Business Careers: What a CFO Does and How to Become One
Do you want to become a chief financial officer (CFO)? Find out the roles of this position and what you need to do to get there.
In business, some of the top-held positions start with the letter "C." These are known as C-suite titles and include CEO (chief executive officer), COO (chief operating officer), CIO (chief information officer), and more.
While all of these hold critical roles within a company's infrastructure, if you're at all interested in working in finance, the one that is likely most important to you is CFO or chief financial officer. What does a CFO do?
The Corporate Finance Institute (CFI) explains that a CFO's primary job responsibility "is to optimize the financial performance of a company, including its reporting, liquidity, and return on an investment." In short, individuals in this particular C-suite role are tasked with ensuring that the business is in top financial shape from both a legal and earnings-based standpoint.
Further, if you break each of these categories down—reporting, liquidity, and return on investment—and look at them individually, a CFO's duties include preparing and filing financial reports in a timely manner, assessing the company's financial commitments and its ability to meet them, managing cash flow, and maximizing earnings while minimizing financial risks.
The CFI adds that, as a CFO, you are also often tasked with working directly with the company's board, vendors, and suppliers so there is a clear line of communication and understanding of all financial obligations, statuses, and procedures. Individuals who will likely report to you are those who are involved in the company's supply chain, those within the information technology sector, and a variety of other departments that ultimately impact the company's bottom line.
Industry Workplace Options
One of the great things about being a CFO is that you can work in a variety of different industries. This offers a number of options, whether you have your heart set on working in one industry in particular or if you'd prefer to cross over from one industry to another at some point in your career to give yourself a bit more variety.
CFO Moves shares that a few of the companies that have recently hired new CFOs include:
The Bureau of Labor Statistics (BLS) categorizes CFOs as financial managers, adding that this job type is anticipated to grow by 19 percent by the year 2026. By comparison, this growth rate is nearly triple that of all other occupations combined—which is just 7 percent—and is expected to account for the addition of more than 108,000 new jobs in this field in the years ahead.
The BLS further indicates that as of 2018, the annual median pay for financial managers is around $127,990 per year. This amount is almost $90,000 more than the annual wage for all workers combined and equates to earnings of approximately $61.53 per hour.
What type of education do you need to work as a CFO? Study.com reports that you must have at least a bachelor's degree in business administration or economics. Both of these degrees provide the foundational requirements necessary to look after a company's finances.
For instance, when earning your Bachelor of Arts in Business Administration degree with a Specialization in Management at Saint Leo University, you'll take classes such as International Business, Strategic Management, and Management of Human Resources.
And if you're interested in a Bachelor of Arts in Economics at Saint Leo, a few of the courses that will prepare you to better fill this role include Money and Banking, Behavioral Economics, and Intermediate Price Theory.
Becoming a CFO is not a one-step process. In other words, you can't go to school, earn your degree, graduate, and expect to be immediately hired into a company as a CFO. Instead, this important, higher-level position is generally filled by individuals who have experience within a specific set of career tracks.
For instance, according to Spencer Stuart, a company that offers executive-level services, a majority of the CFOs in Fortune 500 companies have previously held roles in divisional finance or as a controller (both at 22 percent). Other roles that were formerly occupied by some of the top CFOs in the business world include those related to:
Ultimately, if your goal is to become a CFO, you should now have a better idea of what one does and the steps you need to take to put yourself in the right position. The rest is up to you.