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 few can achieve. Only accountants who have climbed the rocky hills of the accounting profession and reached the top can claim the Chief Financial Officer seat.
The ultimate destination for an accountant’s career is becoming a CFO. 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 do not fulfill.
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. Ultimately, we will also discuss some important decisions you must make to put your cart on the rails toward 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 on 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’s financial integrity and minimize financial risk. The CFO is responsible for everything from regulatory compliance to error control. Nothing major happens in the accounting department without the CFO’s approval.
- The CFO is charged with running the business’s daily accounting. Budgeting and financial planning are major responsibilities only the CFO can address. Beyond that, the CFO manages all financial operations and their optimization and workings.
- The CFO is a driver of change. They provide a financial perspective to every decision. Their job is to maximize the business’s 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 an organization’s most challenging and important financial operations. 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, you must chart the business’s financial future. You need to be an expert data analyst who can leverage financial information to determine the business’s future direction. Financial planning includes everything from resource management to growth investments. The CFO makes all of these decisions. The CFO also plays a major role in dictating business goals. As the business is connected 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 aim for savings and consistency rather than risky growth investments. Only the CFO can make these calls, and their opinion weighs heavily 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 audit the business to ensure the books are clean and transparent. You will also monitor and control all financial activities and eliminate 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 your decisions will reflect on your team.
Trend Analysis and Financial Forecasting
As CFO, you will analyze market trends and compare them to the business’ performance. You must forecast the business’ future financial performance based on historical 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 must 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
A relevant bachelor’s degree is the most basic requirement to become a CFO. Typically, employers favor accounting and economics degrees. This is, however, not nearly enough to become a CFO. For that, you would need higher education. A Master’s or PhD level degree speaks volumes on a CFO-aspirant’s resume. Typically, a Master’s in finance or business administration is the most sought-after 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, 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 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 regarding ideas and concepts. Not for how many bookkeeping entries they can fill in an hour. After working a few years in the industry and establishing 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, it 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, your chances of grabbing that CFO role are quite good.
Connection Building
During your journey to collect experience, building industry connections is also incredibly important. The best way to find new roles is via connections. You can attract many great employers by making friends in the industry and growing your reputation. 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 becoming a CFO is paved with hardship. Nevertheless, aspiring CFOs should stick to their goals and give it their all. We hope 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!
