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Defining the CFO

What Is a CFO?

A CFO, or chief financial officer, is the highest-ranked financial figure in an organization who is responsible for the financial stability of a business. A CFO has several responsibilities, including (but not limited to):

Building a top-notch accounting and financial team
Overseeing financial planning and analysis
Keeping expenses and revenues in balance
Getting funding
Proposing recommendations on acquisitions
Consulting with the CEO and board of directors for developing strategies
Tracking the financial planning and cash flow along with evaluating financial strengths and weaknesses

CFOs help in setting up the technology trends and bring recommendations on everything from supply chain to sales and marketing based on financial insights and industrial knowledge. CFOs are futurists who work closely with the leadership to propose strategic moves by keeping the future in mind.

As a top financial position in any organization, CFOs are accountable to CEOs, as well as regulatory authorities and the organization.

What Does CFO Stand for?

CFO stands for Chief Financial Officer.

What Does a CFO Do?

The role of the CFO in an organization is to oversee the organization’s financial operations by being responsible for the accounting and finance professionals to perform operational tasks and serve the role of strategic advisory.

A CFO helps the skilled staff for finance and works with the departments to allocate and manage the budget for managing human capital. CFO has the responsibility to put the complex data from the past, present, and future in perspective to help the CEO to make better decisions.

From a broader perspective, CFO responsibilities include overseeing:

Liquidity
Return on investment (ROI)
Forecasting
Reporting

Here’s a closer look at each of these CFO responsibilities and how a chief financial officer manages them

CFO Responsibility #1: Liquidity

Liquidity is an organization’s ability to pay off short-term liabilities with readily available funds. It is stated as a percentage of what the company owes against what it owns. CFOs make sure that customer payments are made on time and control expenses so that the on-hand cash is enough to meet the financial responsibilities.

CFO Responsibility #2: Return on Investment (ROI)

A CFO is required to make sure a strong return of investment (ROI) for the organization. ROI measures the possibility of receiving a return on the invested money. ROI is a comparatively basic KPI, and it does not bring in all the variables, so the CFOs add perspective for evaluation to see if a project can deliver robust ROI to become worth the investment.

CFO Responsibility #3: Forecasting

CFOs play an important role in an organization with the ability to predict future outcomes accurately. This includes the financial modeling and forecasting not based on the company’s past performance but on the external and internal factors that can affect the expenses and revenue. CFO is responsible for making sense of the department-level forecasting for creating a profit estimate for shareholders and the company’s CEO.

CFO Responsibility #4: Reporting

CFO is the Incharge of attesting the financial reports according to the accounting principles like balance sheets and cash flow statements that help the stakeholders and internal leadership to understand the financial condition of the business.

How Much Does a CFO make?

The average yearly income of a CFO varies due to multiple factors. The average CFO salary in the U.S. is around $400,000, but it typically falls between $200,000 and $500,000. Many factors like education, certifications, experience, and additional skills can impact a salary package.

How to Become a CFO: 5 Steps

Achieving the knowledge, skills, and qualifications to effectively serve as chief financial officer usually demands years of careful planning, diligent work, and dogged follow-through. Specifically, most CFOs get to these elite C-suite positions by completing five key steps, which entail:

Earning the right degree
Getting extensive financial experience
Considering roles that enhance their skillset
Joining career networks
Undergoing board-readiness training

Here is a closer look at each of these steps to becoming a CFO.

How to Become a CFO Step #1: Earn the Right Degree

Getting a bachelor’s degree accounting or finance is important. You may also have to attain an advanced degree such as an MBA to move forward. Paying attention to your studies to get good skills in accounting and other financial tools is essential if you are targeting to become a CFO.

How to Become a CFO Step #2: Get Extensive Financial Experience

Getting jobs that can broaden your financial experience is important. Additionally, in accounting, you can consider the positions that focus more on risk management, budgeting, analysis, investing, and more. The more you are well-rounded in all these sectors, the stronger you will get as a candidate for CFO.

You can make your way through one company or switch jobs to get the experience. It is important to stay in the same field for deepening your experience.

How to Become a CFO Step #3: Consider Roles that Enhance Your Skillset

For becoming a CFO, you need to know more than finances. Go for the roles that can widen your customer base experience, technological literacy, leadership skills, and business expertise.

How to Become a CFO Step #4: Join a Career Network

When you are on the road to becoming a CFO, joining career networks is important to link with the right people. Joining one is important to building up the connections.

How to Become a CFO Step #5: Undergo Board-Readiness Training

When you are done with all the above things, think about getting a training program. Sharpen your skills with the board-readiness program. Professionals who are looking for an executive-level opportunity should attend the training to develop a deep understanding of the things coming their way.

What Is the CFO Dashboard?

The CFO dashboard serves as a central hub for a host of financial information. It has financial KPIs and other interactive and insightful analytical tools. It helps in consolidating the data in a better and digestible way and helps in improving the decision-making process.

This dashboard tool offers a full-fledged view of all the information that any CFO would need to perform their job responsibilities. It also offers reports for the CEOs with string financial dashboards. So, in a nutshell, a CFO dashboard is an analytical nervous system for all the financial data with efficient tools.

What Does the CFO Do?

A CFO has complete insight into an organization’s financial strategies and is responsible for:

Overseeing overall performance
Developing and overseeing effective revenue streams
Devising and driving business strategies
Creating innovative funds and strategies for driving expansion
Determining risk controls

Consequently, a CFO needs to be competent and highly capable of integrating technology strategies into the business. A CFO works closely with the CEO for influencing and driving the business strategies and becomes a board member who is responsible for any corporate investments.

What Does a CFO Know?

Operations
Product
Customers
Shareholders
Employee Relations
Vendors and Suppliers

What Qualities Make a CFO Great?

Ethics
Self-assurance
Viewing themselves as a team member
Delivering good news and attributing the credit
Delivering bad news with solutions
Natural leaders

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Cowen Partners is proud to be the nation’s top CFO search firm, driven to create maximum value for our clients.

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Defining the CFO: What Is a CFO, What CFOs Do & More | CFO Recruiter