What Is a CFO? (With Skills, Salary and How To Become One)
Updated 22 August 2022
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CFO or chief financial officer is a senior executive who ensures long-term business growth and productivity in an organisation. They work closely with other C-suite executives to manage capital structure, oversee fiscal activities and optimise financial operations. If you have a passion for finance and want to become a CFO, understanding more about this job role can help you make an informed decision. In this article, we discuss what is a CFO, find out what they do and how much they earn, explore the skills required and outline the steps to become a successful CFO.
What Is A CFO?
A CFO is a C-suite executive responsible for managing a company's financial actions. From managing business cash-flows to creating a financial plan for a company, a CFO looks after the financial health of a company. These professionals usually ensure financial stability and ensure the commercial success of a business. A CFO usually collaborates with their company's accounting and finance department to forecast how a company's operations can affect the finances. They are the highest-level financial management professionals who take care of a company's compliance and ensure they meet all the regulatory requirements.
These professionals also develop and forecast long-term plans for a company's profitability, and they may create various financial reports for their company. They also supervise all staff members in the financial department. In short, these professionals manage every aspect of the financial decision-making in a company.
What Does A CFO Do?
Apart from directing a company's financial objectives, goals and budgets, a CFO handles other duties. Some day-to-day duties of a CFO are:
Create financial reports for shareholders, lenders, regulatory bodies and employees
Ensure the proper investment of the company's money while considering the rapid changes in the financial climate
Develop long-term investment plans by effectively managing cash flow and developing budgets
Lead the organisation and team members to achieve vision and objectives
Analyse financial reports to help make informed business decisions
Make recommendations for the financial department in a company
Collaborate with team members to create and manage financial budgets
Oversee the fiscal activity like reporting, auditing and budgeting
Identify and resolve financial risks and opportunities for their company
Study and review financial reports to identify areas for reducing the cost to a business
Collaborate with the chief executive officer (CEO), chief marketing officer and other senior executives to develop strategic business plans
Related: What Does a Chief Executive Officer Do? A Definitive Guide
Advantages Of Becoming A CFO
Here are a few benefits of becoming a CFO:
High salary: One of the significant benefits of becoming a CFO is earning a high salary and getting stock options. As they are a part of the board of executives, they earn a high salary compared to other employees in the finance department.
Prestige and respect: As these professionals are responsible for running a business profitably and maintaining its financial health, they receive respect from colleagues and stakeholders.
Organisational influence: These C-suite executives have a significant say or influence on a company's decision-making process.
Perks and benefits: Apart from receiving a high salary, a CFO receives many other benefits like transportation allowance, house rent allowance, leave travel concession, medical benefits and reimbursement of travel, phone and internet bills. The perks and benefits may vary from one company to another.
Average Salary Of A CFO
The average salary of a CFO is ₹74,273 per month. The exact salary depends upon the candidate's experience, qualification and job location. Some cities pay a higher average salary to CFOs than others. For instance, the average salary in Chennai is ₹1,06,032 per month and the average salary in Bengaluru is ₹87,617 per month. The salary may also depend on the revenue an organisation generates.
Skills Of A CFO
To become a successful CFO, a candidate requires expertise over these skills:
Leadership and management skills
From managing teams to implementing a new financial model, a CFO requires excellent leadership and management skills in almost everything they do. Often, employers prefer hiring candidates who create and implement financial plans and strategies that show their leadership skills. You also require this skill set to manage team members of the accounting and finance department.
In-depth knowledge of financial accounting, corporate finance and cash management is essential for this job. Using their financial knowledge and experience, CFOs supervise financial activities and ensure that their company has the cash to perform its day-to-day operations. They also require technical expertise in accounting and complex financial concepts that help in making critical business decisions.
Related: What Are the Functions of Accounting? (Definition and Types)
Data analysis skills
Employers prefer candidates with excellent data analysis skills because such candidates can easily handle business and financial analytics. This can help a business make data-driven strategic decisions and reduce exposure to risk. The ability to analyse data and come up with logical conclusions is desirable for this job.
CFOs are responsible for making large-scale business decisions that affect the functioning of an entire organisation. The ability to find viable solutions to a business problem often requires strong problem-solving skills. Additionally, employers expect a CFO to provide solutions that are easy to implement and solve organisational challenges.
CFOs manages the asset of a company and for this reason, employers prefer hiring candidates who are honest and ethical about financial reporting. Having strong moral and ethical principles is essential when dealing with the finances of a company. Employers hire candidates with high integrity because the stakes are far too high and the future of the company and its employees depend on its financial stability.
C-suite executives communicate with different professionals, including business stakeholders, CEOs and board of directors. They discuss and present financial reports and other key financial documents either through email or via phone. Also, they often communicate complex financial and investment decisions to various people, like partners, employees, investors and customers. Thus, the ability to verbally communicate with others is essential for this job role. Also, as these professionals prepare various financial reports, having excellent written communication skills is imperative.
How To Become A CFO
Follow these steps to become a CFO:
1. Complete your education
The first step towards becoming a chief financial officer is earning a bachelor's degree in a finance-related discipline. Pursing a BCom or BBA course in finance, accounting and related fields can fast track the process of becoming a CFO. You can even consider an undergraduate course in economics or business administration.
2. Pursue advanced certification or post-graduation
Pursing advanced certification or higher education can help you accelerate your career graph and ensure you earn a higher salary. Also, advanced certification and a post-graduation degree can make a positive first impression during interviews. Some common certifications and post-graduate courses to consider are:
Certified management accountant (CMA): This is a widely accepted certification and can enhance your strategic management and financial planning skills.
Certified professional accountant (CPA): This is a globally accepted certificate and gives you experience with accounting and related areas.
Master of business administration (MBA): An MBA degree provides overall business knowledge and helps understand business acumen. The knowledge you gain during this course can help you prepare for a C-suite role.
Related: What Is an Accountant? Types and Career Advice
3. Gain relevant experience
Hoping to become a CFO immediately after completing your graduation or post-graduation is unrealistic. You require extensive experience, practice and knowledge before you can take on that role. To gain the required skills, you can earn experience in the following areas:
Finance experience: You can work as a financial advisor or finance controller.
Business operation experience: It is good to work in various industries to learn about different business models.
Customer service experience: Gaining experience in a position that requires interaction with clients can prepare you to face the board of directors and C-suite executives.
4. Build your network
During the years you are gaining experience, consider building your network with company leaders and C-suite executives. To build a strong professional network, you can join a professional organisation or network to connect with like-minded people. This can help you get professional development opportunities and improve your skill set.
5. Apply for leadership jobs
Usually, employers prefer candidates who have prior experience in different managerial roles for the job of a CFO. This is important because such roles give you more knowledge about business and help you become an effective leader. Learning how to manage people is often beneficial to become a successful CFO. Some other managerial level roles include director finance, treasurer, controller or audit manager.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
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