May 18, 1987

Smaller Firms Turning to Part-Time Controllers

By Jeff E. Moore

Are you satisfied with the quality and timeliness of financial information you get from your accounting department? Do you look forward to meetings with your bankers or investors? Do you know which computer system is most appropriate for your company? Are you always ready for your outside accounting firm to begin its year-end audit?

When asked these and similar questions, many owners of small and medium-sized companies are reminded of the headaches they experience due to inadequate in-house accounting and financial management expertise. Their accountants or bookkeepers may adequately handle routine clerical tasks, but the owners’ needs are usually much more sophisticated. This is especially true in the case of new and emerging companies.

In the early growth stages of a company, it is essential that the owner have timely and meaningful accounting and cash flow information. Both actual and forecasted activity should be available and presented in such a way that important trends and problems are highlighted. Trying to accumulate and interpret this data can be extremely frustrating for the owner, especially if he or she does not have a strong background in finance and accounting.

These owners feel perhaps that by hiring a controller their problems will go away. A full-time controller, however, can cost $50,000 or more per year. Many businesses cannot afford an expense of this size, or do not have enough work to justify hiring a full-time expert. In these cases, the company should consider a new and unique accounting concept…the part-time controller.

Part-time controllers are being increasingly used to provide competent, prompt and affordable assistance in a variety of situations. They represent a growing breed of CPA professionals, geared specifically to fill niches in the small-business financial community. The individuals providing part-time controller services typically have extensive experience in serving privately-owned businesses in varying industries. Most have worked in public accounting and/or in full-time controllership positions. Accordingly, they understand the financial information needs of business owners and managers, as well as those of lenders, auditors, tax advisors, investment bankers, attorneys and other outside parties. In addition, they generally have expertise in the areas of microcomputers, cash management, internal control systems and procedures, budgeting and business plans.

Don Williams, a senior manager in the Atlanta office of Ernst & Whinney, one of the largest international accounting firms, says, “Companies that do not employ a full-time controller or CFO are indeed the ones that benefit the most from a part-time controllership arrangement. …A good part-time controller can help the business owner run his or her company more profitably and with more control.”

The owner of an Atlanta-based fireplace and woodstove distributor is excited about the help he is getting from his part-time controller. “I receive a complete set of financial statements every month, along with a clear explanation as to what they mean,” he says. “Before, I had to guess what my profits or what my net worth was. …My part-time controller and I are currently implementing a computerized budgeting and inventory system along with a three-year growth plan. There is no way I could do this on my own.”

Tim Shumaker is another entrepreneur who believes in the use of a part-time controller. He is president and owner of ASA Safety Equipment, Inc., an Atlanta supplier of safety equipment and related supplies. “My primary business concerns involve the future. For example, I want to know how changes in my sales volume and pricing structure will affect profitability and cash flow. If I double sales volume next year, will bank financing be needed? If so, how much, and when will it be needed?”

Shumaker has an above-average aptitude for accounting and financial matters, but his background is in sales and marketing. He looks to his part-time controller, an independent CPA, for expert financial assistance. “Business is very much a numbers game,” he says, “and to make wise business decisions I must have good information. That’s why I use a CPA on a part-time basis.”

A company may experience peak periods during which its need for controllership services is greater than usual, maybe because of special projects such as public stock offerings, year-end audits, mergers and acquisitions, loan requests, business plans and construction projects. In these situations, even companies with a full-time controller or CFO might benefit from temporary financial assistance. “Projects such as these,” says Ernst & Whinney’s Williams, “typically involve a great deal of financial analyses, computer modeling or workpaper preparation, much of which can be compiled by a competent, part-time controller. It often makes sense for the client to retain a temporary professional to handle these ‘numbers-crunching’ tasks.”

Other situations in which part-time controllers should be considered are those involving bankrupt and financially-distressed companies. These entities are often in desperate need of improved accounting and financial expertise. In fact, most troubled enterprises would never have gotten in trouble had they effectively managed their financial affairs. In-house accounting personnel often lack the time or expertise to assist with reorganization plans, cost controls, negotiations with creditors, and other specialized needs associated with bankruptcy and insolvency situations. Some part-time controllers posses skills that can be especially helpful to owners, creditors, attorneys and trustees of distressed companies.