Many accounts dream of the day they can become a CFO. It is the height of the accounting profession, where you shape a business’ future and destiny with your own two hands. It is a prestigious role that only a chosen few ever get to achieve. Only accountants that have climbed the rocky hills of the accounting profession and made it to the top can lay claim to the Chief Financial Officer seat.
To become a CFO is the ultimate destination for an accountant’s career. To that end, we decided to help rising accounting stars groom themselves into the CFOs we know lie deep within them. We will start by discussing the role of a CFO in an organization. You must be fully prepared to embrace everything that comes with the position. To become a CFO is to sign up for an incredibly difficult executive role. A role that many ultimately are not up to the task for.
After learning the full scope of the position, we will dive into what you need to become a CEO. Everything from education to licenses and skill requirements will be explored. At the end, we will also discuss some important decisions you must make to put your cart on the rails towards that vaunted CFO chair.
Table of Contents
What is a Chief Financial Officer (CFO)?
CFO is short for Chief Financial Officer. It is one of the three major C-suite roles that serve as the top brass of an organization. The CFO is in charge of the organization’s finances and financial decisions. They oversee all financial operations in the organization and act as the controller.
A CFO serves four important roles in the business.
- The CFO shapes the business’ future by providing strategic advice in the context of finances. Every business decision relies on money, and the CFO is best equipped to provide the needed insights.
- The CFO has a duty to preserve the business’ financial integrity and minimize financial risk. Everything from regulatory compliance to error control is in the hands of the CFO. Nothing major happens in the accounting department without the CFO’s approval.
- The CFO is charged with running the daily accounting of the business. Budgeting and financial planning are major responsibilities only the CFO can address. Beyond that, all financial operations and their optimization and workings are managed by the CFO.
- The CFO is a driver of change. They provide a financial perspective to every decision. Their job is to maximize the business’ earnings, and they are best equipped to advise on what changes are needed for growth.
The Responsibilities and Duties of a CFO
As the highest level of accounting professional, the CFO is tasked with the most challenging and important financial operations in an organization. Before trying to become a CFO, it is paramount that you understand what you are undertaking. The life of a CFO is filled with hardship and stress, with 81% reporting more intensive daily routines than other executives. Every decision they make can make or break the company. Below, we briefly list the major responsibilities you will be tasked with as a CFO.
This is not an exhaustive list, with many businesses demanding even more from the CFO. The crown comes with a heavy burden, and you must be prepared to bear it.
Financial Planning
As CFO, it is your duty to chart the business’ financial future. You need to be an expert data analyst, able to leverage financial information to figure a way forward for the business. Financial planning includes everything, from resource management to growth investments. All of these decisions come down to the CFO. The CFO also plays a major role in dictating business goals. As the business’ connection to the wider economic landscape, the CFO is responsible for whether the business focuses on stability or growth.
For example, in highly inflationary times, the CFO may decide to aim for savings and consistency rather than risky growth investments. Only the CFO can make these calls, and their opinion weighs heavy in the boardroom.
Risk Management
The CFO is also the business’s financial guardian. When you sit in the CFO chair, you become responsible for every risk the business takes. Whether it be capital investment or regulatory compliance, it is your job to do the due diligence. You are the one everyone will turn to when the question of risk comes up. Risk management also involves mitigating damage and harm to the business.
As CFO, you will be auditing the business to ensure all the books are clean and transparent. You will also monitor and control all financial activities and eliminate any errors or financial blunders before they spiral out of control. You are the wall that stops the business from rolling off a cliff.
Vendor and Supplier Relation Management
The CFO is the bridge between business-to-business collaboration. In your capacity as CFO, you will be managing negotiations and deals with vendors and suppliers. Every relationship the business has with another entity will be under your purview. Whether it be talking to the bank for loans to talking down insurance premiums with insurance companies, it’s all the CFOs job.
Managing the Accounting Department
The CFO is the head of the finance team. After you become a CFO, you are now the boss of many different accountants. It is up to you to foster an inclusive team culture and manage group politics. You will be the one they come to for problem solving, and whatever decisions you make will reflect back to your team.
Trend Analysis and Financial Forecasting
As CFO, you will be put in charge of analyzing market trends and comparing them to the business’ performance. You will have to forecast the business’ future financial performance based on historic data and external factors. This is a delicate job, and one wrong prediction can result in a domino effect of bad decisions.
Dealing with Uncle Sam
The US government is no joke. Businesses need to file taxes to the IRS promptly, and deal with all regulatory requirements. This also falls into the lap of the CFO. Once you reach that level, you will be talking about complex tax laws and regulations with incredibly important people. In large, multinational corporations, the CFO is often in talks with many different country’s tax and regulatory authorities. Juggling these delicate relationships is perhaps the most difficult part of being CFO.
What it Takes to Become a CFO
Education
The most basic requirement to set off on the path to become a CFO is a relevant bachelors degree. Typically, accounting and economics degrees are favored by employers. This is, however, not nearly enough to become a CFO. For that, you would need higher education. A Masters or PhD level degree speaks volumes on a CFO-aspirant’s resume. Typically, a Masters in finance or business administration is the most sought-out graduate degree.
Certifications
Education will not get you that far on its own. You need to pair a good college education with industry-relevant certifications to begin your CFO journey. The major certifications that are almost mandatory to become a CFO include:
- Association of Chartered Certified Accountants (ACCA)
- Certified Public Accountant (CPA)
- Chartered Financial Analyst (CFA)
- Certified Management Accountant (CMA)
Skills
A CFO is a leadership role. You need to develop skills geared towards what the job demands. This includes but is not limited to:
- A keen financial acumen
- Logical problem-solving
- Strategizing and planning
- Time management
- People management
- Communication
These skills are not learned in a day. It takes years of trial and error before an accountant develops the qualities to become a CFO. You can give yourself a head start by proactively seeking learning opportunities. Connect with others in the CFO space, and observe how they operate. Ask if you can shadow the CFO at your workplace. Sign up for workshops and start practicing personal discipline. Many of the skills needed are direct results of personal focus and self-discipline.
Experience
Just having the certificates and degrees, or even the skills is not enough to get you over the finish line. To become a CFO for startups even, you must throw yourself into the deep end. Work hard as an accounting professional for good companies. Stay on the move, and keep looking for better opportunities. Try starting your own accounting firm and taking on clients. Shift your mindset from a bookkeeper to an advisor.
Always remember that a CFO is valued for what they offer in the realm of ideas and concepts. Not for how many bookkeeping entries they can fill in an hour. After you have worked a few years in the industry and established yourself as a solid part of the accounting space, you can start your journey to the summit.
The road will be slow, and your career will not jump from accountant to CFO overnight. Instead, the career progression will likely see you transition from accountant to consultant and then a Finance VP or Director. Usually this will take anywhere between 5-10 years for you to reach that level. Once you’ve made it, however, nothing stands between you and that CFO position. With education, skills, certifications and experience under your belt, your chances at grabbing that CFO role are quite good.
Connection Building
During your journey to collect experience, it is also incredibly important to build industry connections. The best way to find new roles is via connections. By making friends in the industry and growing your reputation, you can attract many great employers. Your industry colleagues will also send work your way, and you will be part of a mutually beneficial ecosystem that props everyone up.
Conclusion
The road to become a CFO is paved with hardship. Nevertheless, aspiring CFOs should stick to their goals and give it their all. We hope that we played our part in supporting the CFOs of tomorrow with this detailed guide to the CFO role. Fortunately, thanks to the internet, many new opportunities have opened up for aspiring CFOs. Outsourced CFO services are a booming industry, with many hiring opportunities to capitalize on.
Fractional CFOs are also growing in popularity, especially among small businesses. Right now, is the ideal time to start climbing the CFO ladder. With hard work and some luck, you will reach that coveted CFO seat in no time!
