An average chief financial officer in the USA makes almost $400k per year. CFO earns eight times higher than average workers. This is what makes it one of the most lucrative job position for many.
It is also one of the company’s highest important positions because the financial officer plays an important role in decision-making.
So, let’s know more about CFO.
What is CFO?
CFO stands for the chief financial officer. The chief financial officer is an executive-level employee in a company. It is the third-highest position within a company. The CFO is responsible for analyzing a company’s financial strength and weakness and fixing weaknesses. CFO looks after all types of money transactions, makes sure that every financial division isrunning properly.
Chief financial officer is likecontroller and treasurer who take care of finance and accounting management. They also make sure that the company’s financial reports come in time and accurately. Moreover, CFO is also known as CMA.
What does CFO Do?
When it comes to CFO’s tasks, it falls into three categories. Each task requires unique skills. And these are performed by different teams. So, let’s see what the tasks of a financial officer are;
Do you know what the most important matter for a company is? It is the financial report.
Company’s different bodies such as shareholders, employees, lenders, researchers,and analysts need the financial report in their tasks. Moreover, governments and regulatory bodies also need the financial report.
Chief financial officer ensures completing financial reports accurately and in due time.
Ensuring the availability of liquidity
What is the most crucial thing needed for running a company?
Of course, money!
Here chief financial officer comes into the game. The chief financial officer’s main responsibility is to ensure the company’s financial commitment and manage cash flow in the best efficient way.
This type of task is generally carried out by the treasury group.It has similarities with the reporting team. They are responsible for two types of tasks for instance,working capital and cash balance, which includes payable and receivable accounts and inventory.
On the other hand, the chief financial officer also responsible for issuing debt and managing the investment. Furthermore, they handle all types of liquidity related issues.
Ensuring the maximum return on investment
Do you know what the main aim of a business is?
Generate a maximum return on their investment. Yes, this is what every company wants.
And it is the most crucial task for the chief financial officer.
In this case, CFO helps the company to get the most out of the return on assets and return on capital.
Though other teams in the company come to aid the CFO in this job. Usually,the financial analysis and research team helps CFO to forecast cash flow and compare the return on budget.
If any company has a development group, they also help the CFO forecast its return on investment.
Besidesthe above responsibilities, CFOis also connected with other tasks such as ensuring effective leadership and maintaining a proper communication with the board. Also, they communicate with vendors and suppliers. Even they are connected with things that ensure the company’s culture and values.
Why should you become a CFO?
Chief financial position in a company is not like a simple employee. It is a top-level executive position. Though it is a tough job, there are many reasons to choose it as your carrier;
CFO is one of the most influential persons in the company. They directly report to the CEO. If you have a finance background and a higher mindset, then CFO could be an ideal option for your career.
It is a high paying job. Usually, a CFO earns more than $200Kper year. Even most of the companies have a reward system for the CFO.
The chief financial officer position is considered to be the most lucrative position in the financial job sector.
As it is a financial sector, that means it is an almost recession-proof job. So, you don’t need to worry about losing your job in the recession. Because in recession, business owners will try to earn maximum return on minimum investment.
Step by step guide for becoming a CFO
Chief financial officer is a dream job for many, but it requires a lot of hard work and focuses. But if you give your best, then you can definitely become a CFO. Here is a step-by-step guide for becoming a chief financial officer;
Step one: Acquire a degree in finance-related subjects
Chief financial officer is one of the highest positions in most of the companies. That’s why it required quality degrees. To become a CFO, you should ensure that you get a bachelor’s degree in subjects like accounting, economics, and business.
Step two: Acquire CPA and MBA
Though chief financial officers come from different backgrounds, some qualifications such as CPA can help a lot in achieving the position more easily. On the other hand, having an MBA degree combined with CPA can be a game-changer for your path to the chief financial officer’s position as both fulfilled all the required experiences.
Step three: gather all the required experiences
Experience is the last thing you need for the CFO position. When it comes to acquiring must needed experience for the CFO position, financial experience is the first thing you must take care of. As the main goal of a CFO is to make sure the accurate operation of financial divisions. That’s why you must acquire experience in budgeting, risk management, reporting, and analyzing.
Besides gathering experience in core finance issues, you should gather experience in business operation. It is the second important experience you must gather besides core financial experiences.
At the starting point, you can gather these valuable experiences by joining non-profit organizations and industries as a leader because it provides excellent opportunities for learning different business challenges.
CFO is considered to be the highest goal of financial jobholders. Here I have discussed what CFO is, their responsibilities, why it is important as a career, and how you can become a CFO. These pieces of information will help you understand the chief financial officer properly.