Learn More About What Does a CFO Do and How To Become One
By Indeed Editorial Team
Published 16 August 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
A CFO, short for Chief Financial Officer, is someone with an executive-level role that works closely with the CEO and other executives to ensure the success of an organisation. To discover methods to financially enhance an organisation, a CFO has excellent finance and accounting abilities as well as years of relevant expertise. You can pursue this career path in numerous ways. In this article, we go over what does a CFO do, how much does a CFO earn, what qualifications and skills you need and how to become one eventually.
What does a CFO do?
A CFO is in charge of managing and guiding an organisation through its yearly and long-term financial goals. A CFO is responsible for a wide range of business and accounting duties, as well as the accuracy, timeliness and regulatory compliance of financial reporting. They manage financial employees, evaluate financial statistics and devise financial plans for organisations. Outlined below are some duties answering what does a CFO do:
Implementing the financial strategy of an organisation and ensuring full transparency over its financial performance
Devising strategies for internal growth to boost revenue while minimising costs
Designing and pursuing business ventures
Monitoring merger and acquisition activities
Assisting the Chief Executive Officer (CEO) in the preparation of monthly and annual financial strategies and budgets
Overseeing and approving the preparation of financial reports
Managing tax filing and documentation
How much does a CFO earn?
Salaries for this position differ depending on your industry type and organisation size. It also varies based on your own level of experience, education and expertise. The average annual salary for a CFO is $171,381.
What are the qualifications you need to become a CFO?
Discussed below are some necessary qualifications to begin your career as a CFO:
Considering that this is an executive job, you're expected to have at least a bachelor's degree in accounting, actuarial studies, finance or a closely related subject. These programmes in these degrees would assist you in enhancing your analytical abilities as well as proficiency in financial analysis tools and software.
Nonetheless, many organisations prefer, or in some cases require, candidates to possess a Master of Business Administration (MBA). An MBA can further validate your skills and refine your knowledge in niche subjects. This programme generally takes two years to finish and may be done while the MBA applicant is working full- or part-time. Some MBA schools even require students to have prior job experience before getting enrolled.
The training for this position is often a combination of formal schooling and on-the-job training in lower-level positions. Top executives, such as CFOs, are frequently promoted from inside a company after gaining significant experience as a financial manager. Aspiring CFOs may have previously worked as an accountant or financial analyst before moving into management. In many instances, organisations offer formal management training programmes to educate and prepare finance staff for management positions.
Although certification isn't usually a requirement for a CFO role, many do acquire them to display a high degree of dedication and competence. Outlined below are a few certification options you can consider:
Chartered Financial Analyst (CFA) Certification: Issued by the CFA Institute, this certification addresses theoretical frameworks and abilities that combine theory, industry practise and professional standards to establish the groundwork for investment analysis and portfolio management.
Certified Treasury Professional (CTP): Candidates who obtain this certification indicate that they're specialists in treasury management and have a full grasp of cash processing, reconciliation and financial statement analysis.
Discussed below are some soft skills to succeed in your role as a CFO:
Excellent verbal and nonverbal communication is essential to communicate effectively and persuasively. This is especially crucial when discussing financial plans with fellow executives, managing and leading staff in the financial department and explaining rules and decisions to internal and external stakeholders. Robust communication skills entail active listening, emotion control, cohesion and clarity, confidence as well as respect and empathy.
Among other things, leadership skills entail delegation, the capacity to encourage people as well as honesty and integrity. As a CFO, you're required to be able to identify financial strategies to generate revenue or cut costs and delegate such plans to other members of the team. You're recommended to be able to establish a vision and motivate your team to work to the best of their ability in order to meet a deadline. It's also important that you behave properly in an honest and trustworthy manner, as you're responsible for the overall finances of your organisation.
As a CFO, you're in charge of solving problems related to your organisation's finances and may encounter numerous issues in doing so. To effectively overcome these challenges, you may want to cultivate your analytical, research, creativity and decision-making skills. To be a good problem-solver, you can clearly define the problem at hand, focus on the solution and agree on specific processes to overcome it.
A CFO largely works independently. Thereby, you are to have good time management skills in order to meet daily, weekly and monthly targets without getting side-tracked by less-important duties. Good time management skills entail planning, goal-setting, decision-making and prioritisation as well as delegating and outsourcing tasks.
On top of your soft skills, you're recommended to possess technical skills and intuition to strategise effectively. These technical skills entail the hard skills that you've learned through formal schooling or certification programmes. These skills include accounting, financial analysis, budgeting and forecasting.
What is the work environment for a CFO like?
CFOs work in virtually all industries for both small and large businesses. Some CFOs may be self-employed consultants who operate as part-time CFOs for numerous firms. CFOs generally work in an office setting with the following attributes:
Sitting at a desk for long periods of time
Utilising computers, printers and other office tools
Working evenings and weekends in busy periods
Travelling if necessary
How to become a CFO
Although there's no fixed pathway to becoming a CFO, outlined below are some of the most common steps you can take:
1. Pursue an education
As a basic prerequisite, you need a bachelor's degree in finance or a closely related area for the CFO position. Although it may not be mandatory, many companies prefer candidates to have an MBA as well. Look for vacant CFO opportunities in your area and discover the minimum educational qualifications for the role.
2. Gather experience
To be considered for a CFO role, you ought to have extensive expertise in a financial leadership position. If you're still pursuing your education, seek internship opportunities in financial or accounting departments where you may gain hands-on experience. If you've already obtained a bachelor's degree, search for entry- or associate-level finance positions, such as accounting assistant or financial analyst. Once you've gathered adequate experience, try applying for a financial manager position.
3. Acquire certifications
After you've had adequate education and experience, pursue professional certifications in the accounting and finance field. While they're typically not mandatory, these certifications can validate that you possess the skills and knowledge needed to perform the tasks and duties within the role. Furthermore, these credentials can also showcase your dedication and competence.
4. Update your resume
Update your resume when you have the appropriate degree, at least 10 years of experience and professional certifications. Provide your highest level of education, qualifications and job experience. Highlight the measurable outcomes you've accomplished in the financial jobs you've had throughout your career.
5. Apply for jobs
Look for vacant CFO roles in your area and identify the positions for which you're best suited based on your professional history and experience. In your application, send your most updated resume and a well-written cover letter. Be mindful to apply for roles for which you're qualified.
Is CFO or CEO higher?
The CEO is the highest-ranking official, while the CFO is the highest-ranked financial role in the organisation. The CEO is in charge of directing the organisation to the overall success, and the CFO works to ensure that the organisation possesses the right financial resources to reach this success. A CEO leads and manages C-suite executives such as the CTO, COO and CFO. The upper hierarchy of a CEO is the board of directors and the chairperson. That said, a CEO holds a higher rank than a CFO.
Please note that none of the companies mentioned in this article is affiliated with Indeed. Salary figures reflect data listed on Indeed Salaries at the time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
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