HOW TO BECOME A CFO

September 14, 2021
cma exam pattern
CMA EXAM PATTERN
September 6, 2021
what after 12th
What to Do Next After 12th in Commerce Stream
September 22, 2021

A chief financial officer, or CFO, is a great role to aspire to for anyone who works in finance. It’s one of the elite positions in any company, and usually commands a large salary.

INTRODUCTION

A Chief Financial Officer (CFO) is one of the highest-ranking executives in a company, and reports directly to the Chief Executive Officer (CEO). Although the role of the CFO will differ from organization to organization, their main responsibility is to manage the company’s finances, including profit and loss reporting, budget allocation, financial forecasting and financial risk management.

There is no single pathway to becoming a Chief Financial Officer. CFOs typically have a strong educational background with a high level of leadership experience in business, accounting and financial management.

If you’re envisioning your future as a CFO, make it a bright one.

If CFO is your dream role, you’ll need to make sure you have the right qualifications.

An organization’s CFO has a large say in the business strategy and steers revenue flow developments and funding decisions. The principal expectation from them is to be first-rate in financial analysis and budgeting skills. They must have profound knowledge of tax codes, cutting costs, and building equity/revenue. Finances and money are arguably the greatest priority of any organization.

The Duties of a CFO

  • Providing the executive leadership with expert financial advice and proposing new financial strategies.
  • Producing the company’s financial reports including profit and loss statements and balance sheets.
  • Managing financial forecasting and allocating budgets.
  • Approving business cases.
  • Monitoring cash flow.
  • Lead, direct, and manage the organization’s finance or accounting teams.
  • Advise the CEO or other executive members on the financial implications of business plans or current events.
  • Review formal finance, H.R., or IT-related financial procedures to enforce policies or internal controls.
  • Manage or oversee independent auditors.
  • Plan, execute and oversee upgrades to financial systems, processes, or technologies.
  • Relate with investors or shareholders to gain a deeper understanding of their needs and expectations.
  • Provide data-driven analyses and recommendations related to the financial goals of a company.

CFOs tend to have strong leadership skills, as well as sound judgment and a proven track record of success over time in the area of financial management.

A CFO must possess strong interpersonal and communication skills, both verbally and written and must be able to engage with staff at all levels of an organization. In publicly listed companies the CFO is often required to represent the company at investor relations meetings.

How to become a Chief Financial Officer?

If you're an accounting or finance professional with your eye on the C-suite, specifically the job of chief financial officer, you should take a moment to make sure you know how to become a CFO.

The right CFO career path can take you to the top job of leading a company's financial operations and overall development, with responsibilities that can range from identifying growth targets to preparing the organization for a sale or even salvaging an underperforming business. Attaining the top position in the financial role takes careful preparation.

A range of skills is required, as well as a broad focus of your business, advanced education and credentials, and corporate experience. You need to know not only the numbers but also your company's operations, products and services, customers, vendors, employees and shareholders.

  1. Choose Your Degrees Wisely

    You’ll need a bachelor’s degree. Most likely, you’ll also need an advanced degree to carry you forward. Pay special attention to degrees and programs that give you a solid grasp in accounting plus other financial skills. Your competition probably has an MBA, but remember that not all MBAs are created equal.

  2. Gain Broad Financial Experience

    Actively choose jobs that broaden your financial experience. In addition to accounting, consider positions that demonstrate budgeting, analysis, risk management, investing, and more. The more well-rounded you are, the stronger candidate you become. You can do this in a variety of jobs, or you can work your way through one company. If the former, it’s wise to stay in the same industry to deepen that experience as well. Many people also pursue a CPA license for this purpose.

  3. Take on Roles that Expand Your Skillset

    You’ll need to know more than just finances. Look for opportunities to widen your customer service experience, business and operational expertise, technological literacy, and leadership skills.

  4. Join a career network.

    Career networks can put you in touch with the right people when you’re ready to become a CFO. Join one sooner than later to begin forming connections. Consider the presence of network opportunities when you pursue your MBA or advanced degree. Some programs have career networks which you can leverage while you study.

  5. Pursue Board-Readiness Training

    Done everything above? Think about sharpening yourself with a board-readiness program. Deloitte recommends that professionals seeking an executive position attend board-specific training to develop a deeper understanding of what’s expected of you in the C-suite.

  6. Expand your business and operational experience

    Gaining a deep understanding of the business is critical on the CFO career path. As a CFO, you'll regularly meet with the board and collaborate with managers. For this reason, you need a broader understanding of the business and operational sides of a company.

    The insight and support of an experienced mentor can be effective at this stage, as can cross training and job shadowing. Taking a leadership position at a nonprofit or industry association also can offer valuable training for future CFOs by providing exposure to a broad range of business processes and challenges.

  7. Widen your customer service experience

    Be sure to develop relationships with people at all levels of the company, both within and outside your department. Improve your communication and presentation skills. Position yourself as a team builder.

    Not only as CFO will you be responsible to the board regarding the financial status of a company, but you'll also speak with investors. You'll serve as a conduit between what they want to see from the company and the board. These corporate communications will be frequent, as investors are key stakeholders of the business.

  8. Broaden your understanding of technology

    With more number-crunching in the cloud, Software as a Service, big data analysis, cyber security and other innovations permeating the finance industry, part of the CFO career path is understanding the benefits and risks associated with technology.

    More companies are finding they need big data experts, and they can get them by building technical competence from within their finance and accounting departments. While you may not become an expert in this realm, it wouldn't hurt to familiarize yourself with data retrieval, interpretation and analysis.

  9. Consider controller and treasury positions

    Like certifications, certain job titles have been held previously by today's CFOs. Some have held positions of increasing responsibility within an accounting department, such as internal audit manager, director of finance or controller. Getting broad corporate experience in a treasury function, as an example, can increase your experience with funding and strategy execution, both of which are essential for CFO duties.

  10. Prepare to take on expanded roles

    The influence of CFOs within their organizations continues to expand. At many companies, the roles have expanded outside of traditional accounting and finance, to human resources and information technology.

  11. Leading a business is also getting harder, recent research has shown. In a Robert Half survey, 66 percent of CFOs said it is more challenging to be a company leader today than it was five years ago.

    Between new roles and continuing education, it may take some time to get there, but many who have taken the time to learn just how to become a CFO and follow that path find it's worth the journey. Start now to position yourself for success.

What is a CFO? Responsibilities and Role

A CFO is the senior financial manager responsible for overseeing and managing the financial actions of a company. Like a treasurer or financial controller, CFOs often manage an organization’s finance or accounting departments.

However, unlike a controller, the CFO makes decisions that have an impact on the overall direction of the company. For example, a controller may review financial statements to audit them for accuracy and adherence to regulatory compliance. In contrast, the CFO reviews those same financial statements to analyze them before making recommendations to improve the company’s financial performance.

CFOs are the highest port of call for all financial decision-making in an organization and are expected to assume their share of leadership responsibilities. They’re in charge of managing departments involved in purchasing, pricing, investments, tax, debt management, and accounts payable.

After becoming a Chief Financial Officer, you would be responsible for overseeing transactions made by these departments, recording them in books or databases, and reporting them to upper management or presenting records to external auditors.

CFOs are also responsible for ensuring financial compliance management is met by their organization. To achieve this, they need to research and audit all departments to make sure they’re following local and federal laws and guidelines.

Responsibilities of a CFO may include:

  • Managing the financial actions of a company
  • Tracking cash flow
  • Financial Planning
  • Analyzing the company’s financial strengths and weaknesses
  • Proposing corrective actions where appropriate
  • Ensuring that financial reports are accurate and completed in a timely manner
  • Dealing with investors
  • Devising a company’s strategic direction
  • Making announcements on financial performance - both positive and negative

Who Does a CFO Manage?

Traditionally, the CFO heads the finance or accounting department. Here, you may manage a range of professionals, including:

  • Accountants
  • Controllers
  • Tax professionals
  • Analysts
  • Human resources
  • Investor relations specialists

However, any financial hierarchy within a company will fall under your leadership. In general, if any planning or analysis requires the input of an expert on the financial impacts, you can expect to be tapped for your advice.

The Skills & Qualifications of a CFO

Get ready to showcase your flexibility, adaptability, and willingness to be proactive in supporting sustainable growth. The CFO is one of the fastest evolving positions at the executive level thanks to rapidly advancing technology and shifting expectations about the way we do business.

  • Leadership and management skill: Almost everything you do as a CFO involves some form of leadership. Whether it’s managing a team to implement new financial infrastructure or getting other executives on board with a plan, understanding leadership fundamentals is crucial to success.
  • Accounting skills: CFOs are expected to demonstrate technical expertise in accounting and financial topics. Additionally, you’ll need to have a solid grasp on abstract subjects that have concrete impacts in the business world, such as the time value of money.
  • Data skills: According to Deloitte, businesses increasingly expect CFOs to handle business and financial analytics, using it to make highly data-driven decisions. At least 18 percent of CEOs who responded to their survey believed those responsibilities belonged solely to CFOs.
  • Strategy skills: The CFO is responsible for laying the financial foundation to help a company reach its goals. Expect others to turn to you when it comes time to find that uncontested market space that makes competitive and financial sense.
  • Influencing Skills: CFOs obviously are part of the strategic leadership team of an organization, so influencing the remainder of the C-suite becomes a critical attribute.
  • 360 view for a perspective of the business: CFOs must have a helicopter view of what’s happening in other departments, in the market, within competitors’ businesses. Only then they can build a winning growth strategy.
  • Passion for technology: CFOs must adapt to the latest technology for automating and speeding-up processes, facilitate team-wide collaboration and enhanced productivity, and avoid unproductive and cost-centric practices.
  • Out of box thinking: By thinking out of the box, CFOs can be ahead of the curve and take the best ideas forward, pertaining to both – finance team and the whole organization.

It’ll probably come as no surprise to hear that you need a lot of experience to reach CFO level. It’s definitely not a role you can take on straight after school or university.

Most CFOs will have an educational background in finance, business, economics or management. A typical route would be to do a bachelors and masters degree in accounting or other finance-related studies, alongside a professional finance qualification, such as ACCA or CIMA.

While education and the relevant qualifications are all-important, the quality of your working experience and professional track record are the best tools for potential CFOs.

There used to be quite a rigid path for CFOs - going from accounts assistant to controller and treasurer, then on to CFO - but modern times call for modern CFOs.

There are opportunities to expand your experience in sales or operations into finance. The modern CFO needs a breadth of experience - they need to understand, and have experience, company-wide.

No matter what your background or education, the role of CFO is not one to take on lightly. Immensely rewarding, but the financial weight of a company is on your shoulders.

As a CFO you will hopefully have a very successful career at the top of the ladder, but a huge amount of responsibility and expectation would lie with you.

Read – evolutions of CFO

The Most Common Degrees for CFOs

You’ll need a bachelor’s degree to become a CFO. The U.S. Bureau of Labor Statistics notes that the most common are finance, public accounting, economics, public administration, and business administration.

A master’s degree – usually in one of those same fields – also comes highly preferred due to the level of management you’ll demonstrate every day. Common master’s degrees include:

  • Master of Business Administration
  • Master of Science in Accounting
  • Master of Public Administration
  • Master of Accounting for Financial Analysts
  • Master of Accounting for Financial Managers
  • Online short courses: Work your way towards CFO by studying online short courses in the following fields: Compliance Management, Operations Management, Import and Export Management, Business Risk Management, Strategic Business Management

Certification Courses

Earning a master’s degree in accounting lays the educational foundation for aspiring CFOs. However, earning further certifications and licenses can increase potential upward mobility. Holding certifications and licenses can set applicants apart and one day put them in the lead for a CFO position. While not comprehensive, the following list offers a selection of possible continuing education certifications for finance and accounting professionals.

  • Certified Public Accountant (CPA): This well-recognized designation is also the oldest. CPAs are the only type of accountants licensed by a state government and allowed to write audits and offer opinions on the financial situation or outlook for publicly traded companies. CPAs are also certified to sign tax returns and represent clients to the IRS.
  • Association of Chartered Certified Accountants (ACCA): Some professional courses enable you to learn finance in details. One such course is ACCA. With this course, you can learn about taxation and accounting standards. You learn about accounting practices, and it remains an important skill when you are willing to be a Chief Financial Officer. You can opt for this professional course as well, and it will improve your chance of becoming a Chief Financial Officer.
  • Chartered Financial Analyst (CFA): There is yet another course that can help you a great deal. CFA is also a professional course that teaches you about the financial domain, and it mainly teaches you about the investment side of the business. Making the right investment by accessing the cash flows is another important job of Chief Financial Officer, and this course prepares you for the role. The CFA certification gives professionals the specialized expertise — in investment analysis, asset management, and portfolio strategy, for example — required of CFOs.
  • Certified Management Accounting (CMA): It’s recommended that people who want to become a CFO go after an accounting certification. The most popular and respected is Certified Management Accountant (CMA). Although CMA is frequently associated with the CFO role, CMAs are considered experts in financial management, strategic decision making, and managerial accounting. That’s a good comfort zone to have if you’re leading a company’s finances.

The CFO Career Path

If serving as a CFO is on your professional bucket list, be prepared for the long-haul. According to one interview with a CFO, potential prospects typically have around 10 years of related background and experience before seeking the position. If you’re laying out your career planning early in your professional development, you can take steps to accelerate your trajectory – such as picking out a business school with a proven track record in helping students achieve their career goals faster.

You could take many different paths to become a CFO. Finance- and operations-related roles include responsibilities that are sought-after in Chief Financial Officers such as resource management, people management, and the right balance of technical expertise, theoretical knowledge and leadership. Managers and directors in those sectors are natural candidates for the position.

What Does A CFO Do?

A CFO is responsible for the financial planning and record keeping of a company, as well as managing financial risk.

  • Be an effective organizational leader and a key member of senior management
  • Balance the responsibilities of stewardship with business partnership
  • Act as the integrator and navigator for the organization
  • Be an effective leader of the finance and accounting function
  • Bring professional qualities to the role and the organization

In short, a good CFO supports the chief executive officer (CEO) and communicates key information and concepts to the board of directors so they may make the best decisions for the company. In addition to the skills and abilities already discussed, a CFO must also have the requisite financial and technical knowledge needed to become a CFO.They report to the company’s higher management - usually the Chief Executive Officer (CEO), plus board members. The CFO is one of the highest positions in large companies.

What does it take to be a great CFO?

  • Flawlessly execute strategy
  • Be strategic and tactical
  • Ensure revenue flow by having the vision to avoid or adapt to disruptions to revenue streams and knows when to invest in something new to grow profitability

What does a CFO know?

  • The operations
  • The product
  • The customers
  • The vendors & suppliers
  • All the employees
  • The shareholders

What qualities make a great CFO?

  • Fearless
  • Self-assured
  • Delivers bad news without placing blame
  • Delivers good news and attributes credit
  • Views themselves as a team member
  • Leader

Chief financial officers (CFOs) play a central role in helping organizations navigate the complicated business world. While in the past a company’s CFO traditionally focused on its finances, as the business world has evolved over the last several decades, the expectations and demands placed on CFOs have intensified. Their roles within a company have greatly expanded. CFOs have gone from being guardians of organizations’ financial health and overseeing the financial control infrastructure to owning a plethora of responsibilities, such as making strategic and operational business decisions, overseeing compliance and control, understanding and upholding business ethics, and acting in a governance capacity, just to name a few.

What does a CFO earn?

Depending on the size of the company, the salary can vary. However, you may expect to be earning over £100,000* a year, with some CFO salaries reaching up to £1million.

Large multinational companies hire outstanding financial experts as CFOs and offer very attractive salaries.

ROLES THAT LEAD TO CFO

  • Finance Manager
  • Operations Manager
  • General Manager
  • Business Manager
  • Director of Operations
  • Finance Director
  • Director of Administration
  • Staff accountant
  • Accountant
  • Accounting manager
  • Financial controller
  • Senior accountant

The Chief Financial Officer is a staple in the board room, playing a vital role in keeping the company compliant and profitable. Yet, the route to achieving that coveted role can seem confusing, leading many people to feel as though it remains just out of reach.

With the right preparation and strategy, you can absolutely become a CFO. We’ve outlined what it takes to become one, the skills you will need, and provided some pointers in the steps you can take right now no matter where you are in your career.

The Chief Financial Officer (CFO) is often the ultimate position for a finance career. You’re as high as you can go in a company, the only person above you operationally is the Chief Executive Officer, then there are the owners – entrepreneur, shareholders, chairman – who you have to report to and keep happy. For many CFOs the next challenge is Chief Executive Officer (CEO), company ownership or retirement – so you see, it’s very nearly the final and most senior role for many finance professionals.

Looking for better guidelines on how to become a CFO? Contact us for detailed guidelines and courses options to pursue your dream goals.


Facebook
LinkedIn
Instagram

Request More information

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat