10 errors that plague financial controllers

Poor planning, losses due to theft or mismanagement of risk, lack of information and unbalanced budgets are some of the mistakes controllers hope not to find in their company. As financial controller, do you dare to uncover others?

The mission of a controller is to perform proper management oversight of the company.Well, yes, that’s obvious. But although the functions of a controller are roughly monitoring, analysis, planning and strategic decision making, below we reveal the main mistakes that you can make as a controller.

1. Economic losses occur due to theft or mismanagement of risks. That is, one or more of the control mechanisms of the company's financial management have not been working properly, with obvious consequences.
2. There is no planning, so the wrong decisions are made about growth, investment or financing, or there is a lack of coordination between departments and people.
3. Problems are found in the routine work of the team because techniques that encourage people to participate are not being used, meaning people are not given the right incentives, which leads to a lack of motivation.
4. Budgets are not prepared, or the budgets used are prepared poorly, which creates imbalances and the misuse of resources.
5. There is no information on costs or the information available is incorrect, so the wrong decisions are taken regarding sale prices or discounts.
6. You are not analysing the available information correctly.
7. Deviations from the budget are not controlled, so you do not take timely corrective action.
8. The regular information on the progress of the company is incorrect or generated very late, so you cannot make a correct assessment of what is happening.
9. There is too much information. It is often duplicated or even triplicated, but key data are missing. This prevents you from taking timely measures to optimise the performance of the company.
10. The management control system you designed is too complex, meaning it is less efficient and more prone to errors.

How can you avoid them? 

To avoid these mistakes, which have surely horrified you, control is very important. In fact, control activities can be classified into preventive controls, since prevention is better than the cure, and detective controls.

Which ones should you choose? This is a difficult question to answer. Usually this decision does not correspond to the controller, but to the CFO, who usually opts for a mixture of the two. Preventive controls prevent errors from occurring and detective controls allow us to have increased security for operations overall.

The importance of teamwork

The concept of the controller receives negative press in certain countries. It is common for the word controller to have negative connotations. There are different versions regarding the origin of the term “controller”. These include one from 12th century France, where the contreroullour was the person who watched out for the duplicating of accounts. From then until the 21st century, the concept has continued to evolve into the figure we have today. While it is true that it is very important for the controller to have technical skills (knowledge of the industry, the company, accounting and management), other skills, such as dialogue, teamwork, time management, etc., are also needed.

In conclusion, for efficient management control  the controller must open up avenues of dialogue with the team on the one hand and, on the other, have the full support of management, especially the CFO. A controller needs consensus and cooperation to get the best results.