How to Become a CFO: Steps and Career Outlook
Cutting costs, generating revenues, surpassing quarterly projections—these are the daily considerations of a chief financial officer (CFO). CFOs account for their company’s overall financial condition. They have their finger on the “cash pulse” of the organization and understand which growth opportunities represent a good investment and how to manage internal operational risks. For those interested in how to become a CFO, it’s important to understand that the road is different for each aspiring professional. However, a few key factors, such as earning a bachelor’s degree in finance or accounting and a Master of Business Administration (MBA), remain consistent.
What Does a CFO Do?
A chief financial officer leads a company’s financial and accounting operations. Part of his/her responsibility includes working with top executives, such as the chief executive officer (CEO) and chief operations officer (COO), to execute the company’s strategies by implementing financial policies, processes, and technologies.
The role of the CFO keeps evolving with the expansion of global markets and digital technology. According to a recent report by the professional services company Accenture, CFOs must capture and evaluate their organization’s data, using their financial expertise and business insight to identify trends and opportunities. They can then advise the executive team on operational improvements such as automating accounting processes.
Talented CFOs are needed to help companies navigate global markets successfully. These professionals extend their skills beyond finance to drive data to better position the company for long-term success.
Steps for Becoming a Chief Financial Officer
For those wondering how to become a CFO, the process requires a robust financial background, years of experience, and hard work. Many CFOs follow three steps on their journey to the C-suite.
Step 1: Gain a Financial Education and Certification
Many CFOs begin their careers with a bachelor’s degree in a finance-related subject such as accounting, according to a recent article by Business News Daily. Degrees in finance, economics, or statistics also can provide a solid financial foundation for aspiring CFOs.
Graduates often begin working in a company’s finance or accounting department. If working in a public company, some must hold a Certified Public Accountant (CPA) certification, according to the U.S. Bureau of Labor Statistics (BLS). Each CPA must complete a minimum number of postsecondary hours and years of work experience, and pass an exam to obtain a certificate. Accountants also must have a license to practice in their state.
Other certifications, such as Chartered Financial Analyst (CFA), demonstrate an enhanced level of financial competence for advancement in some organizations. Some employers may require their CFO to hold one of these certifications.
Step 2: Earn a Master’s Degree
While it is not a requirement to earn a master’s degree to become a chief financial officer, many employers prefer CFO candidates with a Master of Business Administration degree, according to the BLS. A Master of Business Administration (MBA) can enhance the skills needed to become a CFO.
As the Accenture report highlights, a CFO not only reads and understands financial data but serves as an effective leader, communicator, and strategic partner. MBA coursework such as strategic resources management helps students strengthen their skills in managing people, information, and systems. This background is important as a successful CFO must understand how to structure the right teams of people with the right skills to ensure the finance functions—such as accounting, treasury, and auditing—work cohesively.
To build business function consistency, today’s CFO must understand big data and analytics. A successful CFO can identify and solve issues by leveraging business and nonbusiness data. An MBA program can help professionals build confidence in understanding how to manipulate data sets and create actionable tasks based on findings.
Step 3: Develop the Skills a CFO Needs
The final step for those who want to become a CFO is developing essential skills. CFOs with a background in business have more insight into the needs of their company and can better identify opportunities for improvements. With business acumen, CFOs actively practice business strategy development, implement management techniques, understand sales and manufacturing, exercise financial knowledge, and have a vision for certain business functions. On a practical level, CFOs need to exhibit finance and technology skills. They also need competence in forecasting, financial modeling, data mining, data visualization techniques, and product analysis.
Through gaining business and leadership experience, CFO candidates also cultivate a deep understanding of operational and customer service skills. They implement their leadership capabilities by giving presentations and coaching employees. Building relationships with other C-suite executives is another aspect of working as a CFO. Actively listening, effectively communicating, and negotiating fall under the job description as well.
Salary of a CFO
Serving as an interpreter of financials on the book and their impact on the company, CFOs often talk with other company executives, investors, and employees. As a leader in financial matters, the CFO must clearly communicate the reasons for certain company decisions such as cost reductions or automating accounting tasks.
As some of the highest-level employees in a company, CFOs are well-compensated based on their education and knowledge of their industry. According to PayScale, the median annual salary of CFOs is around $135,500. Those with 5 to 9 years of work experience can earn around $117,400, and professionals with 10 to 19 years of work experience can earn closer to $140,700.
Future Growth of CFO Jobs
Professionals serious about pursuing a path to become a CFO will enter a competitive but growing market. The BLS projects a 4% growth rate between 2019 and 2029 for top executive positions. The future CFO should prepare for managing more than budgets and reporting for their organization. The report by Accenture notes that a CFO needs to take charge of technology to automate systems and processes. Alongside this digitization movement, CFOs often manage risks of cybersecurity while ensuring their organization complies with reporting regulations.
Start Your Journey to Becoming a CFO Today
Organizations need professionals to take charge of the CFO’s expanding role and guide the company into the next age of technology and finance. Aspiring professionals can build the foundation of their careers by pursuing Norwich University’s online Master of Business Administration, which helps create strong leaders well-versed in business management practices. Students wondering how to become a CFO can customize their MBA by choosing a concentration in construction management, finance, organizational leadership, project management, supply chain management and logistics, energy management, or technology management.
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9 Skills CFOs Need to be Successful in the Future, Business Insider
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5 Categories of Finance Competencies for 2020, CFO
Age and Tenure in the C-Suite: Korn Ferry Institute Study Reveals Trends by Title and Industry, Korn Ferry Institute
Average Chief Financial Officer (CFO) Salary, PayScale
How to Become a CFO: 7 Steps to Guide Your Career Path, Rober Half
Accountants and Auditors, U.S. Bureau of Labor Statistics
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