What Is a Chief Financial Officer? Understanding CFO Roles and Responsibilities

A chief financial officer (CFO) serves as the top financial executive within organizations across all industries and sizes. If you're considering a career as a CFO, understanding the role requires knowing what chief financial officers do, their key responsibilities, and career prospects. This guide covers everything you need to know about becoming a chief financial officer.

What Is a Chief Financial Officer?

A chief financial officer oversees an organization's financial health while serving as a strategic partner to executive leadership. CFOs monitor financial operations including cash flow, accounts receivable, and accounts payable while developing strategies to strengthen the company's financial standing. This role extends far beyond traditional accounting tasks to include financial planning, risk assessment, and business strategy.

Chief financial officers analyze the company's financial strengths and identify areas needing improvement. They review financial data and financial information to understand the organization's financial health, enabling them to capitalize on strengths while addressing weaknesses. This comprehensive financial analysis helps ensure the company maintains strong financial management systems.

The CFO's responsibilities include creating strategic financial plans that maximize organizational strengths while minimizing vulnerabilities. Chief financial officers work closely with the chief executive officer, chief accounting officer, and other finance leaders to implement these strategies. This collaboration ensures financial decisions align with overall business objectives and support future growth.

Key CFO Responsibilities and Daily Duties

You can’t talk about what a CFO does without also discussing their job responsibilities. These are the actions that a CFO takes daily to help the organization maintain and/or advance its financial position.

A CFO’s job responsibilities include:

• Monitoring the organization's revenues, expenses, and cashflow to always stay abreast of its current financial position
  Overseeing cash flow management, tracking the organization's revenues and expenses, and maintaining awareness of the company's financial position through continuous financial reporting and analysis
• Leading financial planning processes, developing budgets, and determining optimal resource allocation across the finance organization to support strategic objectives and market expansion
• Leading financial planning processes, developing budgets, and determining optimal resource allocation across the finance organization to support strategic objectives and market expansion
• Creating financial forecasts based on market demand, sales trends, and internal data to project future earnings and guide strategic decision making for profitable growth
• Generating financial reports and financial statements for the chief executive officer, board members, and regulatory entities to support sound financial decisions and ensure regulatory compliance
• Ensuring compliance with financial regulations, including tax requirements and standards like the Sarbanes Oxley Act, while maintaining accurate financial reporting for regulatory compliance purposes
• Managing the finance department, overseeing financial controllers, finance professionals, payroll specialists, and other team members while providing guidance to overcome challenges and improve finance operations

A CFO’s exact job responsibilities can vary from one organization to another. When pursuing this type of role, it can be helpful to thoroughly read the job description that the organization posts when advertising the open position. This will give you greater insight into what is expected if hired as a CFO for that specific employer.  

CFO Salary and Compensation

The Bureau of Labor Statistics tracks compensation data for financial managers, which includes chief financial officers. As of May 2021, financial managers earned a median annual salary of $131,710. Entry-level positions started around $77,040, while experienced CFOs and top earners reported wages exceeding $208,000 annually.

Geographic location significantly impacts CFO compensation. States like Washington ($170,476), New York ($160,460), and Idaho ($154,218) offer higher average salaries, while North Carolina ($103,036), Louisiana ($108,616), and Georgia ($115,182) tend toward lower averages for the CFO position.

Senior CFOs at larger organizations command significantly higher compensation. Industry data shows average incomes reaching $422,800 annually, with total compensation ranging from $321,500 to $540,300 depending on company size, industry knowledge, and the scope of the CFO role.

Understanding the Chief Financial Officer Role Within Corporate Structure

The CFO role sits at the intersection of financial management and business strategy. Chief financial officers typically report directly to the chief executive officer while collaborating with other C-suite leaders. The finance organization under a CFO includes financial controllers, treasurers, and various finance professionals who handle specific aspects of financial operations.

Within this structure, the financial controller manages daily accounting tasks, accounts receivable, accounts payable, and financial reporting. Meanwhile, the CFO focuses on higher-level functions like financial planning, risk management, and strategic decision making. This division allows the CFO to serve as a strategic partner to executive leadership rather than getting bogged down in traditional accounting tasks.

The scope of CFO responsibilities continues expanding beyond finance operations. Modern chief financial officers often influence decisions around digital transformation, human capital management, and external environment analysis. They work with regulatory entities, manage relationships for obtaining funding through equity financing or equity funding, and guide the organization through complex financial challenges.

Essential Skills and CFO Qualifications

Becoming a chief financial officer requires developing both technical financial expertise and broader business capabilities. Here's what aspiring CFOs need to build throughout their careers.

Financial and Technical Skills

Strong financial management abilities form the foundation of CFO success. This includes deep understanding of financial statements, financial analysis, and financial reporting requirements. CFOs must interpret complex data from financial management systems, create accurate financial forecasts, and translate financial information into actionable insights.

Most successful chief financial officers possess an accounting background and understand traditional accounting tasks, even as the role evolves beyond these fundamentals. Knowledge of investment banking, cash flow management, and capital structure helps CFOs make sound financial decisions about physical assets, financial investments, and the company's liquidity.

Strategic and Leadership Capabilities

The modern CFO serves as a critical advisory role within the organization. This requires business strategy expertise, including understanding market demand, competitive positioning, and strategic direction for future growth. Chief financial officers must analyze sales trends, assess market expansion opportunities, and evaluate external environment factors affecting the organization's financial health.
Leadership extends throughout the finance department and beyond. CFOs guide finance leaders, financial controllers, and finance professionals while fostering collaboration with other departments. Strong communication skills help CFOs present financial reports to boards, explain financial challenges to stakeholders, and offer strategic direction to the entire organization.

Industry Knowledge and Compliance Expertise

Understanding industry-specific financial regulations and maintaining regulatory compliance represents a critical responsibility. CFOs navigate requirements like the Sarbanes Oxley Act, work with regulatory entities, and ensure proper financial reporting standards. They also conduct risk assessment and develop risk management strategies to protect the company's financial standing.

Career Path to Becoming a CFO

The journey to becoming a chief financial officer typically spans 10 to 20 years. Most CFOs start in entry-level finance or accounting positions after completing their bachelor's degree in accounting, finance, or business administration.

Early Career Development

Financial professionals often begin as financial analysts, junior accountants, or similar roles. These positions build foundational skills in financial data analysis, financial reports preparation, and basic financial operations. Gaining experience with accounts payable, accounts receivable, and creating reports provides essential knowledge of finance function mechanics.

As professionals progress, they move into management roles overseeing teams and handling more complex financial challenges. Positions like financial controller or finance manager offer opportunities to develop leadership capabilities while managing broader financial operations and working more closely with strategic responsibilities.

Advanced Education and Certifications

Most chief financial officers hold an advanced business degree. An MBA or Master of Accounting (MAcc) provides the strategic thinking and comprehensive financial management knowledge required for executive positions. These programs develop skills in financial planning, business strategy, and organizational leadership.

Professional certifications enhance credibility and demonstrate commitment to the field. Many CFOs hold credentials as Certified Public Accountant (CPA), Certified Management Accountant (CMA), or Chartered Financial Analyst (CFA). These certifications validate expertise in accounting principles, financial analysis, and investment strategies.

Stepping Stones to the C-Suite

Before reaching the CFO position, finance professionals typically serve in senior roles like financial controller, treasurer, or chief accounting officer. These positions provide experience managing finance organizations, overseeing finance operations, and contributing to strategic decision making.
The transition to CFO often involves demonstrating ability to think strategically about the company's finances, influence business strategy, and serve as a strategic partner to executive leadership. Building relationships across the organization, understanding various business functions, and showing how finance enables organizational success all contribute to CFO readiness.

The CFO's Role in Financial Planning and Strategic Growth

Chief financial officers play a central role in shaping organizational direction through financial planning and strategic initiatives. Their work ensures the organization maintains healthy financial operations while positioning for future growth.

Financial Planning and Analysis

CFOs oversee comprehensive financial planning processes. This involves developing annual budgets, creating long-term financial forecasts, and conducting data analysis to inform strategic decisions. They examine internal data, assess external environment factors, and evaluate market demand to build realistic projections.

Financial analysis conducted by CFOs identifies opportunities for profitable growth and areas requiring attention. By reviewing financial information across the organization, CFOs spot trends, measure performance against goals, and recommend adjustments. This ongoing analysis supports sound financial decisions throughout the organization.

Strategic Decision Making and Resource Allocation

How organizations deploy resources significantly impacts their success. CFOs guide decisions about financial investments, capital structure, and obtaining funding through various sources. They evaluate options for equity financing, assess the role of investment banking partners, and determine optimal approaches for future growth.

Chief financial officers also provide critical input on major initiatives like market expansion, acquisitions, or digital transformation. Their financial expertise helps leadership understand the implications of strategic choices, ensuring decisions align with maintaining strong company financial standing.

Cash Flow Management and Financial Health

Maintaining adequate cash flow represents a fundamental CFO responsibility. Chief financial officers monitor the company's liquidity, manage working capital, and ensure sufficient resources for operations. This includes overseeing accounts receivable collection, managing accounts payable timing, and forecasting cash needs.

Through effective cash flow management, CFOs help organizations navigate financial challenges and seize opportunities. They structure financial operations to support growth while maintaining financial stability, balancing short-term needs with long-term objectives.

Common Career Paths Beyond CFO

The skills developed in a CFO position open doors to various executive opportunities. Many chief financial officers eventually transition to other leadership roles.

Some CFOs progress to chief executive officer positions. The comprehensive business understanding and strategic perspective gained as CFO provides excellent preparation for CEO responsibilities. Others pursue board director roles, leveraging their financial expertise and business strategy experience to guide multiple organizations.

Alternative paths include moving to larger organizations with greater complexity, transitioning to consulting roles advising multiple companies, or specializing in specific industries. The financial expertise, leadership capabilities, and strategic thinking developed as a CFO remain valuable across many career directions.
 

Educational Pathways for Aspiring CFOs

Becoming a chief financial officer requires solid financial expertise gained through 
advanced education. Most CFOs hold an advanced business degree and possess strong accounting backgrounds. Saint Leo University provides excellent pathways for financial professionals pursuing CFO qualifications.

Consider Saint Leo University's Master of Accounting (MAcc) program. This program offers comprehensive training in financial management, cost accounting, forensic accounting, and corporate finance. Students gain the financial expertise needed for CFO positions while preparing for professional certifications like Certified Public Accountant (CPA) examinations.

Another pathway involves earning a Master of Business Administration (MBA) with an accounting specialization. This advanced business degree combines business administration fundamentals with specialized accounting knowledge, preparing students for strategic responsibilities within finance organizations. The MBA develops both financial expertise and business strategy skills essential for CFO success.

Ready to take the next step toward a CFO career? Request information from Saint Leo University to explore which program aligns best with your career goals. Our Graduate Admissions team can discuss how our master's programs prepare financial professionals for executive leadership roles. When you're ready to begin your journey, apply online to start building the skills and credentials needed for a successful CFO career.