CFO (Chief Financial Officer): How to become a thriving CFO (+ free tips)

How to become CFO (Chief Financial Officer), CFO vs CEO, Roles, Responsibilities and salaries

The roles and responsibilities of a CFO (Chief Financial Officer) cannot be overemphasized. The CFO is one of the important positions in a firm because the sole aim of every firm is to make a profit. Which means that to achieve this goal, the CFO must be very effective. This article goes further to explain the details everything you need to know including CFO salaries and qualifications, CFO vs CEO and if you have always wondered how to become a CFO, read this!

CFO(Chief Financial Officer) Definition


CFO which means Chief Financial Officer is a senior officer of a company or firm whose primary responsibility is to manage the company’s finances or financial actions. Their roles also include; financial planning, financial accounting, financial management, monitoring cash flow and in most cases data analysis. 

How they work

However, the role of CFO can be likened to that of a treasurer because it is their responsibility to manage the finances and accounts of a company. They equally supervise the financial reports, making sure they are accurate and concise.

It is important to know that the CFO reports to the Chief Executive Officer (CEO) and the board of directors. However, in some cases may be a member of the board. The responsibility of the CFO includes working directly with the Chief of Operating Officer (COO) on financial matters. For example, strategic budget management, tactical cost analysis, findings etc.


CFO is the highest ranking financial position in the financial industry. Moreover, in a whole firm it is usually the 3rd highest ranking.

CFO(Chief financial Officer) Roles and Responsibilities

Just like it was stated above, a CFO is concerned with the financial actions of a firm. Therefore, the roles and responsibilities will of a CFO will hover around accounting and finance.


 CFO roles and responsibilities specifically include;

  • Managing and directing the financial and accounting sector in a firm or company.
  • Making strategic recommendations to the CEO or members of the board.
  • The role of the CFO includes managing and forecasting and supervising all the financial reports while making necessary corrections.
  • Giving professional and informed advice on long term business and the financial planning involved.
  • Try to develop and establish a relationship with an external or foreign financial partner and stakeholders.
  • Reviewing all procedures related to corporate finance, HR, Information technology etc. Especially those that need qualitative and quantitative financial analysis.
  • Analyzing future investments of the firm however reviewing current trends in the current market.

CFO(Chief Financial Officer) Salaries and Qualifications

CFO Salaries

On the average, the Chief Financial Officer (CFO)s’ salaries on a yearly basis can vary based on some factors like locations, compensations, firms, qualifications, percentiles etc. As of April 2019, Chief Financial Officers that are within 25th percentile gets $371,548 on a yearly basis. Whereas, CFO’s salaries on the 75th percentile is about $462, 923 yearly.

CFO Salaries for top 10 Metro Areas

Top 10 Metro AreasBase CompensationCFO Salaries and Bonuses
New York$448,644$627,527
Los Angeles$420,213$587,762
Chicago$395,780$553,587
Dallas$369,062$516,216
Washington$413,273$578,054
Houston$380,837$532,685
San Francisco$468,150$654,813
Philadelphia$399,786$559,189
Boston$422,636$422,636
Atlanta$365,934$511,840
Salary.com

A Table for CFO Salaries


The table above states the base compensation, Chief Financial Officer (CFO) salary and bonuses in top 10 metro Areas.

CFO Qualifications

Requirements for Chief Financial Officer are quite extensive therefore it can’t be acquired within a short time. That means, to apply for a CFO position, you have to have an impressive educational background, quite a number of financial certifications backed up with years of experience.

Firstly, you need to have a Bachelor or a master’s degree in Accounting, Finance, or business administration.

Secondly, being a certified public accountant, Master of Business Administration, or a Certified Management Accountant would be an added advantage.

Thirdly, having at least a 10 years working experience is a huge requirement. Especially if it is in a major firm, where you have had the experience of being a financial leader in estate development, property development etc.

In a simpler way;

  • A minimum of 8, preferably 10, years experience in a senior role.
  • CPA designation preferred.
  • Masters degree in Accounting, Finance or Business.
  • Up to date knowledge of current financial and accounting computer applications.
  • Excellent verbal, analytical, organizational and written skills.

CFO Vs CEO

Most people get confused and mix up the roles and responsibilities of a Chief Executive Officer (CEO) with that of the Chief Financial Official (CFO vs CEO). While the CEO’s main role is to oversee the operations of the firm, CFO’s main responsibility is to manage the financial sector of the business. In addition, the CEO answers and reports only to the board of directors because he holds the highest rank in a firm. On the other hand, the CFO is the highest-ranked in the financial sector of the firm. However, the CFO reports to the CEO and equally the board of directors.

So other than roles and responsibilities a quick look at the major differences between CFOs and CEOs (literally; CFO vs CEO) should put things in perspective.

Differences between CFO and CEO (CEO vs CFO)

Responsibilities

Chief Executive Officers have the major responsibility of making sure the firms long-term goals are achieved by monitoring everything that happens in other departments. Although he/she doesn’t pay attention to direct details of the department, he works directly with the managers of various department, financial advisors and then gets due reports. Some call the CEO ‘’the manager of the managers’’ which is nothing close to what CFOs do.This is why a basic overview of the “CFO vs CEO” idea should be top priority

Furthermore, while the Chief Financial Officer is usually responsible for all the departments that deal with finances. For instance, accounting, auditing, budgeting etc.

Strategy

In most cases, the CEO brings out some strategies that will be used to achieve the goals of the firm. While the CFO manages the finances in a strategic way in order to achieve the financial goals of the firm.

Liaisons

Chief Financial Officer’s most of the time have a good relationship with investors, banks, lenders etc. Now this is because they have built the relationship overtime through constantly meeting them in meetings, seminars and conference. However, this will help the company over time.

On the other hand, the CEO is like the identity or face of the company, he simply represents the company when needed like talking with the press or meeting community leaders.

Reporting Relationships

CEO’s report to the firms’ board of directors, while CFO’s reports to the CEO. The Chief Financial Officer CFO can may also be among the board of directors like the CEO.

Analysis

The CFO oversees tasks and analyses tasks quantitavely and qualitatively. Also, the CFO reviews financial departments to ensure proper management of costs and allocation of resources.

Development

It is the CEO’s responsibility to prepare and train employees for management positions within the firm. Moreover, the Chief Financial Officer prepares and grooms employees for managerial positions only within the finance sector.

How to become a Chief Financial Officer (CFO)

Asides knowing your way around accounting, there are rage of things you need to do to become a Chief Financial Officer. You need to be a financial strategist and also get familiar with trends in financing.

7 steps to becoming a CFO;

#1. Gain Broad Financial Experience

If you eventually want to become a CFO it means you will fully understand the fundamentals of budgeting, financial market, accounting principles, financial risk management.  

Having a strong financial experience is one of the major steps of becoming a CFO( Chief Financial Officer). This is because CFO’s have the responsibilities of ensuring that the CEO and the board’s financial decisions are regulated and sound.

Moreover, small businesses or firms can decide to merge the position of the CEO and CEO, this implies that in this scenario its only your expertise that can aid you.

#2. Expand your business and Operational experience

For a Chief Financial Officer’s career, having a very good understanding of business can go a long way.  This is because you will have regular board meetings and definitely have a need to collaborate with managers.

It might be important to have an experienced mentor in your field; this will help broaden your understanding of business and the operations of companies.

Another good way to increase your experience as a CFO is by taking leadership positions in nonprofit firms, in order to get the experience needed.

#3. Widen your customer service Experience

Investors are the key stake holders in a business, therefore as a CFO (Chief Financial Officer) you need to develop a good relationship with people in other firms. However, a good way to do this is by improving your communication skills and also presenting yourself as a team builder.

In addition, as a Chief Financial Officer, there will be frequent meetings with investors moreover this is a good opportunity to treat them well and make good presentation of the company and board.

In recent times, technology is fast creeping in into the world of business. For instance, there are a lot of softwares that can analyze data, provide cyber security, financial accounting etc. Now, as a Chief Financial Officer CFO one of your duties is to know the pros and cons of these technologies and innovations. Hereby, knowing what suits your firm best.

#5. Get a Certification

Having some certifications in financial accounting can help you go a long way in your CFO career. For instance, Certified Public Accountant CPA, Masters of Business Administration MBA. These certificates will help I improve your understanding of business and at the same time, give you a better chance at being a better CFO.

#6. Experience in Treasury positions

If you have an intention of becoming a CFO someday, then you should know that taking treasury positions is really good because it opens you up to so much financial experience. Which will eventually be needed as a CFO. 

However, having prior knowledge and experience in finance. Some of these experience could be; Internal audit manager, finance controller, account manager, etc.  

#7. Expand with your Role 

The CFO’s influence in the organization cannot be overemphasized. However, as the company or firm keeps expanding especially in information and technology. The CFO( Chief Financial Officer) needs to stay updated in order to make better informed decisions.     

Widen your customer service Experience

Investors are the key stake holders in a business, therefore as an CFO( Chief Financial Officer), you need to develop a good relationship with people in other firms. However, a good way to do this is by improving your communication skills and also presenting yourself as a team builder.

In addition, as an CFO there will be frequent meetings with investors moreover this is a good opportunity to treat them well and make good presentation of the company and board.

In recent times, technology is fast creeping in into the world of business. For instance, there are lots of software that can analyze data, provide cybersecurity, financial accounting etc. Now, as a Chief Financial Officer CFO, one of your duties is to know the pros and cons of these technologies and innovations. However, knowing what suits your firm best.

Get a Certification

Having some certifications in financial accounting can help you go a long way in your CFO career. For instance, Certified Public Accountant CPA, Masters of Business Administration MBA. These certificates will help I improve your understanding of business and at the same time, give you a better chance at being a better CFO.

Experience in Treasury positions

If you have an intention of becoming a CFO someday, then you should know that taking treasury positions is really a good because it opens you up to so much financial experience. Which will eventually be needed as a CFO. 

Having prior knowledge and experience in finance. Some of these experience could international Internal audit manager, finance controller, account manager, etc.  

Expand with your Role 

 CFO’s influence in the organization cannot be overemphasized. However, as the company or firm keeps expanding especially in information and technology. The CFO( Chief Financial Officer) needs to stay updated in order to make better informed decisions.     

Conclusion

It is no doubt that it is the primary roles and responsibilities of the CFO( Chief Financial Officer) is to optimise the financial performance of any firm they work with. Therefore, it is important to make sure the CFO has the qualifications to do the above. If you are trying to start a career as a chief financial officer it is important to take the due measures inorder to be well qualified. Importantly check out the CFO salaries above to make sure you are not underpaid.

It is very important to understand the underlying difference between the CEO and CFO (CEO vs CFO) based on their roles and responsibilities. This largely has to do with the fact that many think CEOs can substitute the chief financial officer which is false except he has the proper qualifications.

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