As your business grows, so does the complexity of your financial operations, making it essential to have a skilled controller overseeing your financial reporting, cash flow, and internal controls. But is it better to create a position in-house or hire fractional controller services?
Each option has distinct benefits and drawbacks, depending on your company’s size, budget, and financial needs. Let’s break down the differences between fractional and in-house controllers, their respective advantages, and how to determine the best fit for your business.
What Does a Controller Do?
Before deciding between a fractional or in-house controller, it’s essential to understand the role of a controller in a business. Controllers are responsible for overseeing accounting operations, ensuring financial accuracy, and maintaining compliance with financial regulations. Their primary responsibilities include:
Financial reporting
Preparing accurate financial statements and reports.
Cash flow management
Monitoring and managing cash flow to ensure business stability.
Internal controls
Implementing policies to prevent fraud and errors.
Budgeting and forecasting
Helping leadership make informed financial decisions.
Process improvements
Identifying inefficiencies in financial operations and suggesting improvements.
In-House Controller: Pros
An in-house controller is a full-time employee dedicated exclusively to your company’s financial management. They work closely with your internal accounting team, providing leadership and continuity in financial operations. Advantages of having an in-house controller include:
Hands-On Leadership
An in-house controller is physically present and available to collaborate with your team in real-time.
Immediate Response Time
When financial issues arise, having an in-house controller can result in faster decision-making and problem-solving.
Customized Financial Strategies
Your controller can create and execute financial strategies tailored specifically to your business.
In-House Controller: Cons
An in-house controller is often best suited for larger businesses with stable, ongoing financial management needs that justify the cost of a full-time hire. While having an in-house controller can supply your company with more direct, in-person service, there are some drawbacks to consider, like:
Higher Costs
An in-house controller will generally cost more, this role typically commands a high salary, along with benefits, bonuses, and other overhead expenses.
Risk of Underutilization
If your business has fluctuating financial needs or is under $5 million in revenue, a full-time controller is unlikely to be fully utilized. In most cases, in-house controllers are given additional responsibilities outside of their expertise in order to fill time. This leaves both the controller unfulfilled and the employer at risk of over-investing in an employee they may not require full-time.
Hiring Challenges
Finding a qualified controller is time-consuming and expensive. If you do hire in-house, your controller works as a team of one, which leaves you in a tight spot when they need time off for vacation or illness. If your solo controller does take off, replacing them will disrupt financial operations.
Fractional Controller: Pros
A fractional controller provides the same financial expertise and oversight as an in-house controller but works on a part-time or contract basis. Fractional controllers are typically outsourced through an accounting firm and serve multiple clients.
Cost-Effective Solution
Hiring a fractional controller is significantly more affordable than a full-time hire since you only pay for the services you need.
Access to Expert-Level Guidance
Fractional controllers typically have extensive experience across different industries, providing valuable insights into best practices.
Scalability and Flexibility
As your business grows, you can adjust the level of service you receive without the commitment of a full-time hire.
Seamless Integration with Accounting Services
Many fractional controllers work as part of an outsourced accounting team, providing a comprehensive financial solution.
Fractional Controller: Cons
A fractional controller is an excellent choice for mid-sized businesses that need expert financial oversight but don’t require a full-time hire. However, it’s important to consider the possible disadvantages of fractional controllers, including:
Limited Availability
Since they work with multiple clients, fractional controllers may not always be available on demand.
Less Company-Specific Knowledge
While experienced and dedicated to helping your business, a fractional controller may not have the same intimate familiarity with your business as an in-house controller.
Remote Work Setup
Most fractional controllers work remotely, which may require businesses to adjust how they communicate and collaborate.
5 Key Factors to Consider
Now that you understand the differences between the two roles, let’s explore the factors that will help you determine which option is best for your business.
1. Your Business Size and Complexity
A fractional controller is ideal for startups and small to medium-sized businesses with straightforward financial operations.
Larger businesses with complex financial needs may benefit from an in-house controller for continuous support.
2. Budget Considerations
Hiring an in-house controller can cost anywhere from $90,000 to $180,000 per year, depending on location, plus benefits.
A fractional controller, on the other hand, costs a fraction of that amount, making it a more budget-friendly option.
3. The Level of Financial Expertise You Require
If your company needs ongoing financial strategy and leadership, an in-house controller may be a better fit.
If you need financial guidance without the overhead of a full-time salary, a fractional controller offers high-level expertise at a lower cost.
4. Scalability Needs
If your business is growing rapidly, a fractional controller provides flexibility without the long-term commitment of a full-time hire.
A larger, more established business may require the consistency and in-depth involvement of an in-house controller.
5. Access to a Broader Network
Fractional controllers often bring industry insights from working with multiple companies, which can benefit your business.
An in-house controller will be focused solely on your business, with less exposure to outside industry trends that may be beneficial.
Which Controller Is Right for Your Business?
If your business is scaling quickly, managing increasing financial complexities, or looking for cost-effective financial leadership, a fractional controller is the best choice. This option gives you access to expert financial oversight without the burden of a full-time salary.
On the other hand, if your company has a large finance team, needs continuous financial oversight, and can afford a dedicated hire, an in-house controller may be the right fit.
For many businesses and startups, a fractional controller offers the benefits of outsourced controller services: expert financial guidance with the flexibility to scale services as needed.
Get Expert Financial Guidance with Basis 365 Accounting
If your business needs professional financial oversight but isn’t ready for a full-time hire, Basis 365 Accounting can help. Our fractional controller services provide expert financial management tailored to your business’s unique needs.
With Basis 365, you’ll get:
● High-level financial oversight at a fraction of the cost
● Scalable services that grow with your business
● A dedicated team of accounting professionals supporting your financial goals
Find the Right Financial Solution for Your Business
At Basis 365 Accounting, we provide fractional controller services designed to help growing businesses streamline their financial operations without the expense of hiring in-house. Our team of experienced professionals will ensure your financial reports are accurate, cash flow is managed effectively, and internal controls are in place, all while giving you flexibility.
Ready to take control of your business finances? Contact Basis 365 Accounting today and discover how our fractional controller services can help your business grow!
