The chief financial officer is a member of the C-suite, a term used to describe the most important executives in a company. Alongside the CFO, these roles include the chief executive officer (CEO), the chief operating officer (COO), and the chief information officer (CIO). Access to timely, accurate data is a key enabler to finance productivity and decision support. Automated reporting and analytics allow more time to be dedicated to forecasting and predictive analysis. Technology will play an increasingly important role for the CFO, but its effectiveness depends on the accuracy, availability, and consistency of data, and on robust, integrated technology infrastructure.
- A CFO needs to be a visible leader in the business, an excellent communicator, and an influencer.
- They not only spent time on individual succession planning for key roles in the organization, but also on ensuring the right balance of technical, analytical, and leadership skills within their team.
- On the other hand, the CFO is responsible for the financial part of the company only.
- The Bureau of Labor Statistics (BLS) predicts the job outlook for financial managers to grow 15% between 2019 and 2029.
- CFOs must adapt to new technology and be at the forefront of ERP implementations and cloud-based solutions.
Within the hierarchy of an organization, it’s easy to confuse the roles of a chief executive officer (CEO) and a CFO. While each takes on different responsibilities within a company, the CEO and CFO work as strategic partners and have a shared vision for the company’s continued success. A CEO oversees the entire company’s operations and holds the highest rank in an organization. The CFO, on the other hand, assumes the highest rank within the financial division of an organization, and CFO responsibilities focus on the financial management of the business. The CFO typically reports to the chief executive officer (CEO) and the board of directors and may additionally have a seat on the board. Some CFOs have the title CFOO for chief financial and operating officer.[1]
In the majority of countries, finance directors (FD) typically report into the CFO, and FD is the level before reaching CFO.
Reporting
CFO stands for “chief financial officer.” The CFO is the top financial position held by an individual in a company or organization. The federal government of the United States has incorporated more elements of business-sector practices in its management approaches, including the use of the CFO position alongside, for example, an increased use of the chief information officer post, within public agencies. However, CFOs are required to work closely with the other senior executives of a company, such as the CEO. These executives are sometimes referred to as the C-Suite of the company, representing the company’s highest level of decision-making. Although the CFO is typically subordinate to the CEO in the corporate hierarchy, CFOs will generally be the foremost decision-maker on all matters within the Finance department of their firm. So generally, CEOs are responsible for steering the organization to overall success (including increased revenue, market share, brand awareness, etc.) while the CFO is responsible for ensuring the organization has the right financial resources in place to achieve its goals.
- However, CFOs are required to work closely with the other senior executives of a company, such as the CEO.
- Usually, CEOs report to the board of directors, a group of internal and external members supervising management and large-scale decision-making in the organization.
- For instance, when the marketing department wants to launch a new campaign, the CFO may help to ensure the campaign is feasible or give input on the funds available for the campaign.
- The CEO is usually an internal member (or inside director) and may be the chairman or chairwoman of the board.
They normally support the Chief Operating Officer (COO) on both tactical and strategic matters concerning cost-benefit analysis, securing of new funding, forecasting needs, and budget management. The uneven pace of recovery worldwide has made it more challenging for many companies. The CEO usually reports to the board of directors of the company and is responsible for maximizing the entity’s value, including revenues, market share, share price, etc. In the government and non-profit sector, chief executive officers typically seek to achieve results that relate to the mission of the organization. The CFO also works with the company’s financial planning and analysis (FP&A) team to scrutinize historical data and market trends and compare the company’s financial performance against key performance indicators (KPIs). CFOs provide guidance and leadership to large-scale teams, communicate with the board and other stakeholders, negotiate with suppliers and vendors, and promote a company’s overall mission, values, and culture.
The CFO role has emerged from focusing on compliance and quality control to business planning and process changes, and they are a strategic partner to the CEO. People in this role have significant input in the company’s investments, capital structure, and how the company manages its income and expenses. This corporate officer may assist the CEO with forecasting, cost-benefit analysis, and obtaining funding for various initiatives. The majority of people who end up in this position have advanced degrees and certifications, such as a graduate degree in finance or economics, and the Chartered Financial Analyst (CFA) designation. It also helps to have a background in accounting, investment banking, or analysis. Behavioral competencies are key to the business partnership role—a “seat at the table” must be earned.
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They’re responsible for overseeing financial operations, budgeting and financial reporting. On the other hand, the CFO is responsible for the financial part of the company only. The CFO is, in most cases, responsible for a number of departments that are financial-related, such as budgeting, accounting, compliance, and auditing. The chief executive officer’s main duty is to keep an eye on the big picture, overseeing the operations in all departments and making sure that the long-term goals of the company are realized. The CEO doesn’t involve himself/herself in the detailed tasks of every department but maintains a general oversight with the aid of department managers. The primary function of a controller is to maintain and operate the books, looking back at data that has already been generated.
CEOs are the ones primarily responsible for company strategy, mission and organization. Those in the CFO role must also be willing to try new things and take calculated risks to grow the business and improve the overall financial standing of the company. NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value.
Want to Become a CFO?
While a CFO’s salary can vary based on industry, experience, and location, typical base salaries range from $84,000 to $239,000 a year. OMB Circular A-123 (issued 21 December 2004) defines the management responsibilities for internal financial controls in federal agencies and addressed to all federal CFOs, CIOs and Program Managers. The circular is a re-examination of the existing internal control requirements for federal agencies and was initiated in light of the new internal control requirements for publicly traded companies contained in the Sarbanes–Oxley Act of 2002.
This enables him or her to create and implement business plans for the company that align with the bigger picture and long-term goals of the company. With the advent of the digital economy and rapid technological change, as well as increased economic uncertainty and investor scrutiny, the CFO role is becoming more forward- and outward-facing, with a focus on business value and opportunities. Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Gain unlimited access to more than 250 productivity Templates, CFI’s full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more. The CEO is the public face of the company, making speeches and meeting with community leaders and the press.
The Role of the CFO of Today and Tomorrow
This makes the functions more accountable for their financial metrics and also allows the finance team to provide more insightful commentary through a better understanding of the business. Another previous CFO boss of mine gave me one of the best pieces of feedback I have received—“Don’t be a postbox,” meaning that it’s not enough for finance just to produce static snapshots of the company’s financial health. The CFO must paint the picture for the business and translate the financial data into meaningful commentary, trends, and actions. CFOs oversee fundraising strategies, evaluate investment opportunities, and determine how to balance debt and equity. They collaborate with treasury groups that manage the company’s cash balance and working capital, including accounts payable, accounts receivable, and inventory. Much of their time is spent preparing financial reports for executives, investors, shareholders, employees, lenders, and government regulatory bodies.
While CFOs often report to the CEO and board of directors, they have much greater autonomy than lower-ranking finance professionals within the company. The term chief financial officer (CFO) refers to a senior executive responsible for managing the financial actions of a company. The CFO’s duties include tracking cash flow and financial planning as well as analyzing the company’s financial strengths and weaknesses and proposing corrective actions.
Developing accurate financial scenarios (43%):
The controller role is a natural progression from accountant, but CFO is not necessarily a natural progression from controller, wrote Ben Paramore, CFO at Great Southern Wood Preserving, on the website Proformative, an online community for finance professionals. Spending a certain number of years as a controller doesn’t necessarily lead to a promotion to CFO — though it could lead to a promotion to finance director. The reason is because of the evolving skill set required to be a CFO, as discussed in the previous sections.
This includes managing all aspects of financial and cash flow planning, as well as analyzing its financial position. However, unlike a controller or accountant, a CFO is responsible for financial planning, while the other two are in charge of bookkeeping and the company’s financial statements. A CEO (Chief Executive Officer) is the leader of an organization, responsible for its overall strategy, mission, and direction. The CFO (Chief Financial Officer) heads the finance department, overseeing financial operations, budgeting, and financial reporting. While the CEO sees the broader organizational picture, the CFO focuses on financial resources and reporting.
