How To Become a CFO

A Step-by-Step Guide to How To Become a CFO

Becoming a chief financial officer can be considered the pinnacle of the accounting profession.

It is also known as “number two” or “co-pilot.” Yet, as this article shows, the CFO role can be as valuable as that of a chief executive officer.

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The CFO role usually takes years to achieve. Yet, this should not discourage finance professionals. The career path can have a different time horizon depending on the size and profile of the organisation. The role has a high profile. It is fulfilling and has the second-highest average compensation, after the CEO. If desired, it also places you in a good position to seek the top position.

How To Become a CFO in 6 Strategic Steps

Becoming a CFO requires a combination of both education and experience, as well as the right blend of skills.

• Step 1: Bachelor’s Degree: To hold a CFO position, a bachelor’s degree is almost mandatory. It is rare to see a CFO who has not yet obtained an undergraduate degree as part of their relevant education. It can be in accounting or finance. But those subjects provide the key knowledge for accounting qualifications.
• Step 2: Professional Qualifications: An accounting qualification is essential for a CFO’s career path, serving as a testament to their knowledge and background. A Certified Public Accountant, for example, is one of many available certifications today. Others include the Chartered Financial Analyst. Also, the Chartered Auditor and the Chartered Management Accountant. Groups like ICAEW, CPA, ACCA, and CIMA offer many qualifications for young finance pros. To stay in membership, you must do continuous professional development (CPD) for each of these qualifications.
• Step 3: Work Experience: There is no standard experience that will help you become a CFO. But a typical path is a finance career, from management accountant to financial controller to finance director.

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• These roles and the breadth of scope of such positions are essential. Still, candidates must have much industry experience. This includes experience in financial services and manufacturing. They must also have exposure to various types of companies, including public, private, and owner-run ones. International experience is also valued. Financial professionals should always consider it. They should also seek chances to grow. These may take them away from traditional accounting. For example, ERP implementation or M&A are recommended. These experiences would add skills they may not have in a normal career.
• Step 4: Managerial Skills: Accounting and technical skills are part of an accountant’s financial expertise. But to become a CFO, they need leadership and empathy. They need general managerial and strategic skills, as well as business knowledge that extends beyond numbers. They will acquire most of those skills as their careers progress to more prominent roles. But it’s crucial to emphasise that you need more than accounting skills and a degree to get to the top. The paragraph below titled “The Modern CFO” explains this further.
• Step 5: Advanced Education: Job boards for C-level executives typically require advanced degrees, such as an MBA programme or a master’s degree. Although not mandatory, it helps cement one’s reputation further, so it’s a “plus.” Some organisations also fund their C-suite’s education. In the later stages of one’s career, a Master’s degree is beneficial, particularly when combined with relevant experience. In other words, pursuing an MBA immediately after university can be helpful. Still, it will have a lower value than, for example, an MBA obtained while being a Finance Director as part of career development.

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• Step 6: Professional Network: Consider joining professional networking associations. They will grow your networking abilities. They will connect you with professionals from different industries and sectors. Attend industry events or conferences organised by ACCA, CIMA, and other professional bodies. These networking opportunities can help you further your career and secure a CFO job.

Get a Bachelor’s Degree in a Relevant Field

A degree in finance or business is always beneficial. But, as mentioned earlier, it’s not mandatory. Some CFOs have studied engineering, chemistry, or even history and literature. Therefore, young accountants should not perceive their chances of becoming CFOs as lower due to their studies.

Get a Professional Certification, Such as a CPA or CMA

You need professional certification, unlike an undergraduate degree. Yet, the type of certification is flexible. It could be a Certified Public Accountant. It could also be a Chartered Financial Analyst, a Certified Auditor, or a Certified Management Accountant. Young professionals should choose the one that best fits their career. They should consider their experience and specialisation. Professional experience will provide accountants with all the necessary skills. This will expose them to becoming CFOs.

Get Industry Experience

Industry experience is the most crucial step out of the six above to progress in a finance career. But this requires well-rounded experience. As with any C-suite role, attaining the top will take years, but new accountants shouldn’t let that deter them from achieving their goals. The only things that can help people acquire the skills necessary to excel in their sector are experience and time.

Industry experience tends to push one’s career towards a particular sector. For example, a certified financial analyst has worked in the financial services industry. They are more likely to succeed as a bank or financial institution’s CFO than in a manufacturing company.

Therefore, one should carefully select an industry. It’s beneficial to switch industries within reason. This increases the chances of becoming a chief financial officer in that industry. People are drawn to several industries, so while it’s important to be exposed to a few early in a career, there will come a time when it’s crucial to focus on one.

Get an MBA or MSF Degree (Optional)

A Master’s in Business Administration is not a prerequisite for this position. Yet, it’s something that is valued and appreciated today at the point of recruitment.

It is a significant differentiator when it comes to hiring. However, due to the course content, it requires a greater commitment than a university degree.

In line with continuous professional development, many organisations offer to fund MBAs. Experience gained during a career is critical. It helps understand how complex concepts apply in the real world, alongside the studies. Hence, the recommendation is to pursue an MBA at the midpoint or later stages of one’s career.

Online education and flexible courses have made tremendous inroads. They ensure that what was once considered elite is now accessible to the majority of people.

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Get Well-Rounded Experience (More Than Just Accounting)

The title suggests a CFO handles financial strategies, planning, and a company’s finances. But, in reality, to be a CFO, a person needs experience beyond just finance.

Their career may start in accounting. Yet, a CFO needs to have exposure to a wide range of experiences beyond finance. This is due to their co-pilot requirement and financial advisory services.

A CFO must understand investor relations, stakeholder and shareholder management, and commercial acumen. They gain this understanding from exposure to sales and purchasing procedures. They also need experience in human resources throughout their career.

Being a strategic advisor, which will occupy most of their time once at the top, requires more than just expertise in financial analysis. That’s why, as said above, it’s key for accountants to have “intimacy” with many business streams in a company. For example, in a small- to medium-sized company, it is common for an FD to be responsible for IT or even human resources. The CFO of a large organisation will also make basic decisions about buying and selling.

Unlike other executives, a CFO is the only position in a company, besides the CEO, that allows an individual to be aware of all aspects of a business, including finance. Other C-suite positions do not have this. Therefore, “lateral moves,” or even switching from a publicly listed to an owner-run company throughout their career, should not be seen as a deterrent or have the perception of a “downgrade.”.

How To Become a CFO: Managerial and General Skills

CFOs are expected to interpret financial statements. They must understand financial operations and accounting principles. They must also run accounting departments. Yet, diverse experience is key to becoming a CFO. It gives accountants skills beyond financial literacy.

But there’s more to that:

• Communication Skills: You are both one of the prominent “faces” of an organisation. The ability to explain complex financial concepts simply to many stakeholders sets you apart. Good communication is essential.
• Risk Management Skills: A CFO is a gatekeeper, safeguarding a company’s assets. As such, they should have an eye for risk management. They should provide the right balance between stellar company aspirations. They need to ensure that growth is sustainable and appropriately managed.
• Investor Relations Skills: This is especially relevant for CFOs at publicly listed companies. They often co-lead with the CEO in releasing quarterly or annual results. They also do so for fundraising, which combines financial closeness and communication.
• Leadership Skills: CFOs are leaders of an organisation, not just the accounting department. They need the right leadership skills for the company, its environment, and its stakeholders. Each style fits only some leaders. Throughout their careers, young accountants will be exposed to different types of. A CFO is “looked up to” by the workforce and is fundamental to cementing company culture.
• Information Technology and Data Skills: Organisations are becoming increasingly data-driven due to technological innovation. CFOs play a crucial role in ensuring a business has the necessary tools for growth. It’s more than just the investment analysis of ERP projects; it has nothing to do with advanced coding skills. It’s a deeper understanding of how data serves the organisation and the financial data, a subset of it.
• Strategy Skills: A CFO must look ahead to predict opportunities and risks in today’s volatile business. Their mindset must focus on the bigger picture and how an organisation can enjoy strategic opportunities.

CFOs Are in Demand: A Sunny, Competitive Career

One can look at a platform like LinkedIn and search for CFO roles, and they will see thousands of job listings. The simple reality is that CFOs are in high demand across all company sizes and industries.

The CFO role is a gratifying career, both professionally and financially. As mentioned at the beginning of this article, it is the “pinnacle” of an accountant’s career. The demand is high because CFOs play a fundamental role in business strategy and financial management. Still, most importantly, they are strategic business advisors that a company cannot afford to be without.

Even small and medium-sized organisations traditionally have finance managers or financial controllers. They are increasingly shifting to CFOs.

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CFO Career Path

The path to becoming a CFO remains heavily focused on functional lines, as broad financial experience is still a prerequisite.

One would expect to start their career in a company’s finance department as a management accountant or financial manager. They’d then become a financial controller or finance director. Eventually, they’d aim for the top spot. Moving into roles such as an internal auditor or a project manager for business systems would be beneficial. They would provide a well-rounded experience.

Depending on one’s career and experience, one could expect to reach the top role within 7–10 years from the start. Yet, for large publicly listed companies, it would be common to stretch the horizon to 15 or even 20 years.

Pursue Leadership Opportunities

The phrase “lateral moves” has been mentioned a few times. A young professional should not be afraid to switch from finance to other roles with “finance in the background.” They could potentially move to a small general management role or even lead customer service.

Involvement in M&A, or digital transformation, is also highly valued.

A switch does not harm one’s career. Indeed, it provides valuable exposure that could propel one’s path and make it more “appealing” to more prominent roles.

Young professionals should thus be encouraged to gain experience outside of finance.

What is a CFO? Responsibilities and Roles

The duties of the chief financial officer vary according to the type of business and revenue streams, but several characteristics support this role.

They must handle financial strategy, cash flow, and financial statements. They also provide financial planning and tax or audit compliance services. They also handle compliance management. One should add strategic planning. This is increasingly important in a volatile environment. Other executives and the whole organisation should do it.

ESG’s growing importance may also put CFOs in roles that usually fall under investor relations or legal heads. This provides exposure and skills that, in recent years, were outside their area of expertise.

As the gatekeeper of financial data, it often falls to the CFO to execute a digital or economic transformation. This role in the past was typically held by IT or business systems heads.

As outlined in the section below, the modern CFO differs significantly from the 20th-century CFO.

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The Modern CFO

Gone are the days when preparing and commenting on financial statements was considered the most crucial role of a CFO.

The expectations of a modern CFO are more significant than ever, which is why it is an enriching career.

Today’s CFOs should possess a deep understanding of a company’s operations and be able to achieve “more with less.” This is why, as part of their leadership, they must surround themselves with the best talent they can get. They must make the most of the data from their management information systems.

Data and digital transformation are essential, and they are not just buzzwords. A CFO’s job is to give insights into critical decisions. They must also give the company the best technology to enable fast reactions and predictive analytics.

As business strategists, they help shape a company’s future and serve as catalysts for change. Second only to the CEO, it is by far the most visible role in a company.

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