Those eyeing the Chief Financial Officer (CFO) seat need to become strategists instead of just mere scorekeepers, and Certified Public Accountants (CPA) are already well-positioned as potential candidates.
Gone are the days when CFOs just crunched numbers. These days, they play a much more strategic and entrepreneurial role in the company. Some CFOs even get involved in legal, HR, and operational matters.
What’s really interesting is how the role of CFO has changed over the years, along with the skills and qualifications needed for the job. Nowadays, there are various paths to becoming a CFO.
Not Just Your Numbers Guy
In the past, CFOs mainly focused on the basics like bookkeeping, reporting, and keeping an eye on cash flow. They weren’t really expected to dive into business strategy. But today, the role of a CFO has expanded significantly.
Jean-Baptiste Cousin from SMASH Group points out that the CFO's job has changed: “It used to be all about numbers, but now it’s really about being a business partner. A lot of accounting and bookkeeping is automated or outsourced these days.”
Now, CFOs are using their financial know-how to offer strategic advice and share key financial insights. This helps other directors and board members make informed decisions and guide the company in the right direction. They not only have solid experience in finance but also the soft skills needed to handle all sorts of responsibilities that come their way.
CFO’s Academic Prerequisites
While there is no single path to becoming a CFO, a solid educational foundation is essential.
Education
University degrees are essential for most CFO roles. Although some exceptions exist and the landscape is evolving, a Bachelor’s degree remains a common requirement. It’s not mandatory to major in finance, but doing so is typically advantageous for aspiring CFOs.
CFOs often hold Bachelor’s degrees in subjects such as:
Accounting
Finance
Economics
Business
Management
There are no strict guidelines on which major to choose; however, finance-related degrees tend to better prepare candidates and reduce the need for additional coursework later. While there is ongoing debate about the necessity of an accounting background, it’s not uncommon for a CFO to have a non-finance undergraduate degree combined with a Master’s degree or certification.
Advanced Degree
Some prospective CFOs enhance their education with a Master’s degree, which, while not obligatory, provides valuable skills and knowledge. MBA (Master of Business Administration) degrees are particularly prevalent among CFOs due to the expanded scope of the role, now encompassing broader business and strategic responsibilities.
An MBA offers comprehensive business knowledge and management training, critical for today’s CFOs. Surveys indicate that around 50% of Fortune 500 and S&P 500 CFOs hold an MBA, with 33.6% having a CPA, and 10.4% possessing both. Other popular Master’s degrees include Finance and Accounting.
Certifications and Accreditations
Beyond or instead of a Master’s degree, aspiring CFOs can pursue specialized certifications to bolster their finance knowledge. Many CFOs start in accounting, hence the high prevalence of CPAs among them. However, this isn’t the sole route to the CFO position.
Useful certifications for CFOs include:
Certified Public Accountant - CPA
Chartered Accountant - CA
Certified Financial Planner - CFP
Certified Management Accountant - CMA
Several other certifications cater to different interests, equipping candidates with specialized skills and knowledge. A combination of an advanced degree and/or certification, along with a Bachelor’s degree, is instrumental in building the foundation for a successful CFO career.
Experience
Years of relevant experience are indispensable for aspiring CFOs. A proven track record is essential.
Technical Experience
Understanding the numbers is crucial. While modern CFOs focus on business strategy, they must be experienced in roles like accounting, auditing, budgeting, and financial analysis. Climbing the ranks of the finance team isn't the only way to become a CFO.
Business Experience
Dan Wells from GrowCFO emphasizes the value of experience in areas beyond finance:
"When you look at the CFO being the co-pilot to the CEO and delivering the business plan, there's a lot of knowledge in there around fundraising, implementing change, and making strategic decisions. These are areas you're not typically exposed to in junior finance roles."
CFOs need a well-rounded skill set, combining technical and general business experience to serve as effective strategic partners. Gaining this broader experience can be accomplished through cross-functional projects or job shadowing colleagues in other departments. Business and financial expertise are both crucial for CFOs.
Soft Skills and Expert-Desired Qualities of a CFO
Along with a solid education and relevant experience, a CFO must possess a robust set of soft skills to effectively handle the broader aspects of their role that extend beyond financial metrics. Many of these soft skills can be developed over time, but some should already be in place from day one.
Social Acumen
Given the current economic uncertainties, CFOs must manage diverse emotional reactions from founders and investors. Empathy, communication skills, and the ability to remain focused on objectives are essential.
Communication
Effective communication is vital for any leader, including CFOs. This encompasses both internal communication within the company and external communication with stakeholders. A competent CFO:
Communicates effectively with their team.
Keeps the rest of the company informed about the finance team's strategic decisions and activities.
Represents the company in all external financial matters, including public speaking engagements, and meetings with investors and board members, and acts as the finance ambassador.
Building relationships outside of the executive team is crucial, highlighting the importance of collaboration.
Visionary
CFOs need to be visionary thinkers, positioning the company for future success through strategic, data-driven decisions. They must evaluate risks and opportunities, think analytically, and drive the company's growth strategy forward.
Effective Leader
Good leadership is essential for a CFO to elevate the company and its team. Setting goals, guiding the finance team, and collaborating with other company leaders are key tasks. Identifying gaps within the team and knowing when to outsource or bring in new talent are crucial aspects of effective leadership.
Tech-Savvy
While CFOs don't need to be tech experts, they must embrace and lead the charge in digital transformation. Adopting technology, digitalization, and automation is crucial for driving efficiency and innovation within the finance team.
Strategic Innovator
A CFO’s creative thinking skills are important for effective cash management. CFOs should apply flexible and innovative strategies to optimize working capital and explore external financing options.
Flexibility
Adaptability is a must for CFOs, especially in dynamic and uncertain environments. The ability to forecast and reforecast effectively allows CFOs to cushion unforeseen circumstances and build resilience.
Bold Decision-Maker
While CFOs need not be inherent risk-takers, they must be less risk-averse than their predecessors. Embracing uncertainty and the potential for failure as part of long-term success is crucial, especially in the tech sector.
CFO Leading Digital Transformation
The role of the CFO has really changed over the years. Gone are the days when they were seen as just the risk-averse enforcers who always said no. Nowadays, modern CFOs are more like growth facilitators and value creators. They’re strategic partners to CEOs while also building strong finance teams. To nail this complex role, CFOs need a solid education and hands-on experience in finance and business, along with some good people skills to manage the human side of things. The good news is that many of these skills can be picked up through experience and finance programs around the globe. With the industry facing a talent shortage, technology is becoming a tool for CFOs to tackle these challenges effectively.
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