Managing your cash flow: should you have a controller?

At the core of every successful enterprise is a central team of professionals, including lawyers, accountants and board of directors. But no player is more crucial to the growth of a business than the controller--the financial wizard who keeps his or her eye on a company's cash flow.

At some small companies, the controller and treasurer are the same. But in general, the treasurer handles the receipt, custody, investment and disbursement of funds. The controller, on the other hand, is a company's chief accounting executive, responsible for financial reporting and interpretation, tax administration, accounting system development, internal and external audit coordination, internal controls management and cost analysis. A controller also handles day-to-day finances and puts together monthly reports examining payables, receivables and balance sheets.

Your business has to be at a certain level of activity before it's even feasible to hire a controller, cautions Robyn Elliott, a CPA in Culver City, Calif. "A controller makes sense once your company is generating at least $500,000 in sales, has a larger customer and supplier base or is looking to enter new markets."

Bottom line: You don't need a controller to handle basic accounting functions. But if you've got more complex problems--say, you want to get your troubled business going again or make changes in your product line--you might think about hiring a higher-level person, says Elliott.

Still, many small companies can't afford a full-time controller. A controller's main function is cash management; he or she should help you find ways to save money, explains Geri Jasper, a business counselor with New York's CAMBA Business Outreach Center.

If you're a fledgling entrepreneur, you can always turn to an outside CPA for help, suggests Jasper. But make sure you get your money's worth. You should ask your CPA to do more than basic reporting. He or she should "identify investors, find ways to finance expansion and save your company money," says Jasper.

As a small business owner, you don't want to hire a CPA who doesn't have experience with small companies, says Elliott. One option you have is to hire a part-time controller, private business consultant or other independent specialist to handle specific financial tasks.

Too often, entrepreneurs make a fatal mistake in selecting financial specialists, says Joseph Mancuso, president of the New York-based Center for Entrepreneurial Management, a 3,000-member organization of small business owners. Having an MBA onboard isn't the ultimate solution, he says. It's more important to hire someone with proven experience. "You want someone who understands the limitations and expectations of your type of business," he says.

Whether you hire a controller or a CPA, it's still your responsibility to keep abreast of the day-to-day financial status of your business.