Accounting and finance professionals with high aspirations should consider the role of chief financial officer (CFO). Aiming one’s career path toward becoming a CFO can lead to positions that include heading a finance department, forecasting revenue and creating budgets, or even rescuing a floundering business from possible failure.
The position can be challenging and stressful, but also rewarding. Being a successful CFO involves taking risks, strategizing, analyzing data, managing people, and mastering industry technology. This article will explore how to become a CFO by highlighting some of the education requirements, necessary skills, duties and responsibilities, and potential salary along with the benefits of the profession.
While aspiring CFOs can choose various paths toward a leadership role, many opt to pursue an advanced degree because of the advantages it provides. Most schools require candidates to have a bachelor’s degree in business or accounting prior to applying for a master’s program. Earning a CPA license can further prepare students for a future CFO position.
Master’s students have options regarding majors, but earning a master’s in accountancy (MAcc) provides students with the skills to be successful in any accounting career, be it in the corporate, private, or government sector. A master’s degree allows professionals to advance their strategic planning, analytic, critical thinking, and leadership skills.
Searching for the right master’s program can feel overwhelming. Performing due diligence before choosing is important, as not all programs are created equal. Of all MAcc programs in the U.S., less than 1 percent are from colleges that hold both the business and accounting accreditations from the Association to Advance Collegiate Schools of Business (AACSB). Schools that hold AACSB accreditation exhibit the highest standard of achievement and quality education.
Skills, duties, and responsibilities
CFOs fill important roles in a company and are responsible for many aspects of its organization and performance. They control their organization’s cash flow, maintaining the integrity of funds, securities, and other valuable documents. They also establish policies and procedures for credit, collections, bill payments, and other financial obligations.
The International Federation of Accountants recommends all CFOs to possess and focus on improving the following skills:
- Effective leadership of finance groups
- Stewardship of business relationships
- Professional demeanor
CFOs must also understand and manage all of a company’s liabilities, such as contracts, insurance, leases, and other types of covenants. They handle records retention, real estate transactions, and audits. Another major role for CFOs is ensuring a company complies with regulations, such as generally accepted accounting practices (GAAP) and the IRS tax code.
An organization’s CFO is responsible for company performance and must create and maintain a business model that provides measurable customer value. CFOs use financial statements and balance sheets to analyze and communicate the company’s expected and actual financial performance. They’re also part of the team that raises capital by establishing and executing programs that assure the company’s long-term health.
Depending on the company’s size, the CFO could be the head of several departments, including accounting, finance, human resources, and even IT. In a larger company, the CFO might only supervise the accounting and finance departments. Either way, the CFO leads and supports the organization’s financial functions, from top to bottom.
Salary and benefits
With all the responsibility CFOs take on, it’s no wonder they’re well compensated. The U.S. Bureau of Labor Statistics reports that in 2017 the median salary for CFOs (also called financial managers) was $125,080. The job outlook is also bright for CFOs, with the role expected to grow by 19 percent between 2016 and 2026. This growth rate is much faster than average, according to the BLS.
CFOs are also often offered stock options as a benefit and alternative form of compensation. This means that, depending on how many shares they own, their income is based on the company’s profits. This benefit assures the company that the CFO will try to make the company as profitable as possible while also allowing the CFO to benefit from his or her performance. CFOs are typically offered options of between 1 and 3 percent of the total company shares, according to Business Insider.
A chief financial officer has an important role to play in an organization. Becoming a CFO is a challenge, but the rewards, both personal and financial, are often worth the hard work and education.
Visit our website to find out how Ohio University’s online Master of Accountancy program helps prepare students for success as financial professionals.