What does a CFO do exactly?
The Chief Financial Officer is one of the top executives in a company and oversees all its financial planning operations.
While many CFOs have accounting degrees, CFO responsibilities have much more. They have a lot to do with business decision-making, strategy planning, and leadership. Although they may be trained in accounting, CFOs are not accountants.
While everyone looks up to them (and might envy their big offices), few people understand an actual CFO’s job description. Here’s an overview of what you might be doing on an ordinary day should you become a CFO in the United States!
Start your day as a leader
Whether you’re a morning person or not, early alarms will become the norm. Successful CFOs can work anywhere between 50 and 60 hours per week and any delay in starting the day will only increase the e-mail queue! Before you head to work, you might also need to catch up on the latest business news.
At the start of your day, you might need to spend some time with the accounting staff you are in direct contact with. It may be up to you to solve problems and give advice. The CFO role is leading and advising people – and great leadership needs a degree of presence. Even though you’re one step below the CEO, CEOs will often see you as a co-leader.
Furthermore, don’t forget that there’s a Human Relations bit to your role: you are best-placed to spot emerging talents, to make sure that people are assigned to the right jobs, and to check that your employees are happy in their careers.
An unfortunate part of spending time with your staff and meeting with clients is that your e-mails and voice messages will keep piling up during this time.
This is why many CFOs have a staff member going through their e-mails to make them more manageable. A significant chunk of your day may be spent on following up on company matters.
Plan and analyze
Part of the CFO job description is becoming the financial strategist of the company. Nobody should know the company’s financial performance better than you – and you should always be up to date with all the changes in your field.
The impact you have on the business will be largely due to your ability to plan everything from cash flow and management to company strategies.
And as several executives think better than one, you might need to regularly meet with the CEOs, COOs, or board of directors of your clients for strategy sessions. Sometime during the day, you’re also likely to meet with the CEO of your company, the marketing manager and representatives of other departments to define goals together and discuss new opportunities.
For busy CFOs, lunch will often be a sandwich eaten while working. Others will choose lunch as an opportunity to have a relaxed weekly chat to members of staff who are not among their direct contacts.
Whatever you do, it’s unlikely that you’ll often have time for a relaxing lunch break.
Instead, you might be spending your afternoon doing account analysis, documenting changes in procedures, drafting budgets, reviewing financial statements or working with professionals to file taxes.
While this can sound a little more like an accountant’s life, it is actually just one part of the role of the CFO – and many of these tasks do not need to be performed daily.
Look back on the day
At the end of the day, you’re the one who needs to check whether your team achieved their goals. You’ll also need to review accomplishments and make sure you’re on track with all the current projects. This part of the day might be less about pats on the back and more about solving accounting disputes and answering questions.
Not to mention that you probably need to follow up on some of the morning’s e-mails and tasks and to set up a few more meetings. Hence, it’ll be no surprise if you make it home to a cold or takeaway dinner!
If there’s one thing CFOs can’t complain about, it’s lack of variety. As a CFO you need to do several different things: you need to define and meet the company’s income target, as well as make strategic and financial decisions together with the CEO. In the process, you have to keep auditors happy and make sure all the financial statements have been checked.
And finally, your success as a CFO will depend on the people you attract and keep even more than the numbers you make: leadership is something you don’t learn in accounting courses, but that you’ll need lots of as a CFO.
All these different responsibilities mean that no two days will look the same. There are many duties you’ll have to perform less frequently that will often add to your daily work. Morning coffees with clients are not a rare thing (unfortunately for people who enjoy a lie-in).
Meetings with the senior team can also be regularly scheduled – and you might need to provide reports outlining the financial progress of the company and explaining any deviation from the initial goals.
Other CFO Responsibilities
Other tasks you might need to perform less frequently are preparing income forecasts, reviewing invoices, preparing sales reports and financial statements for the company board. You will also attend board meetings to plan for the long term every once in a while.
In addition, every month and quarter you’ll need to prepare closings, budgets and regulatory responses.
The day of a CFO can look different depending on the company and its size. Companies with over 500 employees usually benefit from having a CFO on board. However, bigger companies with more complex financial data and more departments will be more challenging to manage.
Ultimately, the responsibilities of a CFO are the same. Basically, they amount to planning and leadership: the key qualities that distinguish a CFO from a senior accountant.
Keep in mind that many CFOs also manage businesses of their own, have roles in professional organizations and other commitments that make their workday even longer.
You may wonder if being a CFO leaves you enough time to have a rich personal life. While CFOs tend to work many hours a week, a good work-life balance is achievable. However, you need to resist the urge to reply to each and every work e-mail in your free time.
As a CFO you may have the advantage of taking vacations when you want to. On the other hand, you might find yourself working remotely or doing conference calls. Ultimately, overtime might happen. However, if you come from an accounting background you’re probably accustomed to much worse.
For a high executive function, CFO work hours are not worse than those of other senior positions: you’re likely to get weekends to yourself as well as vacation time and relatively work-free evenings.
What is more, the role allows you not only to oversee the finances of the company, but also to get involved in other areas and to work with different types of businesses – you can even run your own business.
So how do you become a CFO?
Nobody becomes a CFO overnight – leaders are usually more successful the more experience they have and the more people they know. To become a CFO you will need several years of experience as a senior manager.
Accounting qualifications are preferable, but CFOs can also have a background in business, finance or economics. While a Bachelor’s degree in a business-related subject is the minimum requirement, many CFOs hold a Master’s degree or MBA, as well as the CPA certification and even higher degrees such as a Ph.D. in accounting.
Many CFOs start out as accountants, finance professionals or managers of small departments and advance within the company. For the most part, good financial and accounting competence will certainly help you on the way. However, you’ll also need leadership and initiative to take on an executive position. Furthermore, you’ll not only have to be able to look at financial details like a competent accountant. Additionally, you’ll need to see the general picture and make predictions like a strategic decision-maker.
Furthermore, communication skills are essential. Basically, you’ll need to translate financial information and present it to other people in an accessible fashion. Additionally, you’ll be working with people arguably more than you will work with finances. Consequently, you’ll need good interpersonal skills and an ability to correctly evaluate your employees.
Ultimately, your duties as a CFO will be complex and sometimes overwhelming. What will help you stand out and change the company’s trajectory is your ability to foresee the company’s financial future. Subsequently, you’ll need to make it happen through accurate analyses and good leadership.
Does all of this sound daunting? Just think of it as the reason that there are so many accounting graduates yet so few CFOs in the business world!