How to Become a CFO: 5 Steps to Follow
If you’re looking to reach the top of financial corporate leadership, becoming a CFO is the way to go. In an organization, the Chief Financial Officer is in charge of managing a business’s finances. Whether you’re forecasting financial trends, organizing investment portfolios, or tracking expenses, the main goal of a CFO is making strategic decisions to help their company reach its financial goals.
Aspiring CFOs should know that this position can be difficult—you’ll need to earn that competitive salary through shrewd decisions and impactful leadership. This article will help you grasp the multifaceted nature of the role and guide you toward the necessary steps that will lead you toward a fulfilling career as a CFO.
What Does a CFO Do?
Ultimately, all CFOs share one goal—optimizing their company’s financial performance. It’s important to keep a wide perspective by using previous experience to identify likely patterns, manage day-to-day budgeting, and make financial forecasts. It’s also important to have a risk plan in place in case of an emergency. The CFO must ensure the company’s financial strategy matches its financial goals with overall business objectives.
Collaboration within the C-Suite
A CFO is one of the most senior roles held by members of a company, alongside the Chief Executive Officer (CEO), Chief Operating Officer (COO), and Chief Information Officer (CIO). These positions are usually very well compensated, but they usually come with significant power, stress, and responsibility. CFOs should maintain a good relationship with the other C-suite executives because it will make their jobs significantly easier in the long run.
As a CFO, you are most likely to find yourself collaborating with the CEO. The head of your company will bring their ideas for new business opportunities to the CFO, who evaluates the fiscal risks and rewards of any new venture. A great CFO will be able to give thorough advice and analysis, plan around potential risks, and effectively communicate the pros and cons of any given situation.
Stakeholder Engagement
CFOs play a critical role in building a strong relationship with stakeholders in your company. These can be investors, creditors, or regulatory bodies. CFOs are in charge of managing the numbers. When it comes to building trust with the board of directors, transparency is key. Honesty and accuracy, even during challenging situations, will bolster the organization’s reputation and resilience in the face of dynamic market forces.
Strategic Thinking and Decision-Making
CFOs always need to be planning for the future. Using their knowledge of the financial landscape and the current trajectory of their organization, they must use strategic thinking to align the budget with overarching company goals. While the CEO often has the final say, it will be your job to find the best path forward, along with viable backup plans.
These recommendations should be driven by data and focused on the financial aspect of any strategy. CFOs play a pivotal role in shaping critical decisions, guiding investments, and mitigating risks.
CFO’s Role in Private Companies vs. Public Companies
The responsibility and leverage wielded by a CFO varies depending on whether their employer is a private or public company. Typically, private CFOs have leaner operations and more flexibility in the absence of shareholders.
On the other hand, public CFOs face rigorous scrutiny, market volatility, and managing shareholder expectations. Public companies are often bigger, can provide higher pay, and have more resources at your disposal. Both situations require aspiring CFOs to approach each situation in a nuanced way and be ready to adapt to the ever-changing environment.
How to Become a CFO in 5 Steps
Nobody becomes a CFO overnight—aspiring CFOs must get a great education, develop important skills and acquire valuable experience before reaching this prestigious position. These are 5 key steps to follow in your journey to becoming a CFO
- Building a Strong Foundation
- Gaining Professional Insight
- Developing Key Skills
- Networking and Industry Connections
- Develop Specialized Knowledge Areas
Becoming a CFO is an ambitious goal for any finance professional and will require thorough preparation and hard work to achieve. Let’s explore each step in more detail.
1) Building a Strong Foundation
You should start with a strong educational foundation by earning a bachelor’s degree in business administration, finance, or a similar field of study. Earning an MBA or other advanced degree will not only help prepare you for this position, it will help you enter the workforce with a huge advantage.
Other tools, like professional certifications, applicable experience, and a strong professional network, will all help elevate you professionally. Here are some ways to get ahead:
Certifications and Professional Qualifications
Professional certifications are a great way to prove your credentials in any workplace. Anyone could be good at budgeting, but becoming a Certified Public Accountant (CPA) means employers won’t have to take you at your word. CPAs are particularly well suited to this role. These are tangible markers of expertise that validate your proficiency in essential skills needed for CFOs.
Other useful and impressive certifications include Certified Management Accountant (CMA) and Chartered Financial Analyst (CFA). These credentials prove your mastery of accounting principles, financial management techniques, and investment analysis methodologies. These certifications will signal your commitment to earning your role in the C-suite.
Advanced Degrees and Specialized Programs
If you want to enter the workforce with a leg up on the competition, pursuing an advanced degree will raise your future value as an employee immensely. Entering a Master of Business Administration (MBA) program will help seed professional advancement and give you the necessary know-how upon entering the corporate world. MBA programs delve into the intricacies of finance, strategy, and organizational leadership. Plus, executive education programs tailored for finance professionals can hone specialized skill sets relevant to the CFO role.
The Crummer Graduate School of Business offers a range of accredited MBA programs which can propel you forwards in your career in finance.
2) Gaining Professional Experience
Hands-on experience is a pivotal part of reaching the office of CFO. Practical experience will give you insights into real-world financial challenges and bolster your decision-making abilities. Getting your foot in the door is only the beginning!
As you climb the corporate ladder, you will move from entry-level to mid-level management, likely managing a team similar to your original role. Eventually, you will aim for roles with broader responsibilities. You will fill various roles as your career progresses, likely working as a manager, a financial planner, and heading shared services.
To progress from junior roles to managerial positions, you must hone your interpersonal skills, decision-making prowess, and strategic foresight on the job. Collaborate with other departments and assume responsibilities that extend beyond conventional job scopes to help foster necessary skills.
Diversification of Experience
Understanding a wide range of roles will make you a more effective leader! Diversify your experience by working in different sectors or industries. Exposure to diverse financial challenges, regulatory environments, and business models provides invaluable learning opportunities.
Leadership Opportunities
Leadership isn’t handed out. Ambitious employees will seek out leadership opportunities or create their own when possible. Taking on managerial roles or leading financial initiatives contributes significantly to the development of leadership skills, which are essential for the CFO position.
Strategic Decision-Making
As your career progresses, your ability to make strategic financial decisions will grow as you gain more professional experience. Each role and experience gained contribute to sharpening strategic thinking and decision-making capabilities. Learn from your mistakes and don’t get comfortable with your successes. How can you do a better job tomorrow?
Involvement in Key Financial Functions
As much as possible, involve yourself directly with key financial functions like budgeting, forecasting, financial analysis, and risk management. Get comfortable working with this responsibility. This hands-on experience will build a solid foundation for future leadership roles within the organization.
3) Developing Key Skills
Knowing the path to success doesn’t automatically come with the skills you need to thrive.
Aspiring CFOs need to develop a diverse skill set to prove their financial leadership. These skills range from leadership and management prowess to effective communication, technical acumen, and strategic foresight. These skills enable CFOs to navigate complexities, drive innovation, and foster growth within their organizations.
Leadership & Management Skills
In order to reach the height of financial leadership, CFO hopefuls must prove their leadership acuity. CFOs guide financial teams, facilitate decision-making, and steer their organization through turbulent financial waters with confidence. You can develop this skill before you reach a management position—get a head start on a difficult new project or offer to help a struggling coworker!
Strong management skills are also necessary to oversee intricate financial operations seamlessly. CFOs must know how to efficiently manage teams, projects, and resources. If there are any extracurricular activities like a company softball team, offer to be the manager. If you aren’t being offered opportunities, do everything you can to make them yourself.
Communication Skills
The ability to communicate effectively is a core skill of great CFOs. In such a numbers and data-heavy position, explaining complex issues in clear terms is crucial. These financial insights are communicated to a wide range of people including employees, stakeholders, and the CEO. Adept communication is indispensable for navigating complex financial landscapes. This will also help strengthen your managerial skills and help ease collaboration with the financial team.
Technical Skills
In today’s tech-driven era, CFOs must possess a robust arsenal of technical skills. Proficiency in financial analysis tools, accounting software, and emerging technologies relevant to financial management equips CFOs to make informed decisions and stay ahead of industry trends.
Soft Skills
Soft skills like adaptability, problem-solving, and emotional intelligence are invaluable tools for leaders to have on their belt. CFOs can use these skills to navigate dynamic financial environments adeptly, foster strong relationships, and inspire team members toward shared goals. Work on developing patience, regulate your emotions in stressful situations, and always be prepared to think on the fly.
Integration of Skills in Financial Functions
The integration of leadership, management, communication, technical, and soft skills has lots of practical applications in critical financial functions. By strengthening relationships with your team while developing your own talent, tasks like budgeting, forecasting, risk management, and financial reporting will feel easier and more streamlined. By linking these competencies together, CFOs bolster financial resilience and drive sustainable growth within their organizations.
4) Networking and Industry Connections
Strong leaders begin as strong employees who build up their peers and develop lasting connections. Cultivating a robust professional network and relationships with mentors will become a cornerstone of your career progression. Reach out to seasoned professionals on, seek mentorship from industry stalwarts, and participate in networking events to broaden their horizons and gain invaluable insights. Networking doesn’t just help you get ahead at the office, it will also help build a positive community in the financial world.
Participate in industry events, join a professional association, and connect with peers and mentors. This will help expand your circle and get a wider perspective on industry trends.
People are always more likely to help a friend than a stranger. Be careful to not exhaust these relationships. Reach out to them at regular intervals and don’t wait until you need a favor! Whenever you’re able to lend a hand, take the initiative. Build a reputation as an authentic, helpful, and dedicated individual.
5) Develop Specialized Knowledge Areas
To fill the role of CFO, professionals need to be able to navigate multifaceted domains beyond traditional finance. Whether it’s managing cash flow, understanding the financial aspects of human resources, or other strategic initiatives, a CFO’s specialized knowledge is what helps keep an organization running. Here’s how some specialized knowledge areas impact an organization’s vitality and bottom-line performance.
Cash Flow Management
At the core of financial stewardship lies the art of cash flow management. Cash flow is the money a company brings in from normal business activities usually by selling products or providing a service. CFOs orchestrate strategies to optimize cash flow, manage working capital, and ensure liquidity. This fortifies the organization’s resilience and sustains its operational vitality.
Human Resources and Financial Operations
Finance and human resources converge under the CFO’s purview. Together, they work to manage employee payroll and benefits. The CFO also weighs in on the employee handbook and manages compliance problems.
Stakeholder Management, Investor Relations, and Board Interaction
Navigating complex stakeholder landscapes, CFOs cultivate transparent, communicative relationships with investors, regulators, and the Board of Directors, fostering trust and confidence in organizational stewardship. They are responsible for utilizing money from investors and therefore, are obliged to share any financial developments that arise.
Technology Integration and Information Technology
As technology continues to evolve rapidly, CFOs spearhead the integration of technology into financial operations, leveraging information technology for enhanced financial analysis, reporting, and decision support, thereby optimizing organizational performance. Strong technological literacy is a necessary skill for CFOs to keep a company operating at the highest capacity possible.
Conclusion
A skilled Chief Financial Officer must work to stay well-rounded. Anyone aspiring to this role can get ahead of the curve: develop your leadership skills, technical acumen, and strategic vision as early and as often as possible. A bachelor’s in business is a good start but is not enough on its own.
Hopefully, this article helped you gain valuable insights into the long journey toward executive leadership. To reach the highest levels of success, you must go above and beyond in all you do. Explore Crummer’s range of accredited MBA programs to further your career.
