- Being a great CFO means having a thorough understanding of accounting and business operations.
- CFOs analyze company finances to help plan the company’s overall direction.
- At a minimum, it will take about 10 years of experience to achieve this C-suite position.
If serving as a company’s chief financial officer (CFO) is on your professional bucket list, strong leadership skills are imperative, said Ken “Mr. Biz” Wentworth, founder of Mr. Biz Solutions. The ability to communicate effectively with one’s staff is also necessary, he said.
But being a capable leader and cogent communicator are not the sole skills that would benefit a CFO. Do you love numbers and business? If so, a spot in the C-suite could be in your future. Here’s an overview of the typical duties, skills and career path of a CFO.
What does it take to be a CFO?
Rather than just a passing understanding of numbers, a thorough understanding of accounting is crucial for a CFO, said Wentworth.
He should know. In his lengthy professional career, Wentworth has been the CFO of several businesses. He attributes his own success to his comprehensive understanding of accounting principles. In addition to an affinity for numbers, he said “an entrepreneurial mind that allows you to think like a CEO” is essential.
Rick Vazza – a certified financial analyst, certified financial planner and president of Driven Wealth Management – agreed about the importance of a strong accounting background for a CFO.
“My CFA background has proven critical in my ability to assist my clients,” Vazza said. “I got indoctrinated in how to read financial reports such as a balance sheet, profit and loss, and cash flow statements.”
What are a CFO’s duties?
So, what does a CFO generally do?
“A CFO uses financial analysis to help a business owner make forward-looking and strategic decisions, as opposed to reactive ones,” said Vazza.
As Vazza did as a CFA, a CFO garners an untainted view of a company’s financial health by reviewing its balance sheets, profit and loss statements, and cash flow management to make the best financial decisions for the business.
How long does it take to become a CFO?
Gaining the professional experience and requisite temperament to serve as a CFO takes time, said Vazza. While there is no mathematical formula for determining when a person is prepared to lead a company, experts say you must take certain steps to prepare for the demanding role.
What proved critical to Vazza’s professional success as a CFO and business consultant was the CFA exam, which he likened to taking a “three-year exam.” He said it takes “no less than three to five years actually working with business owners to examine their pain points.”
Overall, Vazza estimated it takes six to eight years of toiling in the business arena to familiarize oneself with the various principles required of a CFO.
The path to becoming a CFO is different for every person, depending on their competencies, said Wentworth. Because he thinks a CFO candidate should possess at least “a couple years” of accounting experience on top of a few years of being a finance manager, a prospective CFO should garner at least 10 years of business-related background before seeking that top job.
If a CFO has any desire to eventually be named the company CEO, that inner circle is a great place to be.
“Over the past 10-15 years, due to some financial things that have happened the past few years, more CFOs are being hired to be CEOs,” Wentworth said.
What does a CFO make?
Serving as a CFO has its financial rewards. According to Vazza, the average pay for a CFO is “in the six figures.”
Of course, some companies can’t afford that salary, and even if a business can budget for that expense, that doesn’t mean it’s cost-efficient.
In those instances, “fractional CFOs” can be the answer. Retaining a fractional CFO is like hiring a consultant.
“Full-time in-house (CFOs) are expensive, so having a fractional CFO bridges the gap,” said Vazza.