Becoming a CFO is not easy, but it’s also very attainable. There is no one path to get there, but the right education, skillset, and motivation will definitely help.
CFOs of S&P 500 companies’ average annual salary is $4.7 million, while many of the top 500 highest paid CFOs in the US top over $1 million annually. With these numbers in mind, it’s no surprise so many people want to know how to become a CFO.
This high-level role sits at the intersection of strategy and financial management. A CFO title might come with a big paycheck, but it’s also a job requiring a lot of experience and education. Not to mention, the responsibilities on a CFO’s shoulders aren’t for the faint of heart.
Let’s go over everything you will need in order to set yourself on the right career path to become a CFO.
Job Description: What is a CFO?
On a broad level, a CFO’s job is to handle an organization’s financial operations. In doing so, they also help determine the company’s strategic course and the capital required for that growth.
The CFO’s role is incredibly diverse. As such, they must possess high levels of technical knowledge, strategic thinking, and leadership skills to manage the company’s finances.
Hear from CJ Gustafson, the CFO of PartsTech, about how his first year as a CFO went to get more insight into this role.
A CFO’s Responsibilities
Certain responsibilities fall on a CFO’s shoulders rather than other finance team members. Based on the extensive experience and education it takes to fill this role, this background helps them perform these responsibilities effectively.
Some of the primary responsibilities most CFOs are responsible for include:
- Financial planning and analysis
- Budgeting and forecasting
- Technical proficiency
- Cash flow management
- Financial reporting
- Risk management
- Investor relations
- Mergers and acquisitions
- Capital structure management
These are just some of the core tasks a CFO is responsible for, but the list goes on as the role requires them to be involved in various aspects of the company’s financial operations.
CFO Education & Qualifications
So, what exactly does it take to be entrusted with those CFO responsibilities? While there isn’t necessarily one direct path to this role, certain CFO qualifications are commonly required in the United States.
Note that these qualifications do not all necessarily happen in this order, nor are each of them necessary for every chief financial officer’s job.
A Bachelor’s Degree in Accounting (or similar)
Most CFOs begin their education with a bachelor’s degree in accounting—all but five states in the US require this: Hawaii, Maine, Alaska, Massachusetts, and Georgia. If you live in one of those states, you might pursue a Bachelor’s degree in finance or business instead.
These degrees tend to emphasize teaching students to be strategic and critical thinkers.
MBA or MFA
Many graduates of Bachelor’s degree programs in accounting or finance decide to continue their education by pursuing either:
- A Master’s of Business Administration (MBA), concentrating in accounting and finance
- A Master’s of Science in Finance (MSF)
A study by Finance Jobs found that 48.8% of Fortune 500 CFOs have an MBA. This shows that holding an MBA is not a requirement, but around half of the CFOs of the biggest companies have one, and it definitely helps.
Relevant Work Experience
Some aspiring CFOs begin their work experience before furthering their formal education, while others might jump right into an MBA or MFA program. Regardless, this experience tends to involve accounting jobs, financial analysis, and budgeting.
Relevant work experience is considered essential in finance. After all, this experience often forms the foundation of a finance professional’s hands-on experience.
Professional Certifications
Most future CFOs pursue a professional accounting certification after they receive their Bachelor’s degree in accounting—the necessary education and experience to be eligible to become a CPA in most states.
Usually, this accounting certification will be either Certified Public Accountant (CPA) or Certified Management Accountant (CMA). CPA certification entails more compliance, audit, and taxation training. Conversely, CMA training is more geared toward strategy, management, financial planning, and projection.
Before they can get this certification in the United States, accountants must complete 150 semester hours or 225 quarter hours, which usually takes about five years.
Then, to sit for the CPA exam, they need 120 semester hours, or 180 quarter hours. Most students take one to two years to pass all four sections of this exam. Importantly, they will also need at least one year of relevant employment to get a CPA license, but this work experience is not necessary to sit for the exam itself.
In addition, there are many finance and FP&A courses that are available for beginners and experts that can help further your skills and stand out on resumes.
Once you have completed the necessary education and certifications, you can continue your path to becoming a CFO by developing the right skills.
Developing 9 Necessary Technical Skills for a CFO
Given the various responsibilities of a CFO, it will come as no surprise that a chief financial officer needs a broad skillset to fulfil them. As aspiring CFOs progress through their careers, there are a number of skills they should work on developing to help them reach the level they hope to achieve.
Here are nine critical technical skills to start developing:
1) Financial Planning and Analysis
While a finance background is essential, CFOs also require excellent analytical skills to analyze financial data and turn it into actionable insights. They must be able to interpret complex financial information and use it to make strategic decisions.
Scenario modeling also plays a significant role in the CFO position. Ideally, a CFO will have honed their critical thinking and strategic planning skills to make informed decisions that positively impact a company’s financial future.
2) Budgeting and Forecasting
Generating data that clearly shows the company’s financial health is one thing, but knowing how to interpret and act upon this information is another. CFOs must be able to develop budgets and forecasts that align with the company’s strategic goals.
That said, budgeting and forecasting shouldn’t be a solo job. When organizations utilize a virtual financial planning partner that makes it easy to collaborate with colleagues, this helps CFOs (and other team members) create more data-driven forecasts.
3) Technical Proficiency (Including AI)
Technical proficiency is a virtually universal skill requirement for CFOs. This includes financial software, Excel, and other programs used to analyze data. In fact, over 76% of open job descriptions for FP&A roles require Excel skills.
With artificial intelligence in finance becoming more prevalent, CFOs must also be comfortable with AI technology and data analysis tools. This includes interpreting and drawing insights from large amounts of financial data.
Fortunately, user-friendly financial AI tools like Datarails’ FP&A Genius make it incredibly easy to do this, even without an extensive background in data science. While artificial intelligence was once considered a specialized skill, it is now a more common skill expected of most professionals, at least on a fundamental level.
4) Cash Flow Management
Most financial professionals are quite well-versed in managing cash flows by the time they ascend to their role as CFO. Still, this is a skill they should keep working on at every point in their career.
This improves their ability to forecast cash flow and manage working capital accurately. In turn, they can ensure a company has enough liquidity to meet its financial obligations—an invaluable CFO skill.
Cash flow management goes hand in hand with budget and projectionᅳCFOs must hone their awareness of the factors that can affect current and future financial circumstances.
5) Financial Reporting
Like cash flow management, financial reporting skills are often second nature to a financial professional by the time they become a CFO. The ability to present financial data clearly and concisely is non-negotiable, especially when communicating with investors or other stakeholders.
Beyond reporting this information, however, CFOs must also analyze it to properly identify trends and drivers that trigger business growth. This information also helps them prepare the organization for what comes next.
6) Risk Management
Most financial management strategies include risk management, and finance teams are wise to do so. Part of a CFO’s job is spotting potential financial risks. Identifying risks ahead of time and implementing strategies to minimize their impact is part of a proactive rather than reactive strategy.
7) Investor Relations
Being a CFO isn’t just about crunching the numbers and interpreting financial data—there’s also a strong social component. CFOs must be skilled at developing and maintaining relationships with investors, board members, and other financial stakeholders.
They should work on their business communication skills (which we’ll discuss in a moment) to accurately communicate the company’s financial data. This also helps them present it in a way easily understood by those who aren’t as well-versed in finance.
8) Mergers and Acquisitions
Leading up to an M&A, there’s usually a lot of strategic thinking and negotiation involved in solidifying these deals. CFOs are often heavily involved in these deals as part of their role in managing the company’s finances.
This requires them to work closely with legal teams, investment bankers, and other financial professionals.
9) Capital Structure Management
Managing a company’s funding is no small feat for an entry-level finance professional, which is why much of this responsibility often falls on the most experienced finance team member: the CFO.
Optimizing an organization’s capital structure better positions a business’s ability to achieve its financial goals. CFOs often steer the ship in this department. They can identify the right mix of equity and debt financing for financial success.
5 Soft Skills for a Chief Financial Officer
The valuable skill sets for chief financial officers are largely technical in nature. However, another set of skills is just as important: soft skills. These intangible qualities and abilities make a CFO (or any other professional) exceptional at their job.
Among the most important for a CFO are:
1) Communication
CFOs must communicate effectively with various stakeholders within and outside the organization.
Clear communication is key, whether they are presenting financial data to investors or explaining complex financial concepts to colleagues. The better a CFO can simply communicate complicated financial information, the more successful they will be.
2) Leadership
Inspiration and leadership are hallmarks of successful CFOs hoping to promote a collaborative, high-performance setting.
Good leadership usually includes:
- Vision Setting: The financial team’s vision should reflect the company’s strategic priorities. It’s up to a CFO to create this vision.
- Motivation: Encouraging and motivating staff members to give their best effort.
- Mentorship: Offering employee development and assistance to their team members.
- Decision-Making: Making data-driven decisions that benefit the company.
3) Strategic Thinking
A CFO should work in unison with a company’s long-term goals. To do this, they must think strategically and make financial decisions with this strategy in mind.
Strategic thinking involves:
- Big-Picture Focus: Understanding the wider market and economic conditions that affect the company’s future growth perspectives. Anticipating future trends and preparing the company to capitalize on opportunities and mitigate risks.
- Inventiveness: Coming up with innovative ideas to address financial challenges.
- Integration: Financial strategies must support and integrate into the company’s business strategy as a whole.
- Resource Allocation: Allocating resources to further the strategic objectives of the company.
4) Problem-Solving
Improving their problem-solving skills empowers CFOs to overcome financial challenges and unlock growth opportunities.
Creativity, decisiveness, and resilience are three soft skills that will go a long way toward this.
5) Ethical Judgment
A CFO must have integrity and ethical judgment. If a CFO does not comply with legal and regulatory standards, they expose themselves to the risk of severe penalties for themselves and their organization.
As such, they must prioritize financial transparency. Financial reporting should also be neutral and unbiased.
Compliance and integrity play a role, too. The CFO is accountable for a company’s financial health and decisions. Making these decisions mindful of legal and regulatory frameworks and acting with integrity strengthens the company’s foundation.
A Day in the Life of a CFO
Before turning to monthly and annual responsibilities, let’s begin by discussing what a day in the life might look like for a CFO.
Most CFOs work regular business hours and must often be on-site (in the office). Depending on their workload, they often work extra hours, either going into the office early and staying late or bringing their work home with them.
In some cases, a CFO can work from home, but there are also times when they’ll travel for work. Because a CFO’s job involves a certain amount of networking and communication, a lot of this has to happen outside of the office.
| CFO Requirements | Optional, but helps |
|---|---|
| Bachelors in Accounting, CPA | MBA, Professional Certifications |
| Hard skills – Excel, analytics, tech | Soft Skills |
| 10 years of Experience | 15+ Years of Experience |
Daily Tasks
When they’re in the office, a day in the life might involve completing these tasks:
- They begin the day by reading and responding to emails, reviewing their schedule, and determining which tasks to focus on that day based on the financial metrics and reports they read that morning.
The reports they tend to review first include income statements, cash flow, and balance sheets. They look to these reports to spot trends, variances, risks, and opportunities.
- Next, they might move on to strategic alignment. This might mean meeting with department heads or other executives to discuss ongoing initiatives, budgets, and financial issues that need their immediate attention.
- Operational oversight is another big part of a CFO’s daily responsibilities. This includes managing budgets, controlling costs, and overseeing capital expenditures. They also rely on financial forecasts to make strategic decisions about next steps.
- CFOs are also tasked with attending or leading investor meetings, which might take place in person or virtually. In these meetings, CFOs share financial results, updates on strategic initiatives, and upcoming plans. They must provide investors with transparency on financial matters throughout.
CFOs deal with a lot of data each day, including reading and interpreting financial reports. They use this data to ensure corporate governance, compliance, internal controls, and financial integrity. However, much of their day also involves using the soft skills we discussed above.
For example, CFOs must guide their finance teams with effective leadership. Communication also plays a role in most of their work, ensuring clarity and understanding across the board.
Monthly Responsibilities of a CFO
These responsibilities also vary significantly but generally include:
- Collecting analyzing, and reporting a summary of the business transactions at the end of each month. This process is also known as the month end close.
- Developing budgets and financial forecasts.
- Ensuring compliance with a company’s regulatory requirements, accounting standards, and principles of corporate governance.
- CFOs must also make decisions regarding cost reduction and revenue enhancement each month. They’ll also need to review capital expenditures and perform ROI analyses for certain projects.
- CFOs might communicate with the board of directors daily, but they also give formal presentations monthly or more often.
A CFO’s Annual Responsibilities
In terms of the tasks a CFO must complete each year, some of the broader work they need to do fall under these categories:
- Compliance (including regulatory, legal, and tax compliance) and governance
- Tax reporting and planning
- Business development
- Finance team management and leadership
- Investor relations
- Capital and risk management
- Developing financial strategies
- Ongoing budgeting and forecasting
How to Become a CFO: FAQs
Now, let’s turn to some of the most commonly asked questions about how to become a CFO and what this role entails. We’ll cover topics such as whether it is a stressful job, how much top CFOs get paid, how long it takes to become a CFO and more.
How long does it take to become a CFO?
Most CFOs have at least 10 to 15 years of relevant work experience before they become CFOs.
Is becoming a CFO hard?
Most CFOs would agree that getting to that position takes a lot of hard work, education, dedication, and time. Some have an easier path than others, but it is generally considered difficult, although certainly not impossible.
What degree do most CFOs have?
Most CFOs have a Bachelor’s degree in finance, business, or accounting and a Master’s in business administration (MBA). There are always exceptions, but those are the most common.
Can I be a CFO without a CPA?
Being a Chartered Professional Accountant (CPA) is not a technical requirement for a CFO. That said, it can undoubtedly be of great benefit to a CFO to have this certification.
Are CFOs well-paid?
As of May 28, 2024, Salary.com lists the average CFO salary as $441,105.
CFO salaries vary widely depending on factors like where they live, their experience, the size of the company, and the business that employs them. Still, the chief financial officer is considered a very well-paying position.
Is CFO a high-stress job?
It certainly can be. Considering the time CFOs must put into their work and the travel and networking often assigned to them, it can be challenging to maintain a healthy work-life balance.
Interestingly, according to a Datarails study data, most CFOs (81%) believe their work is more intensive than other senior executives and managers.
Who is the highest-paid CFO in the world?
As of 2024, Joe Berchtold, the CFO of Live Nation Entertainment, holds this title. His total annual compensation for 2023 was $52,356,095.
- Salary: $1,300,000
- Bonus: $6,000,000
- Non-Equity Incentive Compensation: $2,600,000
- Value Stock Awards: $42,401,504
For reference, Joe Berchtold has a B.A. in Economics from Pomona College and an MBA from Harvard University.
Resources for CFOs
If you are working toward this title, Datarails offers several valuable tools to streamline your work, including financial reporting.
Hundreds of CFOs trust Datarails to help them and their finance teams with tasks such as scenario modeling, consolidation, data visualization, and more.
Book a demo today to see Datarails in action. Here, you can also learn more about FinanceOS, the financial platform for the Office of the CFO.
Did you learn a lot about how to become a CFO from this article?
Here are three more to read next:
