Many business students aspire to take on executive roles for global companies, where they develop policies and make strategic decisions. If you have an interest in accounting and finance and are working toward your master’s in accounting online, you may specifically be working toward a chief financial officer (CFO) position. An essential role in most companies, learn about what a CFO does, potential paths to becoming one, and some challenges to expect along the way.
What CFOs Do
CFOs are financial experts who oversee several key components of a company’s operations. They manage everything from financial statements to reporting and regulations to forward-thinking strategies.
Monitor Financial Statements
As the head of a company’s financial department, the CFO oversees financial statements and reports. To do this, most CFOs rely on a dedicated team of accountants and auditors who compile, produce, and monitor financial reports.
CFOs also oversee financial report analysis and data interpretation. They use this information to assess goals and generate new objectives. They also share vital information with other members of the executive team.
In the business world, executives typically need to have an expert-level understanding of rules and regulations that pertain to the industry. Many CFOs oversee compliance with federal, state, and local laws, ensuring that the company does not fail to meet standards, thereby incurring expensive penalties or entering into lengthy lawsuits. As Entrepreneur explains, CFOs who work for public companies also handle public disclosures and perform duties related to shareholders.
As executives, CFOs do more than simply handle day-to-day operations. These professionals also work with high-level colleagues to develop and enhance corporate policies. They use their expert understanding of the industry to shape strategies that enable the company to achieve ambitious goals and perform at its best.
Essential Skills for CFOs
To excel at their jobs, CFOs typically need to hone a few important skills. The following four are essential for this role.
As a member of the executive team, the CFO must have the ability to lead others. After all, most CFOs head internal teams and may also hire and mentor employees. No matter their leadership style, CFOs should demonstrate a sense of integrity and honesty.
One of the key responsibilities of a CFO is to derive value out of financial data and complex reports. To do this, they must have advanced analytical skills. As Business Insider reports, the CFO of the near future could spend up to 90 percent of his or her efforts on analytics, which points to a strong need for this skill.
Ability to Build Relationships
The role of a CFO is rarely an isolated one. Instead, these executives must forge and maintain strong relationships both within the organization and throughout the industry. As a fundamental member of the executive team, the CFO will collaborate with the chief executive officer (CEO), chief operations officer (COO), and other decision makers. To stay on top of important developments in the industry, the CFO should also gain the trust of external financial experts with key insights.
While CFOs may monitor both short-term and long-term objectives, their primary goal is to help companies grow and succeed in the long term. Doing this well requires strategic thinking and a sense of creativity.
How to Become a CFO
Business executives who become CFOs tend to follow a professional path that includes both advanced education and job experience. Since this position is rooted in finance, many candidates might earn a master’s in accounting online or another graduate degree in finance, business, or economics. In these advanced degree programs, future CFOs can learn high-level accounting and finance principles while exploring pressing problems in the industry and building a professional network.
Next, candidates in this field typically take entry-level positions in accounting or finance. Some become certified public accountants (CPAs), while others pursue positions in auditing or financial planning. Over the course of several years, candidates take on more responsibility as they rise through the ranks. They also make connections and build their networks in the financial industry.
After working as middle and senior managers for several years, some candidates may have the opportunity to pursue a CFO position. Those who have built the strongest networks and honed the best analytical and strategic planning skills often have the best opportunities for career growth.
Top Challenges CFOs Face
No matter how much experience candidates have, most find that the path to becoming a CFO is not an easy one. Many CFOs face numerous challenges along the way.
Building Effective Teams
Many CFOs have prominent roles in the hiring and training processes for their teams, but this requires more creativity now than ever before. As the AICPA explains, executives must do more with smaller budgets and fewer staff members. They must be more selective during the hiring process, do more to retain high-level staffers, and work to streamline productivity.
Adapting to New Technology
CFOs do not typically have to be technology experts, but they must be comfortable with industry standards for software, applications, and hardware. As Robert Half explains, CFOs should also be willing to explore innovative options such as cloud computing and software as a service (SAAS), as well as the inherent risks of technology.
Anticipating Regulatory Changes
Regulatory changes are inevitable in the financial industry, and CFOs must learn to anticipate them and their effects. As KPMG suggests, the most successful CFOs can seek out the advantages in these updates, using their strategic thinking to improve workflows and strengthen analytics.
Understanding the Impact of Market Trends
The best CFOs understand that myriad external forces impact business and affect their objectives. As Business Insider explains, executives must develop high-level knowledge of the market trends, politics, and international events that shape business. From there, they can better respond to industry trends and create lasting value.
For those who aspire to become business executives, an online Master of Science in Accounting degree could be an important step in the process. With the essential skills, an advanced degree, and the right experience, today’s business students may be equipped to pursue rewarding careers as CFOs.