External Controlling: Benefits of Using Interim Controllers

A look at the growth of the interim management market in recent years makes it clear that companies are increasingly turning to external specialists to address their challenges. The industry association Dachgesellschaft Deutsches Interim Management e. V. (DDIM) forecasts that the interim management market in Germany will reach a record volume of over 2.9 billion euros in 2024. This would represent an increase of approximately 1 billion euros since 2019. 

The fields in which interim managers are deployed are diverse and include, among others, finance and accounting, human resources, and marketing. One of the most common areas of focus is controlling. According to a survey by Ludwig Heuse GmbH, this area accounted for about nine percent of interim assignments in the D-A-CH region in 2022.

But what responsibilities can interim managers take on in controlling, and what value do they bring to organizations?

What do interim controllers do?

Interim controllers can handle all tasks related to both operational and strategic controlling. Their responsibilities also include project-related activities. The following control loop illustrates the typical workflows in controlling:

Specifically, the steps include, among other things, the following tasks:

Conducting target-actual analyses: Target-actual analyses help identify deviations from cost targets and determine corrective actions in a timely manner.

Financial Reporting: The preparation of reports such as annual financial statements presents the financial position of organizations and allows it to be communicated to stakeholders.

Budgeting: Budgeting involves determining and optimizing corporate budgets.

Risk Management: Financial risks are identified and assessed in order to determine appropriate measures to minimize them.

Compliance Monitoring: It is essential to ensure that all financial activities and reporting comply with applicable legal requirements.

Process Optimization: By implementing appropriate tools and adapting structures, existing processes in controlling can be made more efficient.

Strategic Planning: Based on the financial data collected, strategic planning involves defining goals and determining the appropriate measures to achieve them.

Interim Controlling Offers These Benefits

Companies benefit from numerous advantages when they hire external controllers. In particular, the extensive professional expertise that interim controllers bring to the table represents significant added value. On the one hand, through their work with a wide range of clients, they gain valuable, practical experience in controlling across various industries and company sizes. On the other hand, they are experts in their field and possess extensive theoretical knowledge. They can contribute both of these aspects to a company in a way that generates value. 

Furthermore, interim controlling is characterized by the fact that it can usually be implemented immediately . This enables companies to respond flexibly to challenges and to maintain seamless operations even when unexpected problems arise.

When interim controllers begin working at a new organization, their flexibility and adaptability mean that no lengthy onboarding period is required. Because they work on a variety of assignments, they are accustomed to adapting quickly to different corporate cultures and situations. As a result, they are generally able to integrate seamlessly into existing teams, ensure a smooth transition, and take proactive action in a timely manner.

Another important aspect is the efficiency with which interim controllers carry out their duties. Since their assignments are time-limited, they are focused on achieving results quickly. This enables them to help companies meet their financial goals and strive for sustainable success, even during short transitional periods.

When is it worth hiring interim controllers?

As previously explained, there are a wide variety of areas of responsibility that interim controllers can take on. The same applies to possible scenarios in which their involvement is particularly beneficial:

1. Staffing Shortages

Staff turnover, sick leave, or lengthy recruitment processes—a shortage of specialized personnel within a company can have many causes and significantly disrupt business operations. Interim controllers can step in at short notice to bridge such gaps, thereby ensuring continuity in financial control.

2. Restructuring

Restructuring is often accompanied by new processes or the implementation of updated software, which can present challenges for employees. Interim controllers help efficiently implement planned adjustments and monitor the resulting changes. In doing so, they ensure that employees are involved in the restructuring process. In this way, the short-term extra workload associated with a restructuring can be managed, and a smooth transition can be achieved without the need for permanent employment.

3. Growth Stages

Periods of growth present organizations with new challenges, such as limited financial resources. Because they work in a variety of settings, interim controllers are usually familiar with different stages of growth and know what it takes to navigate them successfully. With their expertise, they help adjust budgets and action plans to facilitate healthy growth.

4. Controlling Projects

Carrying out specific controlling projects is similar to restructuring. Interim controllers bring valuable expertise to the implementation process without the need for a permanent position. Specifically, they help ensure that projects are carried out efficiently, that the necessary tools are implemented, and that employees are trained.

5. Lack of internal teams

In large companies, controlling teams are an integral part of the organizational structure. The situation is different in small businesses. They often lack the time, expertise, or personnel to establish independent, fully functional controlling departments. As a result, necessary controlling tasks may not be performed at all or may not be carried out reliably, responsibilities may not be clearly assigned, and there may be no foundation for reliable oversight of the company’s finances. By bringing in interim controllers, even small businesses can ensure effective controlling and thus lay the foundation for financial stability. Since their involvement is only temporary, interim management offers small businesses a helpful immediate solution without having to commit to long-term financial obligations.

Interim Management as a Solution to the Shortage of Skilled Workers in Controlling

In addition to the internal causes of staffing shortages already mentioned, the shortage of skilled workers—an external factor—is currently posing major challenges for companies in many industries. A 2022 survey by the consulting firm Horváth found that approximately 11 percent of open positions in the finance and controlling departments remain unfilled. This situation can have a wide range of negative consequences for organizations, including, among other things, constraints on growth, quality issues, and overburdening of existing employees.

Due to the shortage of skilled workers, the search for qualified employees often takes a long time. Interim controllers can bridge these gaps. They are able to do so thanks to their expertise, without compromising the quality of controlling processes. At the same time, organizations can benefit from new ideas and the know-how of interim management. Thus, the use of interim controllers not only fills staffing gaps but also allows temporary vacancies to be utilized effectively. If this is followed by a smooth transition to the employee who will fill the position in the future, the company can benefit from interim assignments in the long term and thereby mitigate the negative effects of the shortage of skilled workers going forward. Thus, interim controlling offers a partial solution to the problems of the skilled labor shortage, but it does not replace the need to develop long-term strategies for recruiting and retaining skilled workers. Only in this way can the company’s stability be ensured in the long term.

Unlock the Full Potential of Industry 4.0 with Interim Controlling

In addition to the shortage of skilled workers, today’s Fourth Industrial Revolution—known as Industry 4.0—requires a reorientation of corporate planning. It involves the ability to intelligently interconnect control systems, machines, and processes using digital technologies. This transformation is also bringing about major changes to the role of the controller.

To fully leverage the potential of Industry 4.0 in controlling, new IT systems must be implemented that enable seamless data transfer. As a result, administrative tasks such as data entry will no longer be required of controllers in the future. Instead, their focus will shift increasingly toward strategic tasks. Through the implementation and integration of modern tools, they will have access to large volumes of real-time data that must be managed and analyzed. 

In addition, interconnecting systems increases the risk of data misuse and cyberattacks. To ensure data confidentiality despite this, appropriate security measures must be implemented.

Overcoming these hurdles requires not only the introduction of new technologies but also adjustments to work processes. To implement and manage these changes effectively, controllers need different skills than they did just a few years ago. Companies should ensure that their employees are prepared for these changes early on. This is the only way to successfully adapt to the conditions of Industry 4.0.

Interim controllers who, in addition to their knowledge of IT and business administration, also have an understanding of production processes can successfully support companies in today’s data-driven world. Furthermore, interim managers possess the flexibility needed to address the specific challenges of Industry 4.0. This enables them to guide the entire transformation process. By training employees and developing adaptation strategies, interim controllers can help companies not only overcome these challenges but also capitalize on the opportunities offered by digital transformation.

What Matters When Selecting the Right Interim Controllers

To ensure that interim controllers can meet a company’s requirements, it is essential to verify that they meet certain criteria. A wealth of experience is crucial for them to make a valuable contribution. Excellent teamwork and communication skills are also essential to ensure a smooth integration into existing teams. In addition , they should be able to perform at a high level, even under pressure, so that results can be achieved quickly.

In addition to their professional and personal qualities, interim controllers must also be available at times that align with the company’s needs. They should be able to start work promptly so they can provide immediate support even when unforeseen problems arise.

These aspects represent the basic requirements for a successful assignment. In addition, individual skills tailored to a company’s specific needs may be required. These include, for example, knowledge of a particular industry or proficiency with specific tools. Therefore, a thorough analysis of the company’s requirements is essential before selecting interim managers.

Costs of Interim Controllers

The costs for interim controllers are generally calculated based on daily rates and vary depending on the duration of the assignment, expertise, location, and complexity of the assignment. In interim management, the 1-percent rule generally applies, which states that the daily rate for interim managers should be approximately 1 percent of the gross annual salary that a specialist in a comparable position would receive. On average, the daily rate in Germany ranges from 800 to 1,200 euros. If the assignment takes place on-site, additional costs for travel to and from the location and accommodations may apply, depending on the distance.

Reap the benefits over the long term

Hiring interim controllers is particularly worthwhile when a company can benefit from it in the long term. The handover at the end of an assignment plays a key role in this regard. 

First and foremost, it is important that the assignment period be sufficiently long to ensure that all necessary tasks are properly completed and that a “smooth transition” can take place. If the assignment period is too short, there is a risk of an abrupt transition. However, smooth business continuity can only be achieved if the future controllers are thoroughly trained in the company’s ongoing activities by the interim controllers in advance. Therefore, detailed documentation of the processes and regular discussions between the interim controllers and the future controllers should take place before the handover.

The most effective transition can be achieved through what is known as a “wind-down phase” for interim managers. During this phase, the number of days they spend on-site is gradually reduced, while their responsibilities are progressively handed over to the employees who will take over the tasks in the future. 

In addition, the careful selection of tasks for interim controllers can contribute to a lasting, positive impact of their work. Especially during longer assignments, it should be part of their responsibilities not only to address current challenges but also to contribute to long-term strategic planning. This includes identifying opportunities for improvement and developing corresponding recommendations for action. 

Companies can also benefit in the long term from the consulting skills of interim controllers. They can help the internal controlling team develop further and equip it with the skills it needs to independently optimize processes after an assignment is complete.

Conclusion

The growing demand for interim controllers highlights the wide range of roles they can fill. They enable companies to respond flexibly to various challenges, such as staffing shortages, periods of growth, or restructuring. In doing so, organizations benefit not only from the expertise of interim managers but also from their flexibility and efficiency.

At a time when the development of new technical solutions is accelerating, companies are constantly facing new challenges. These demands will increase as a result of artificial intelligence (AI) and the new industrial revolution. According to studies, AI is expected to grow at an annual rate of 36.6 percent through 2030. Due to technological disruptions and growing market complexity, interim controllers will increasingly serve as strategic advisors in the future. The days when they were viewed merely as a temporary solution to fill vacancies are a thing of the past.