What is a chief financial officer?
A chief financial officer, or CFO, is a senior executive role within a corporation or organization. The position exists to ensure an organization’s financial stability and fiscal health. The CFO is primarily responsible for managing the company’s financial actions, which includes tracking cash flow and financial planning.
CFOs play a pivotal role in shaping and executing an organization’s financial strategy. Their unique perspective and understanding of the financial landscape, combined with the ability to interpret complex financial data, make them integral to a company’s success. By identifying risks and opportunities, CFOs guide the company’s financial direction, which directly impacts its growth and profitability. Moreover, CFOs communicate the company’s financial status and strategy to stakeholders, such as board members, investors, and employees, serving as a crucial link between the financial realm and the rest of the organization.
Duties and responsibilities
The chief financial officer has a wide range of responsibilities, focusing on the company’s financial management. They are responsible for managing the company’s finances, including budgeting, financial forecasting, and capital raising. They also oversee the financial planning and record-keeping, as well as financial reporting to senior executive management. In many cases, they are in charge of investment strategies and decisions, ensuring the company’s money is allocated in a way that yields the highest returns.
In addition to these tasks, the CFO is also responsible for risk management, assessing financial risks, and making plans to mitigate them. They are often tasked with maintaining investor relations and may also oversee the company’s legal department, ensuring compliance with financial regulations and laws.
The work environment of a CFO is typically an office setting within the headquarters of an organization. They work closely with other executive team members, particularly the CEO, chief operating officer (COO), and the board of directors. Their role is high-pressure and demanding, with a significant degree of responsibility, as financial success or failure of the company heavily depends on their decisions.
While much of their work is done on a computer analyzing financial data, CFOs also spend a good deal of time in meetings. This includes internal strategic planning sessions and external meetings with investors, financial institutions, and regulatory bodies. The work can be stressful due to its high stakes, but it can also be rewarding and impactful.
Typical work hours
The work hours for a chief financial officer are generally full-time, with extra hours commonly required. The role often involves more than the standard 40-hour work week, and late nights can sometimes be expected due to the global nature of finance and different time zones. It’s not uncommon for CFOs to be on call and available most of the time, given the critical nature of their responsibilities. CFOs may also have to travel frequently for business meetings, investor relations, and site visits. Thus, the role demands a high level of commitment and flexibility.
How to become a chief financial officer
Becoming a Chief Financial Officer (CFO) requires a blend of education, broad financial expertise, strategic thinking, and leadership experience. CFOs are responsible for managing a company’s financial actions, so the path to this executive role typically involves several years of progressive experience in finance and management. Here are the steps to help you chart your path toward a CFO position.
Step 1: Earn a bachelor’s degree
Your path to becoming a CFO should begin with a bachelor’s degree in a finance-related field. Degrees in finance, accounting, economics, or business administration provide a strong foundation for understanding the financial workings of a business.
Step 2: Gain practical experience in finance roles
After completing your undergraduate studies, seek entry-level roles in finance to gain practical experience. Positions such as financial analyst or accountant provide the opportunity to understand the financial processes within a company and gain a solid grounding in financial management principles.
Step 3: Pursue a master’s degree
Next, consider pursuing a Master’s in Business Administration (MBA) or a similar graduate degree with a focus on finance. This advanced education can deepen your understanding of business strategy and financial management and is often a requirement for top executive roles such as CFO.
Step 4: Obtain professional certifications
Earning professional certifications can enhance your credibility and expertise. Certifications such as Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), or Certified Management Accountant (CMA) are highly respected in the field and demonstrate advanced knowledge of financial management principles.
Step 5: Gain leadership experience
Aspiring CFOs must have extensive leadership experience. Progressively senior roles within the finance function, such as finance manager, director of finance, or vice president of finance, can provide opportunities to manage teams, develop strategy, and make high-level financial decisions.
Step 6: Develop a broad business perspective
In addition to financial acumen, CFOs need a deep understanding of the overall business and industry trends. This can be acquired by taking on cross-functional projects, participating in executive-level strategy discussions, and staying informed about industry trends and market dynamics.
Step 7: Apply for CFO positions
With the necessary educational background, certifications, and extensive leadership experience, you can begin applying for CFO positions. Your resume and cover letter should highlight your financial expertise, leadership experience, strategic thinking abilities, and business and industry knowledge. Be prepared to discuss how your financial leadership can drive business success and shareholder value.
As a CFO, staying informed about changes in financial regulations, industry trends, and best practices is essential. Continuing professional development, participating in industry associations, and attending conferences can help you maintain your expertise and adapt to an ever-evolving business landscape. Here are a few recommended courses to explore:
- Think Like a CFO Specialization is a course from Coursera that helps you learn the language of finance. You’ll review the important questions to ask and be able to create an action plan to fix your company’s financial dilemmas. The course will leave you feeling comfortable reading, interpreting, and discussing financial statements.
- Udemy offers a course called Nailing Your First Quarter as a CFO. The course will help you during your first 100 days on the job. You’ll cover the competencies of the modern CFO and develop strategies to develop strategic alignment with the finance teams. It’s a great option when you’ve just started to ensure you are crushing it out of the gate.
Once you’ve been in the role for a bit, check out the Chief Financial Officer Leadership Program. You’ll cover change management tactics, financing strategies, developing corporate strategies, and more. The course uses real-world examples to provide additional content, and the course is taught by someone who has decades of experience in this role.
How much do chief financial officers make?
The compensation for a CFO varies significantly based on a variety of factors. One of the primary influences is the size and industry of the company. Larger companies with more complex financial structures often pay higher salaries than smaller companies. Experience also plays a significant role, as those who have proven their abilities in financial management over time often command higher salaries.
Education level can also impact a CFO’s salary, with those holding an MBA or other relevant advanced degrees potentially earning more. Bonuses and stock options often form a significant part of a CFO’s compensation package, especially in large publicly traded companies. The economic health and profitability of the company can also affect the CFO’s compensation, as can the cost of living and wage levels in the geographic location of the company’s headquarters.
Here are the top paying industries and states according to BLS (Bureau of Labor Statistics), however, salaries for CFOs can often exceed this figure, particularly at large corporations.
Highest paying industries
- Technology: $250,000
- Financial Services: $230,000
- Healthcare: $230,000
- Insurance: $225,000
- Pharmaceutical: $220,000
Highest paying states
- New York: $255,000
- California: $245,000
- New Jersey: $240,000
- Massachusetts: $235,000
- Connecticut: $230,000
The average national salary for a chief financial officer is:
Types of chief financial officers
In this section of the career guide, we explore the different types and specializations of the chief financial officer (CFO) role. A CFO has a pivotal role in any organization, whether it’s a small business, large corporation, or non-profit entity. Despite the general financial focus of the CFO role, there are specializations based on the specific industry, type of organization, and particular demands of financial management within that context.
A corporate CFO typically serves in a private business entity, managing its financial operations. They play a crucial role in decision-making processes related to investments, capital structure, and financial strategies. Their responsibilities may include financial planning, risk management, record-keeping, and financial reporting to higher management and stakeholders.
Public company CFO
A public company CFO manages the financial operations of a publicly traded company. They are responsible for financial reporting, compliance with SEC regulations, investor relations, and strategic financial planning. They play a crucial role in maintaining investor confidence and ensuring the company’s financial health. Their role is particularly complex, given the additional regulatory requirements and the necessity for transparency with shareholders.
An SMB (Small and Medium-sized Businesses) CFO operates in a smaller-scale business environment. They manage all aspects of the company’s finances, from accounting and financial reporting to strategic financial planning. In many cases, they may also handle other operational aspects of the business, given the smaller size of the organization. Their role is pivotal in ensuring the financial sustainability and growth of the SMB.
A nonprofit CFO works within a charitable or service-oriented organization. The job often involves managing the organization’s finances with a focus on sustainability and funding management. They may also be involved in fundraising initiatives and ensuring the efficient use of funds to support the organization’s mission.
A startup CFO operates within a unique business environment where the focus is often on growth and scalability. They are responsible for financial planning, securing funding, cash management, and providing strategic financial input to help the startup grow and navigate potential financial challenges.
A healthcare CFO serves in a hospital or healthcare setting. They manage the financial operations of the healthcare facility, which could include budgeting, financial reporting, patient billing, and strategy development. Their role is crucial in ensuring the financial sustainability of the healthcare organization amidst the complexities of healthcare financing.
In the public sector, a government CFO is responsible for managing the financial operations of a governmental agency or department. Responsibilities involve budgeting, reporting, ensuring compliance with financial regulations, and developing strategies for effective financial management in the public sector.
Financial services CFO
A CFO in the financial services industry has a unique role, as they operate within an industry whose primary business is finance. They oversee financial planning, risk management, and regulatory compliance. Their position is pivotal in ensuring the financial health of the bank or financial institution while also complying with the regulations of the financial industry.
A fractional CFO provides CFO services on a part-time or contract basis, often serving multiple small to medium-sized businesses simultaneously. They offer strategic financial guidance, help with financial planning and analysis, and assist in financial decision-making. This role is particularly valuable for businesses that need expert financial leadership but do not have the resources or need for a full-time CFO.
Each of these specializations provides a unique perspective on the CFO role, highlighting the versatility and breadth of this profession. The CFO’s responsibilities vary across industries and types of organizations, but their common goal is to ensure the financial health and sustainability of the organization they serve.
Top skills for chief financial officers
Success as a chief financial officer (CFO) requires a blend of financial acumen, strategic thinking, leadership abilities, communication skills, and knowledge of regulatory compliance.
Financial acumen is, naturally, at the heart of a CFO’s skill set. They need to understand the financial implications of business decisions and be able to interpret complex financial data. Their expertise should cover areas such as financial planning and analysis, budgeting, and cash flow management. This knowledge enables CFOs to steer the financial direction of the organization, making decisions that drive growth and profitability.
Strategic thinking is another crucial skill for CFOs. Beyond handling day-to-day financial operations, CFOs are expected to contribute to the organization’s strategic direction. They need to forecast financial trends, identify growth opportunities, and align financial strategies with the company’s broader goals. This requires a deep understanding of the business landscape, market trends, and the company’s competitive position.
Leadership abilities are paramount for a CFO. They are responsible for leading the finance team, making critical financial decisions, and representing the company to investors and other stakeholders. Effective leadership involves inspiring and motivating the team, setting clear objectives, and fostering a culture of accountability and excellence.
Communication skills are also essential for CFOs. They must be able to clearly and effectively communicate financial information to various stakeholders, including board members, investors, employees, and regulatory bodies. This involves translating complex financial data into understandable terms and crafting messages that resonate with different audiences. Effective communication helps ensure that all stakeholders understand the company’s financial position and strategy.
Finally, knowledge of regulatory compliance is vital for a CFO to ensure the company’s financial practices comply with all relevant laws and regulations. This involves staying updated on changes in financial regulations, implementing compliance measures, and overseeing financial audits. A strong grasp of compliance requirements helps protect the company from legal issues and maintain its reputation in the market.
Looking for a new job?
Browse our national database of chief financial officer job openings and apply today
The career path leading to the role of a chief financial officer (CFO) often starts with obtaining a bachelor’s degree in a finance-related field such as accounting, finance, economics, or business administration. Early career roles typically involve gaining experience in financial analysis, auditing, or accounting to understand the intricacies of financial management.
As one progresses, they may take on more senior roles within the finance department, such as a senior financial analyst, finance manager, or controller, which involve greater responsibility and complexity. These roles offer opportunities to gain deeper knowledge of financial planning, reporting, and compliance.
The next step in the career path is often a director or vice president of finance position. These roles typically involve overseeing a company’s financial activities, managing teams, and making strategic financial decisions. It’s also common for professionals at this stage to pursue advanced certifications, such as becoming a Certified Public Accountant (CPA) or earning an MBA, to further enhance their credentials and expertise.
Finally, after demonstrating a high level of competence and leadership, one might be appointed or hired as a CFO. The CFO role involves overseeing all financial operations, strategic planning, risk management, and communicating the company’s financial status to the board of directors and other stakeholders.
The CFO role is often seen as a pinnacle position within the finance domain, but some CFOs transition into broader roles such as CEO or COO, or they might move into board roles or consulting after a successful tenure as CFO.
Similar job titles
Position trends and outlook
The role of the chief financial officer (CFO) has been undergoing significant transformation in recent years. Traditionally seen as a financial overseer and risk manager, the CFO is now often viewed as a strategic partner to the CEO, playing a pivotal role in shaping company strategy. The trend is toward CFOs becoming more involved in strategic planning, digital transformation, and even aspects of operations traditionally outside the finance function.
Moreover, the rapid expansion of technology and data analytics has been a game-changer for CFOs. They are now expected to lead the charge in harnessing financial data, driving efficiencies, and making data-informed strategic decisions. This requires a solid understanding of new technologies like AI, machine learning, and predictive analytics.
Another trend is the growing emphasis on sustainability and social responsibility within organizations. As businesses face increasing scrutiny from investors and regulators regarding their environmental, social, and governance (ESG) practices, the CFO’s role in managing ESG risks and disclosures is becoming more critical.
Employment projections for chief financial officers
According to the Bureau of Labor Statistics (BLS), employment for top executives, which includes CFOs, is projected to grow 4% from 2020 to 2030, about as fast as the average for all occupations. This growth is attributed to the increasing need for effective business strategies and financial management in the modern business landscape.
To succeed in this evolving field, CFOs should stay current with changes in financial regulations and technology, adapt to the market’s changing needs, and continuously develop their financial management, communication, and leadership skills. Building a solid network of industry professionals and collaborating with other businesses can also be crucial for success in the competitive CFO industry.
Chief financial officer career tips
Understand the broader business landscape
As a chief financial officer (CFO), it’s essential to understand the finance function and the broader business landscape. This includes everything from the specifics of your industry to the wider economic climate. You should be aware of how each department in your organization contributes to its overall financial health and how external factors might impact your company’s financial performance.
Foster strong relationships with other executives
As a CFO, you’ll work closely with other C-level executives, including the CEO, CIO, and COO. Strong relationships with these individuals can lead to better communication and more effective decision-making. Attend meetings, social events, and team-building activities to foster these relationships and ensure you’re all working towards the same goals.
Stay updated with financial regulations and laws
The financial industry is heavily regulated, and these regulations are constantly evolving. As a CFO, you should be familiar with all relevant laws and regulations, as failing to comply with them could have serious consequences for your company. Regularly review updates from regulatory bodies, attend seminars and workshops, and consult with legal experts to ensure you’re always in the know.
Build a professional network
Networking is crucial in any career, but it’s particularly important for CFOs. A strong professional network can provide valuable insights, advice, and opportunities. Consider joining professional organizations and attending networking events to meet other professionals in your field. Relevant associations and networks include:
- The Financial Executives Networking Group (FENG)
- The American Association of Finance & Accounting (AAFA)
- The Association for Financial Professionals (AFP)
- CFO Leadership Council
The role of a CFO has evolved significantly over the past few years, primarily due to advances in technology. Modern CFOs need to be tech-savvy and ready to leverage new technologies to improve financial reporting, risk management, and strategic planning. This may involve everything from implementing new financial software to utilizing AI and machine learning tools.
Commit to continuous learning
The financial industry is constantly evolving, and as a CFO, you’ll need to stay up-to-date with the latest trends, technologies, and best practices. Continuous learning is key to maintaining your expertise and staying ahead of the curve. Here are a few ways to pursue ongoing learning:
- Regularly read industry publications such as The Wall Street Journal and CFO Magazine.
- Attend conferences and seminars relevant to your role and industry.
- Consider further education such as an MBA or a certification like the Certified Management Accountant (CMA).
- Stay updated with webinars and online courses on platforms like Coursera or edX.
Focus on strategic thinking
CFOs are no longer just number crunchers but strategic partners who help guide their companies’ futures. It’s important to develop your strategic thinking skills, as you’ll be involved in everything from setting financial goals to making key business decisions. This might include scenario planning, risk assessment, and long-term financial planning.
Where the jobs are
- JPMorgan Chase & Co.
- Goldman Sachs
- Bank of America
- New York
- Financial services
- Robert Half
What is the difference between a CFO and a controller?
While both roles are crucial in the finance department, they have different focuses. A controller is typically responsible for managing the day-to-day financial operations of a company, such as accounting and auditing. Conversely, the CFO has a more strategic role, making high-level financial decisions, forecasting financial performance, and advising the CEO and board of directors.
How is the performance of a CFO measured?
The performance of a CFO is usually measured by the financial health and profitability of the company. Key performance indicators might include revenue growth, profitability margins, return on investment, cash flow, and the effectiveness of capital management strategies. The CFO’s ability to contribute to the company’s strategic direction is also a crucial factor.
Does a CFO have decision-making power?
Yes, a CFO has significant decision-making power in a company. They make critical decisions about the company’s financial management, including investment strategies, capital structure, and financial risk management. They also play a key role in strategic planning and major business decisions.
What challenges does a CFO typically face?
CFOs often face challenges related to managing financial risk, ensuring profitability, securing funding, and navigating financial regulations. In addition, the role requires working with a variety of stakeholders, including other executives, board members, employees, investors, and regulators, which can be complex and demanding.
Is the role of CFO the same in all industries?
While the core responsibilities of a CFO – overseeing the company’s finances and contributing to strategic decisions – are similar across industries, the specifics can vary. For instance, a CFO in the manufacturing industry might focus more on cost control and efficiency, while a CFO in a tech startup might focus more on securing investment and managing rapid growth.
Do I need to have a particular personality type to be a successful CFO?
While there’s no single “correct” personality type for a CFO, certain traits can be beneficial. These include being highly analytical, detail-oriented, and strategic. Strong leadership skills are also critical, as CFOs often manage large teams. Additionally, integrity and transparency are
What are some effective strategies for managing financial risk as a chief financial officer?
As a chief financial officer, practical strategies for managing financial risk include identifying potential risks and vulnerabilities, developing and implementing risk management plans and policies, and regularly monitoring and reviewing financial performance and data. Additionally, building strong relationships with key stakeholders and maintaining open communication can help to identify and address potential risks early on.
How important are leadership and management skills for a chief financial officer?
Leadership and management skills are essential for a chief financial officer, who is often responsible for managing large teams and departments and developing and implementing financial strategies and policies. Effective leadership involves building solid relationships with team members and stakeholders, empowering others to achieve their goals, and leading by example.
How important is collaboration with other departments and executives for a chief financial officer?
Collaboration with other departments and executives is essential for a chief financial officer. It enables them to leverage other teams’ and departments’ expertise and resources and align financial strategy with overall business goals and objectives. Additionally, effective collaboration can help to identify potential areas for improvement or optimization and support organizational growth and success.
What are some effective strategies for managing a budget as a chief financial officer?
As a chief financial officer, the best methods for managing a budget include developing realistic and achievable budgets based on accurate data and analysis, regularly monitoring and reviewing financial performance, and making adjustments as needed. Additionally, communicating budget goals and expectations to team members and stakeholders, and empowering them to contribute to the budgeting process, can ensure that budgets are effective and impactful.