What is a CFO?
A CFO provides strategic leadership to help organizations meet their financial goals. Learn more about a CFO’s responsibilities and how to hire a CFO.
March 19th, 2025
What does CFO stand for?
CFO stands for "chief financial officer."
What does a CFO do?
For any organization---from growing startups to longstanding enterprises---a CFO plays a critical role in managing financial stability and driving strategic initiatives for growth. Basically, CFOs must be able to drill down and optimize day-to-day tasks while also stepping back to evaluate a company's larger financial picture.
What are the core responsibilities of a CFO?
Just like there's no one-size-fits-all business plan, there's no one-size-fits all CFO. Since every organization has different financial structures and needs---ranging from complex inventory management and working capital financing to revenue recognition and investor relations---they might require unique services from their financial leaders.
Still, there are many core responsibilities that CFOs can help manage across industries and company sizes, like:
- Financial planning: CFOs can step in to manage budgets for the entire organization or for certain teams. This might include forecasting spending needs, developing strategies to improve cash flow and working capital, and scoping out investment opportunities to match liabilities and meet long-term business goals.
- Regulatory compliance and risk management: CFOs can help companies adhere to complex and changing regulations across multiple jurisdictions, like ever-evolving accounting standards and tax laws, so they can mitigate risk---and avoid those hefty fines.
- Strategic decision-making: Financial decisions aren't made in a vacuum. That's why CFOs collaborate with company leaders serving as thought partners with deep insight into the organization's financial outlook to build forward-thinking strategies that drive growth. Whether a company is looking to navigate a new acquisition or complete a tricky merger, CFOs are there to help make informed, data-backed decisions.
- Leadership and team management: More than just number crunchers, CFOs are experienced team leaders,motivators and mentors, equipped with the soft skills to empower employees and improve productivity. As adept communicators, CFOs can also help build collaboration between departments, support cross-functional communication, and keep teams on track towards their financial goals--ensuring books close on time so leadership can drive the organization with the critically accurate and timely information it needs.
- Performance monitoring and reporting: Since financial health is always changing, CFOs can lead the process of tracking important financial metrics and provide updated financial reports to key stakeholders, prepare crucially important presentations to investors, and accurate reports to your board.
What important skills should a CFO have?
A CFO's skills can range from conducting in-depth financial analysis to managing interdepartmental conflicts in a pinch.
Depending on your company's financial needs, you might seek a CFO with some combination of these core skills:
- Financial planning skills: Master accounting, financial reporting, budgeting, and forecasting to fuel data-driven decision-making.
- Strategic thinking skills: Align financial strategies with the company's long-term goals to improve efficiency.
- Analytical skills: Analyze financial statements and reports to identify opportunities for growth or mitigate risks.
- Leadership skills: Build and manage high-performing financial teams to improve productivity and engagement.
- Communication skills: Present complex financial data clearly to stakeholders, investors, and team leaders.
- Technological skills: Stay up to date with new financial tools to help improve and automate financial operations and gather valuable insights.
- Emotional intelligence skills: Help manage interpersonal relationships and remain level-headed in the face of conflict or stressful situations.
What is the difference between a CFO and a CEO?
One letter makes a big difference: The chief executive officer (CEO) is the highest-ranking executive within an organization, responsible for setting the company's overall vision and driving growth. Seated at the top of the hierarchy, they manage all departments and often serve as the face and voice of the company. The CFO, on the other hand, focuses specifically on financial management strategies like budgeting, forecasting, capital structure, risk assessment, and maintaining financial health.
What is the difference between a CFO and an accountant?
The CFO provides strategic oversight for long-term decision-making and organizational growth, while an accountant handles day-to-day financial tasks like bookkeeping, tax preparation, and reporting.
What is the difference between a CFO and a financial controller?
A CFO oversees the company's overall financial strategy looking outward to watch market trends and economic forecasts and generate forecasts to help the organization proactively plan, while a financial controller is the lead accountant and manages internal activities like accounting, compliance, and overseeing cash flow to keep business running smoothly.
Who does a CFO report to?
A CFO typically reports to the CEO and board of directors, providing strategic insights to help the company meet financial goals. Depending on the company's structure, the CFO may also report to other executives, such as the chief operating officer (COO).
Who reports to a CFO?
As the head financial leader, a CFO often has several direct reports, including the VP of finance, director of financial planning & analysis, financial controllers, accounting managers, treasurers, and IT managers.
How does someone become a CFO?
Becoming a CFOs often takes years of educational accomplishments and in-depth industry experience.
Each CFO's career path will have its own trajectory, of course, but the general requirements to become a financial executive include:
- Education: CFOs should have at least a bachelor's degree in accounting, finance, economics, or business. Some CFOs pursue advanced degrees like an MBA or a master's in finance for added expertise and leadership credentials.
- Certifications: CFOs might earn professional certifications such as Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), Certified Management Accountant (CMA), or Certified Internal Auditor (CIA) to enhance their key skills and competitiveness in the job market.
- Experience: CFOs should have 10-15 years of leadership and technical experience in senior finance roles, such as financial analyst, finance manager, controller, or VP of finance.
How do I hire a CFO?
Hiring a CFO can be a complex and time-consuming process---often taking several months or longer.
Traditionally, organizations have to take at least the following steps to hire a CFO:
- Define the role and responsibilities: Clearly outline the CFO's duties and required qualifications, including skills, expertise, and experience.
- Assemble a hiring committee: Form a team of the CEO, board members, HR, and senior finance leaders to oversee the hiring process.
- Craft a compelling job description: Clearly outline the key responsibilities and requirements of the CFO, also highlighting company culture, benefits, and career growth opportunities to attract the right candidates.
- Source candidates: Use professional networks, industry connections, and online platforms to identify potential hires. Or partner with an executive recruitment firm to build a curated shortlist of top-tier, qualified applicants.
- Conduct rigorous interviews: Assess each candidate's financial experience, leadership skills, and cultural fit through interviews and test assignments.
- Check references and backgrounds: Verify references from previous employers and confirm each candidate's skills and competencies.
- Negotiate compensation: Offer a competitive compensation package based on market trends to secure your top pick.
- Finalize the hire: Make the final decision with input from key stakeholders and start the process of onboarding your new CFO.
How long does it take to hire a CFO?
Hiring a CFO typically takes three to six months, depending on different factors like the company's specific needs and interview process. Conflicting feedback from stakeholders and complex contract negotiations can also draw out the hiring process.
How much does it cost to hire a CFO?
While hiring the right CFO can make or break an organization, many end up paying top dollar to attract new financial executives and beat out the competition. In fact, total compensation for a full-time CFO can reach $300,000--400,000 annually, including salary, benefits, bonuses, profit sharing, and relocation compensation.
Why should I hire a fractional CFO?
Not ready to commit to the schedule and price tag of a full-time executive? Businesses can hire a fractional CFO to access top-tier financial guidance at a fraction of the cost.
Going further, the biggest benefits of hiring a fractional CFO include:
- Cost-effectiveness: Fractional CFOs offer high-level financial expertise at a more affordable cost, saving businesses valuable resources.
- Flexibility: Fractional CFOs provide tailored services based on your business needs, whether for a few hours a month or a specific project like fundraising or financial restructuring.
- Broad expertise: Fractional CFOs bring diverse experience from working across industries and companies, offering fresh perspectives and best practices that can give companies a competitive edge.
- Faster onboarding: Fractional CFOs can be hired and onboarded quickly, minimizing gaps in financial leadership and making an immediate impact.
- Objective guidance: Fractional CFOs offer unbiased advice to help spot inefficiencies and uncover missed opportunities. As external experts, they can lead the charge in making data-driven decisions to match each company's best interests.
Learn more about how to hire a fractional CFO for your business.
