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Understanding the Bookkeeper and Controller Roles

October 1, 2020 / by Jane Lvovskiy

Here's a look at the key responsibilities of a bookkeeper and a controller — and how they work together.

Bookkeeper-and-controller-working-togetherAny successful business needs to have a person, or people, handling bookkeeping and controller tasks. While there is some overlap between the two roles, there are also critical differences. Let's take a closer look at these distinctions and at how the person or team taking on these roles can help you maximize profitability while minimizing risk.

Agreeing on Terms
Maybe the easiest way to grasp the difference between a bookkeeper and a controller is to think of each in a literal sense. A bookkeeper, as the title plainly states, keeps the books — i.e., records all of a company's financial transactions in a systematic way. Without a competent bookkeeper to log this data, a business owner would quickly lose track of how much money was flowing into the company and how much was flowing out. The result would be chaos.

A controller takes the process to the next level by analyzing and interpreting this data to institute financial controls (hence the name). Controllers also help the business owner implement efficiencies, develop budgets and provide insights that could lead to additional opportunities.

Bookkeeping and Controller Services: They Work Best When They Work Together
Understanding the difference between the roles of the bookkeeper and the controller also makes it easier to understand why (and how) they must work together for maximum efficiency. The best way to appreciate the interrelatedness of the two roles, however, is to imagine what would happen if the bookkeeper and controller didn't work together.

Basically, it's a case of GIGO — garbage in, garbage out. If your bookkeeper doesn't provide timely, accurate financial records, your controller can't do their job properly. Simple as that. It's hard to make informed decisions when you're misinformed.

Fortunately, it's easier than ever for your bookkeeper and controller to function effectively together. That's because cloud-based bookkeeping software enables unprecedented levels of automation and real-time data sharing.

Getting to the Nitty-Gritty
To cement your understanding of the different, though connected, roles that bookkeepers and controllers play, let's look at some of the day-to-day functions.

In general, bookkeeping responsibilities include:

  • Accurately capturing all financial transactions. This encompasses payroll reconciliations, accounts receivable (including preparing and sending invoices, recording revenue and sales receipts, and posting and applying bank deposits) and accounts payable (including processing credit card expense transactions and vendor bills, paying independent contractors, collecting W-9s and managing submission of 1099s to the IRS and the state).
  • Overseeing month-end close This includes reconciling balance sheet accounts, making journal entry adjustments and verifying accuracy of income statements.

Meanwhile, controller responsibilities include:

  • Providing forecasts of where your business is headed by reviewing your balance sheet, income statement and statement of cash flows, along with industry-specific key performance indicators. Doing all this provides actionable intelligence for everything from applying for business loans to opening additional locations to buying out a competitor. (The COVID-19 pandemic provided stark proof of how important it is to be able to change direction quickly in the face of unforeseen events. Controllers are invaluable at times like this.)
  • Working as a liaison with your CPA to meet all tax-related filing deadlines and deliver audit-ready financials. A qualified controller will also stay on top of any loan-reporting requirements and preparation of financials for government contracts. Controllers are especially helpful for satisfying the granular financial requirements at nonprofits.

Do You Have Holes in Those Roles?
Now that you understand the differences between a bookkeeper and a controller, as well as the importance of each, are you confident that your company has both of those vital functions covered? Whether it's one individual (such as through an outsourced bookkeeping and controller services provider) or more, make sure you can answer this question in the affirmative.

Topics: Bookkeeping Services, Brooklyn - Staten Island

Jane Lvovskiy

Written by Jane Lvovskiy