Difference Between CEO And CFO: Everything You Need to Know
The difference between CEO and CFO comes down to their strategic responsibilities.3 min read
The difference between CEO and CFO comes down to their strategic responsibilities. While the CEO oversees the entire company, the CFO oversees all the financial aspects of the company.
What is a CEO?
The CEO is the highest-ranking position in a company. He or she has the role of implementing decisions made by a company board. In the role of CEO, this executive oversees all the company departments, ensuring they formulate and implement policies and strategies appropriately. A CEO may be appointed by the board of a company or be an owner of a company.
What Does the CEO Do?
The CEO, as the highest-ranking executive manager of a company or an organization, has the role as the top decision-maker with responsibility for the company's success. A CEO's daily tasks vary, aligned with the organization's goals, mission, and operations. The CEO functions may also depend on the company size and number of employees.
Some duties associated with the CEO role are keeping the company solvent, guiding the company into a strong market position, and executing decisions made by the board of directors. Generally, the CEO serves as a liaison between the company and the external world, articulating the company's vision to both employees and potential clients. A CEO may oversee the company's operations and promote its products or services to connect the company or organization with the community.
What are the Qualifications for a CEO?
According to Forbes, close to 40 percent of Fortune 100 CEOs have MBAs, primarily from top schools. Many hold engineering degrees. Alternatively, a CEO career path could start in finance, with 32 percent of Fortune 100 CEOs starting as chief financial officers (CFOs). Most CEOs work their way up through the ranks of a single company. This gives the CEO opportunities to thoroughly understand a company's culture and business.
What are the Characteristics of a CEO?
A CEO must have many skills to keep a company on an even keel and to grow the business or organization. Some successful CEO traits are:
- Emotional intelligence (EI).
- Servant leadership.
- Problem-solving skills.
- Active listening.
- Distilling ideas and concepts.
- Communicating effectively.
What is a CFO?
The CFO has the highest-ranking financial position in a company and reports directly to the CEO. The CFO is responsible for the company's financial business practices and keeping these within industry standards. Essentially, the CFO ensures that the company is meeting business goals. Strategically, the CFO tracks market trends, financial projections, and forecasts. Investments may be a CFO responsibility, and CFOs are often on the boards of directors.
What Do CFOs Do?
As the top financial officer in the company, the CFO's responsibilities include putting together budgets, tracking revenue expenses, analyzing financial data, and reporting budget findings to the CEO and board of directors. It is a CFO's responsibility to maintain and improve the company's financial health. The CFO oversees the accounting department, financial reporting, budgeting, and any audits. A CFO is responsible for building relationships with banks and other financial institutions.
What are the Qualifications for a CFO?
A CFO usually has an accounting degree with a master's in accounting, business, or finance. A CFO should have a certified public accountant (CPA) certificate with more than 10 years' hands-on industry experience. Some organizations will make exceptions about the certified public accounting degree if the CFO has an MBA and years of experience. A track record and long-term presence at the company is useful.
What are the Characteristics of CFOs?
The chief characteristic a CFO should possess is the ability to effectively manage and responsibly grow the company's money. CFOs are usually averse to risk and methodical when making decisions. A CFO's skills will involve mathematical and analysis skills. People and communication skills are also critical.
What is the Difference Between CEOs and CFOs?
The CEO is responsible for the overall company or organization, while the CFO is responsible for the financial side of any business. Another difference is that the CFO may be on the board of directors, while the CEO reports to the board of directors.
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