What is controlling?
Controlling is an essential component of financial management in businesses. Its aim is to ensure that corporate goals are achieved efficiently and effectively. A comprehensive understanding of controlling is crucial for both established companies and startups to ensure financial stability and growth.
What are the differences between internal and external controlling?
| Internal Controlling | External Controlling | |
| Characteristics | Internal controlling, often referred to as operational controlling, focuses on the internal processes of a company. | External controlling, also known as financial or external accounting, deals with reporting to external stakeholders such as investors, creditors, and government authorities. |
| Main Tasks | Monitoring, steering, and optimizing internal business processes, including budgeting, cost accounting, monitoring key performance indicators, and identifying optimization potentials. | Creating financial reports such as annual and quarterly statements that comply with legal requirements and accounting standards. |
| Significance for Startups | For startups, internal controlling is invaluable as it helps set and track financial goals. By monitoring expenses and identifying efficiency improvements, startups can steer their growth more effectively. | External controlling can be complex for startups due to specific regulatory requirements. Nevertheless, it is crucial as it ensures financial integrity and strengthens the trust of potential investors and partners. |
Risk of Confusion
In this context, the terms "internal" and "external" refer to the recipient of the controlling documents. The entity creating these documents is not relevant. Thus, startups often opt to have both internal and external controlling created by an external CFO as a Service agency, simplifying their processes significantly.
Conclusion
Distinguishing between internal and external controlling is crucial for the long-term success of companies, regardless of their size. Internal controlling helps optimize internal processes and increase efficiency, while external controlling maintains transparency and trust with external stakeholders. For startups, it is vital to understand the fundamentals of both approaches and integrate them into their business strategy to foster sustainable growth and ensure financial stability.