Controller & CFOWhat Does a Controller Do in a Small Business?

Job postings for controllers can read like a wish list written by someone who just had a stressful week: "Must manage close, reconcile everything, build controls, support audit, love spreadsheets, remain calm." Accurate, mostly. Also not very helpful if you're an owner trying to figure out whether you need one.

So what does a controller do in a small business, day to day? The short version: a bookkeeper makes the records, and a controller makes sure the records are right and finished. The longer version is below, organized by when the work happens, plus an example of the review that tends to make owners say "oh, that's what that was."

What does a controller do in a small business, in one paragraph?

A controller is the person accountable for the books being accurate, complete and on time. They don't usually enter most transactions. They design how the accounting runs, check the work, fix what's wrong, and produce monthly financial statements the owner can rely on. When something looks odd in the numbers, the controller is the person who should be able to explain it.

Controller responsibilities, by cadence

Weekly or ongoing:

• Reviewing how transactions are being coded, and correcting patterns
• Approving or reviewing bills before payment, depending on how controls are set up
• Answering the bookkeeper's "where does this go?" questions

Monthly:

• Running the close calendar so every task has an owner and a due date
• Reconciling balance sheet accounts: bank, credit cards, receivables, payables, payroll liabilities, loans, prepaid expenses
• Booking adjusting entries, like accruals (recording costs in the month they happened even if the bill hasn't arrived) and deferred revenue (cash received for work not yet done)
• Reviewing the financial statements for anything that doesn't make sense, then signing off

Quarterly and annually:

• Reviewing internal controls and access to bank and payroll systems
• Year-end cleanup of fixed assets, accruals and balance sheet accounts
• Preparing organized year-end information for the CPA, who handles the tax return

If you'd like to see how those monthly steps fit together across the team, our guide to the month-end close process lays out who does what and in what order.

A worked example: the monthly review

One of the most useful things a controller does is a variance review, also called a flux analysis: comparing this month to last month (and to the same month last year) and explaining any big change.

Pretend you run a plumbing company. The controller sets a rule: explain any P&L line that moved more than $2,000 or 15% from last month. In October, three lines trip the rule:

1. Fuel expense went from $4,100 to $7,900. Explanation: two months of fuel card charges landed in October because September's statement was entered late. Fix: move $3,700 back to September.
2. Materials went from $38,000 to $29,000 while revenue was flat. Explanation: a $9,500 supplier invoice was entered to "Repairs and maintenance" by mistake. Fix: recode it.
3. Insurance went from $38,400 in September to $0 in October. Explanation: the annual policy renewed in September and the whole payment was expensed that month. Fix: record it as a prepaid expense and recognize $3,200 a month for twelve months.

After the fixes, October's gross margin goes from looking suspiciously great to looking normal. Which is less exciting, and much more useful.

Internal controls: the controller's quieter job

A controller also designs the guardrails: who can approve a bill, who can send a payment, who reconciles the bank, and who reviews the person who reconciles the bank. In a small business, those duties are often concentrated in one or two people, which is where honest mistakes (and the occasional dishonest one) slip through.

Our article on internal controls for small business covers practical controls that don't require a big team or treating anyone like a suspect.

Do small businesses need a full-time controller?

Usually not at first. Many small businesses need controller-level review a few days a month, not 40 hours a week. That's where controllership services from an outside firm come in: you get the review, close management and controls without the full-time salary. Our post on the fractional controller covers how that works and why the role so often gets skipped.

At ABFI, controller services are part of a fractional accounting department, with bookkeeping, controller oversight and a Client Accounting Manager coordinating the close and the handoff to your CPA.