Interim Financial Management

Interim Controller or Outsourced Controller: Which One Do You Need?

A company may find itself in need of a new Operational or Corporate Controller for any number of reasons. If the need is pressing, then rationalizing resources is appropriate whether it be for an Interim Controller, Outsourced Controller or regular hire. The tough thing can be knowing which of the three will work best for your company. Here, we’ll explore the critical Controller role and the different options you have to fill it.

Why You May Need a New Controller

The need for a new Interim Controller, Outsourced Controller or regular hire could be the result of many situations. Typical ones include:

  • Your existing Controller has resigned.
  • Your business has grown and become more complex, and new expertise is required.
  • Your finance function has been outsourced to a CPA firm, bookkeeper or other financial services provider, but you now prefer a dedicated and experienced resource.
  • Your business isn’t functioning as well as it should, and better information is needed for decision-making purposes.

These situations aren’t unusual for any growing business, but they do need to be addressed in a way that is seamless for the business or that at least doesn’t overly disrupt it.

Is Hiring a New In-House Controller the Best Solution?

The hiring process for any key position is never easy, and the Controllership is no exception. The Controller plays a central operational role not just for the accounting and finance teams, but also for the company as a whole. For such a big job, it can take several months to identify qualified candidates, screen those candidates, make a selection, extend an offer and then allow the new candidate to make a smooth transition.

If adequate time and care are not taken at each step, the hiring process may not result in securing the best candidate. The process can get rushed because the Controller function is crucial to providing timely operational results and other information to internal and external users. These urgent needs could create a rush to hire that overrides the desire to get the best candidate for the role.

Onboarding management-level employees like a Controller also requires an investment of management’s time and company resources. Discovering that you don’t have a good fit after the onboarding processes wastes that time and can be extremely disruptive to your entire team. Beyond that, hiring a Controller may involve significant recruiting costs. Making a rushed decision can result in paying a non-refundable recruiting fee, only to find out that the candidate you chose isn’t a good fit after all. Unfortunately, the recruiting firm won’t always be able to find a qualified alternative, leaving you right back where you started.

Interim Controller vs. Outsourced Controller: What’s the Difference?

If you’ve decided that an in-house hire isn’t the right option, your choice is narrowed to one between an Interim Controller and an Outsourced Controller.

Outsourcing occurs when a company utilizes an outside firm to perform a full-time position or function on a long-term or permanent basis. Examples of this include a shared service arrangement whereby an outside firm would manage the accounts payable or accounts receivable function for a given company, or a company might have the need for a CFO or Controller only on a part-time basis. These arrangements are not considered temporary and become part of the human resources model for the business.

Conversely, an interim resource is intended to perform a specific role for a designated period working with an organization in a capacity similar to an employee. The interim arrangement is designed to fill a temporary business need due to reasons that include attrition, leaves of absence, a temporary increase in business activity due to an acquisition or equity event and a variety of short-term gaps.

The choice between an Interim Controller or an Outsourced Controller is dictated by the demands of the organization. If there is an immediate full-time need with a specific skillset, Interim Controllers fill that need in a dedicated fashion. They are available for as long as the company needs the service, and they bring a wide range of experience to the role that reduces on-boarding time. Outsourcing, on the other hand, would be better suited to part-time Controller roles where dedicated resources may not be needed or for more routine functions like shared service arrangements for general bookkeeping transactions.

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When Would a Company Prefer an Interim Controller in Such a Key Operational Role?

Using an Interim Controller can satisfy the immediate reporting needs required by lenders, senior managers and regulatory agencies while allowing the regular hiring process to run in due course.

A company might be experiencing substantial growth, and the Controller position needs to be defined or re-defined. An Interim Controller can fulfill the role and also perform an assessment of what is needed for the changing environment. That assessment might focus on the Controllership position as well as the accounting staff and its structure.

In another scenario, a company might not be getting the information it needs to make informed decisions due to an underdeveloped financial function. While management knows the function should be strengthened and expanded, specific needs are unclear. The transition from start-up to mid-size company includes the development of a financial reporting & accounting structure, budgeting and forecasting models, performance indicators and operational metrics as well as profitability analysis. The Interim Controller can assess the current financial reporting process and the accompanying reporting.

Another common situation involves a company that has just lost its Controller, with a pending liquidity event making it difficult to re-fill the position. If an equity event is also contemplated or imminent, candidates may be reluctant to join the team due to uncertainties over new ownership. Under these circumstances, there could be a change in location or even the elimination of the role at some point. As well, the management style of new ownership may not be known, making it difficult for a candidate to get an accurate impression of the operating environment. A candidate may also be discouraged by the additional post-transaction work that will be required including the creation of new financial reports and metrics, a system migration and other new operational reporting. All of this assumes you can find candidates with the right skill sets to manage things through a transaction, something that isn’t a given.

In most cases, if a full-time, immediate need exists, an Interim Controller can fill the role. He or she can utilize best practices acquired through numerous previous engagements, provide assessment services and assist with the hiring process by creating job descriptions and offering selection support. An Interim Controller will also be able to provide recommended reporting formats, budgeting and forecasting models, profitability analysis and operational metrics. Finally, an Interim Controller can draw from a wide variety of resources from within his or her own firm.

When Would a Company Prefer an Outsourced Controller in Such a Key Operational Role?

Sometimes it might make sense to use an Outsourced Controller as opposed to an Interim Controller. If the need is not full-time and the organization can be flexible, then a part-time Controller could be more cost effective. These types of engagements involve a limited number of days per week, or the Controller can be utilized for month-end close or at other peak periods. As well, the environment might be more stable and the workload consistent, so that management doesn’t require a dedicated resource.

An Interim Controller: The Best Option in Many Cases

So, what does your company need? If the complexity and volume of business is increasing and you want full-time, dedicated and experienced support, an Interim Controller is an excellent option. This arrangement will provide the skills and focus needed by managers in a changing business environment. An Interim Controller can start to provide value almost immediately – maintaining and developing reporting, establishing needed internal controls, assessing the finance and accounting environment and bringing best practices to the organization.

Is your business looking to strengthen its financial function? If so, we’d be happy to answer any questions you might have about Interim Controllers and the many skills and resources they can bring to the table. Visit our Interim Controller Services page or contact us.

interim controller services

You can also explore our page on controller consulting careers if you’re interested in pursuing Interim Controllership as a career.

About the Author

Susan is a CPA with 20+ years of diverse finance and accounting experience in various industries including manufacturing, technology, apparel and real estate. She is an Ernst and Young alumnus who has held leadership roles at Fortune 500, middle market and entrepreneurial companies as Controller, VP of Finance and CFO. These companies have included Power-One, Clipper Windpower, Allied Signal, and Special Devices among others. Susan has provided financial leadership and project management to accounting organizations, including financial turnaround and restructuring projects, creating international tax structures, implementing IFRS, managing internal and external financial reporting, system implementation and leading finance and accounting efforts for divesture, acquisition and process re-engineering. Susan holds a BS in Accountancy from San Diego State University.

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