The difference between CFO and CEO is somewhat self-explanatory. A CFO is a financial executive of a company who is responsible for the organization’s finances. CEOs are essentially the business face of a corporation. There is a big difference between CFO and CEO; and this gap has become more prominent in recent times as companies have hired more CFOs, while the number of CEOs has actually declined. What exactly is the difference between CFO and CEO? let’s have a closer look.
Who is a CFO?
CFO is the highest-ranking financial position in any company or institution. CFO oversees financial operations, budgeting & financial reports. The responsibilities of the CFO include the management of the company and the maintenance of its finances.
They will make recommendations to the CEO and the board and implement financial decisions to expand the company’s financial strength. The CFO of the company may also be part of the board of directors and may also serve as the CFO of the company.
Responsibilities of CFOs
A CFO is responsible for financial planning- putting together a budget, implementing revenue expenses, and analyzing financial data. The CFO oversees all accounting operations, financial reporting budgeting, and audits.
A CFO is responsible to build and maintain a close relationship with financial institutions and banks. It is the responsibility of the CFO to protect the business’s finances and to keep the financial health of the company. In addition to banks, CFOs also build good relationships with other financial institutions. The CFO should ensure there is sufficient cash flow of the corporate strategy.
CFOs perform quantitative and qualitative financial analyses and share them with CEOs. The CEOs use these findings to guide their decisions for the company. CFOs also review all aspects of the business to see whether resources are allocated correctly and CEOs use this information to run the business. What is clear in all this is that a CFO reports to the CEO first and the board of directors.
What Are The Qualifications For a CFO?
A CFO typically has an accounting degree with a master’s in accounting, business, or finance. CFO should have at least 10 years of business experience. For some organizations, the CFO is required to have a degree/master’s or years of previous experience with a CPA certificate. Industry professionals say an effective track record is valuable to qualify for the position.
The Characteristics of a CFO
The CFO needs to be able to control and grow company money efficiently and responsibly. CFOs often avoid risk and follow a method when making decisions. For an FCO the skills will include mathematics and analytical skill. People skills and communications skills are vital.
They should also make sure a company’s financial health is maintained or improved thus driving change in the business world.
Who is a CEO?
The CEO occupies the most senior level of the company and has responsibility for the organization as a whole. Often the CEO will also be a director in an organization and may act as a chairperson for the company.
The CEO who is in the highest-ranking position oversees all operations in a company and is responsible to maintain wide oversight over each department to see how the company maintains its budget and its market position. While the CFO analyses and evaluates financial risks, a CEO evaluates gains and business risks.
They will usually be responsible for the strategy, mission, and organization of a company as well as maximizing revenue, market share prices, etc. The CEO can be the owner of the business or be elected by the board.
What are the qualifications for a CEO?
To qualify for this position you must have a bachelor’s degree, master’s degree, or MBA in a relevant field. You can qualify to be a CEO if you have experience in a senior management position, or
The CEO has the opportunity to thoroughly understand the corporate culture and business. Forbes estimates that most CEOs and entrepreneurs have engineering degrees.
Can a person be both CEO and CFO?
Yes, but it’s not always the best idea. It is possible to hire or appoint a chief executive officer (CEO) and a chief financial officer (CFO). However, this setup is not optimal in all cases for leaders who do not play well with others; for example, the CEO and CFO might find themselves vying to control aspects of the company, so they have more power. Rather than causing problems within the business, it would be better for them to make significant decisions about finances while the other took care of business operations.
Is a CEO higher than a CFO?
Yes, a CEO is generally higher than a CFO. In theory, the business that generates the most money in an organization is at the top, while smaller firms report on their progress to the general manager. In this way, it’s not just about being higher ranking but also about being more profitable.
The president of your company likely has significant responsibilities over other levels, including overseeing operations and personnel while also being responsible for overall financial management in some cases. The critical success factors for all of these positions may be different, recognizing individual tastes and skillsets, but that doesn’t mean he has less authority or responsibility than those at lower levels to accomplish his goals.
The Difference Between CEO and CFO
The CFO and CEO have distinct positions but all hold important roles within the organization. The CEO will manage the entire company’s operation all the way through sales management. The CEO primarily manages financial reporting and management.
Differences between the CEO and CFO Roles
Strategy
The difference between CFO and CEO in strategy is that the CEO needs to think about the strategy for their company and then initiate procedures that will help them achieve this. The CFO is in charge of supporting the finances; ensuring cash is available for running the business.
Reporting relationships
Another difference between CFO and CEO is that the CEO generally reports to the company’s board of directors, while the CFO is usually tasked with being an integral part of putting together and analyzing a yearly budget.
Development
When we discuss the difference between CFO and CEO we should know that the CEO has many roles: searching for managers across different departments while also preparing those currently under them for future managerial duties. Meanwhile, the Chief Financial Officer focuses on managing finances only-which means no one can become an expert in both fields without starting there from day one!
Analysis
The CFO often has an eye on the future of a company. They analyze how to allocate resources and ensure that operations are being controlled responsibly with attention paid to costs. They also maintain close contact with CEOs to report their findings, including what is happening in markets currently or projections for investments going into the future.
Worked Hours
The difference between CFO and CEO in the worked hours is that the average CFO works 8 hours a day for five days, while the CEO works 12 hours a day for six days.
The role of the CEO is more time-consuming than that of the CFO because CEOs typically command less control over their work. The fluctuations in CEO duties require them to spend an entire 60 hour week doing work, as CEOs are responsible for employees’ worries and often need to do heavy handholding with such teams. As a result, they seldom have enough time left at the end of their working week to spend on their own goals like going home early or taking care of unfinished housework.
When someone identifies themselves as a “chief executive officer,” they are just an employee of the company who happens to hold that title. For instance, when you visit a Starbucks store, one of the managers will be a CFO. They are typically the corporate vice president. They are responsible for the finances and the day-to-day operations of the company.
Compensation
The final difference between a CFO and a CEO is their compensation. CEOs earn much more than a CFO. This difference in pay is the largest between the two professionals. A CEO makes about one-third of one CFO’s annual salary. CFOs earn a bit less than CEOs but still earn much more than the minimum wage.
The salary difference between a CFO and a CEO.
Even though the CEO and The CFO have high-level c-suite positions, the average base salary of a CFO is more than that of a CEO.
Conclusion
Both positions are significant. The difference between CFO and CEO is that the CEO is generally expected to step into the role of CFO whenever necessary to handle and run the business’s operations. Because of the extreme level of responsibility that CFOs are under, they are often considered more of a marketing position than an executive one. If you are interested in becoming a corporate officer, take the time to research the different functions available to you today.
