What is a Chief Financial Officer (CFO)?
Definition: A chief financial officer (CFO) handles all related financial matters of an organization. It includes financial planning, record keeping, reporting, and also advising the organization on any impending financial risks. It is a ubiquitous term and is used interchangeably with chief financial and operating officer (CFOO).
What Does a CFO Do?
Let us explore the advanced duties and responsibilities of a Chief Financial Officer
In an economy, which keeps drifting from time to time, a CFO is no longer just a financial gatekeeper. The duties and responsibilities of a modern CFO have been transforming over the years. Initially, it was all about reporting when there was no enough budget. However, today CFOs have become active participants in transforming the financial strategies of an organization. Some of their advanced roles include: –
- Ensuring adequate mitigation of financial risks as well as compliance with legal requirements. They must execute the right strategies.
- Ensuring operations are guided and grounded on solid financial foundations. It also includes identifying opportunities for profit improvement through benchmarking.
- Prioritizing strategies, communicating them to stakeholders while ensuring their development through the right funding.
- It is providing advice, counsel, and financial leadership to the management. It means they must possess communication and leadership skills. The two are very vital in any commercial function.
How to Become a Chief Financial Officer?
A CFO career is very sensitive and requires reliability, discipline, transparency, as well as honesty. On the other hand, it is also a lucrative career. However, you don’t just become one. It takes a lot of years of experience in the accounting industry, the building of skills and expertise.
It all starts with the common Certified Public Accountant – CPA packages – which form the foundation of an accounting career. They offer extensive preparation, knowledge and understanding of how the CFO role operates.
It could be followed by an MBA. This is Master of Business Administration degree which is not a necessity but it gives a person higher opportunities towards of being a CFO. Furthermore you will spend just two years in a public university.
CFO Career Path
It may not occur to many people, but working for accounting firms is also a plus in advancing into a CFO position. We are talking about firms such as KPMG, Deloitte, PricewaterhouseCoopers, and Ernst & Young. These firms offer significant publicity, coverageand experience. However, obtaining a job placement in them is not an easy task. Nonetheless, the capability and know-how gained is good enough to open opportunities in other corporates.
A chief accounting officer position is also another position you can consider to prepare you for a CFO’s job. More often than not, the role is under the management of a CFO. It gives you opportunities to learn advanced financial facts of an organization.
A company treasury role is also another stepping stone. You will be exposed to tasks which involve financial investments, and interest management.
CFO Salary and Compensation
According to Per Salary.com, salaries for CFOs vary according to states. The CFOs below the 25th percentile earn less compared to those in the 75th percentile. The Bureau of Labor Statistics indicates that a CFO earns eight times more than just a usual worker.
In New York, a CFO takes home $ 627,527 in salary and bonuses, while in Atlanta, it is $511,840. Other metropolitan areas have independent figures, and apart from geographical location, other salary determinants include qualifications and a person’s experience. The base salary takes 70%, while 30% is pegged on other benefits.
However, there other non-financial perks; use of private jets during relocation, a company car, and a driver, large offices, dedicated bathrooms, among others.
In conclusion, a CFO must be able to conversant with generally accepted accounting principles (GAAP). Behavioral competence is also very vital for a CFO role. Remember, every organization wants to spend less while making more.