The CFO, or Chief Financial Officer, of a company or organization, is a member of the executive management team whose primary responsibilities lie in maintaining and promoting the financial health of the organization. The specific duties of a CFO can vary greatly depending on the size of the company and the number of revenue sources. In a small company, for example, a CFO may be only responsible for handling accounts payables and accounts receivables, while the CFO of a large corporation may be required to plan and implement investment and corporate growth strategies.
Regardless of the size of the corporation, the Chief Financial Officer will likely be responsible for the following day-to-day operations:
– Work closely with the CEO and other top executives to maintain the fiscal health of the organization
– Prepare financial reports
– Maintain effective revenue processes
– Manage the company budget and regularly audit ledgers
Educational and Other Requirements
Though educational requirements for any top executive position can vary, Chief Financial Executives typically possess a Bachelor’s or Master’s degree in Accounting, Finance, Business Administration, or a related field. In some cases, the CFO may possess a Bachelor’s or Master’s degree in a field directly related to the industry the company operates in; for example, the CFO of a start-up software company may possess a Bachelor’s degree in computer science with some additional training in finance. Additionally, many companies prefer a candidate to be a licensed CPA.
Aside from educational requirements, an individual holding the position of Chief Financial Officer should possess the following competencies:
– Strong analytical skills
– Strong communication skills
– Excellent leadership skills such as determination, accountability, and decisiveness
How Much Do Chief Financial Officers Make?
According to the Bureau of Labor Statistics, Chief Financial Officers and other chief executives earned a median salary of $176,840 annually as of May 2010.
However, it is not at all unusual for the Chief Financial Officer of a large company to earn far above the median. The CFO of Facebook, for example, earned a total of $18.6 million in 2011 if stock is factored into his total compensation, according to this article in the Washington Post. The Chief Financial Officer of a very small start-up company, on the other hand, may have earnings that fall short of the poverty level. Clearly, the salary of a CFO depends a great deal on the success of the company he or she works for.
It’s also important to note that Chief Financial Officers of non-profit organizations typically earn less than CFOs employed by for-profit corporations. The Commissioner of the Salvation Army, for example, which is similar in function to a chief executive, earned only $13,000 excluding housing allowance, in 2011, according to an article published on MSN Money.
While the duties, and the average salary, of a Chief Financial Officer can vary greatly from organization to organization, the vast majority of chief executives earn in excess of $100,000 per year. The general responsibility of any CFO is to maintain and promote the fiscal health of an organization while keeping accurate records and performing regular audits of the general ledger.
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