What Is a Chief Financial Officer? CFO Roles and Responsibilities Defined

Big public companies may have defined the CFO role, but the chief financial officer position is becoming increasingly common in midsize and even small firms. Recent postings for full-time CFOs on job-search sites include an emerging air mobility design and manufacturing company in Massachusetts with fewer than 20 employees and a 94-bed community hospital in Hawaii.

What’s driving that investment in expertise? Often, CEOs who are at a strategic crossroads recognize the value of an expert financial adviser who can help them grow market share, and their businesses.

In short, smart companies now view the CFO position—both internal and on a virtual or fractional CFO basis—as more of an investment than an expense.

There’s no doubt that a global pandemic made the value of an experienced hand on the finance helm very evident. But our take is that there’s more to the rise of the CFO than an economic crisis. Let’s look at the role, responsibilities, and skills finance chiefs need to serve their companies well.

What Is a Chief Financial Officer (CFO)?

A chief financial officer (CFO) is the highest-ranking financial professional in an organization and is responsible for the fiscal health of the business. The CFO’s responsibilities include, but aren’t limited to, building a top-notch finance and accounting team, ensuring revenues and expenses stay in balance, overseeing FP&A (financial planning & analysis) functions, making recommendations on mergers and acquisitions, obtaining funding, working with department heads to analyze financial data and craft budgets, attesting to the accuracy of reports, and consulting with boards of directors and the CEO on strategy.

CFOs may also help set technology direction, especially fintech, and make recommendations on everything from supply chain to marketing based on their fiscal insights and industry knowledge.

The most-valued CFOs are visionaries—they have an eye toward the future, work closely with top leadership, and aren’t shy about recommending strategic moves.

CEO vs. CFO

The chief executive officer (CEO) is a company’s highest-ranking executive. Depending on corporate structure, the CEO may be responsible for all aspects of a company’s operational and fiscal health, or a president may share some duties. The CEO is the official face and voice of the company to press and analysts, the general public, and, if applicable, the board of directors.

CFOs are the most senior financial officers in an organization. They report directly to the CEO and work closely with the board of directors.

While the CEO occupies a higher-level position from an org-chart standpoint, in high-functioning companies, the CFO and CEO work closely and collaboratively, with CFOs serving as sounding boards, strategists and risk mitigators.

Financial Controller vs. CFO

A financial controller is a CPA (certified public accountant) and often holds an MBA. Financial controllers are responsible for preparing financial reports and analyzing financial data. The financial controller is generally in charge of the accounting function in an organization and reports to the CFO. A controller may be part of a team that includes bookkeepers, accounts receivable/payable clerks, payroll specialists, tax preparers, and accountants.

The CFO relies on the reporting generated by accounting and the financial controller to advise the CEO and board on the company’s strategic financial direction. The controller and other functional specialists report to the CFO.

Key Takeaways

• What informs the need for a CFO is less company size than a desire for a strategic adviser with deep financial expertise.
• CFOs are captains of a team that covers both accounting and finance and consists of senior leaders, such as controllers and VPs of finance, and operational staff—accountants, bookkeepers, tax specialists, and data analysts.
• Serving as a CFO requires a background in accounting or finance and an advanced business degree, generally including an MBA. But it also takes plenty of soft skills.

Chief Financial Officer (CFO) Explained

The chief financial officer (CFOs) holds the top financial position in an organization. They are responsible for tracking cash flow and financial planning and analyzing the company’s financial strengths and weaknesses and proposing strategic directions.

CFOs are accountable to both the organization and various regulatory entities and authorities, including the Securities and Exchange Commission (SEC) in publicly held companies. They are well-versed in both generally accepted accounting principles (GAAP) and state and federal regulations, such as the Sarbanes-Oxley Act.

What Does a CFO Do?

The CFO’s role is twofold: Oversee the organization’s financial activities, including being responsible for the finance and accounting professionals who perform operational functions, and serve in a strategic advisory role for the CEO and C-suite peers.

Meeting revenue and earnings goals and keeping cash flow stable are clearly in the CFO’s purview. Finance chiefs also advise department heads across the organization, assisting them in both maximizing revenues, if they serve in a revenue-generating capacity, and controlling expenses without sacrificing customer or employee satisfaction or the company’s reputation.

The CFO helps select skilled staff for the finance team and works with departments to allocate budget for human capital management.

CFOs put complex data—current, past and predicted financial results—in perspective and help the CEO make sound financial decisions: Should we introduce this new product or service? Can we afford to on-shore our supply chain? What are the tax implications of our employees working from anywhere?

Benefits of Having a CFO

CFOs guide the finance and accounting team and have a broad view of an organization’s financial health, allowing the CEO as well as peers including the CMO, COO, and VPs of HR and sales to focus on their own goals and operational issues. In addition, a CFO provides:

• Leadership skills:

  CFOs must provide leadership on two main fronts: In the C-suite and in their finance organization. In the C-suite, the CFO should be a business-leader peer alongside other executive members, providing insight and perspective to help guide the company’s strategic direction. For the finance organization, the CFO must build and enable a successful finance and accounting team, setting goals, policies, and hiring strategies to create a high-performing organization that meets the company’s needs for financial insight, reporting, and compliance.

• Industry knowledge:

  CFOs must help a company to benchmark itself against peers. There’s a reason B2C companies often seek to hire CFOs away from competitors, as Netflix did when it hired Activision’s finance chief. Same for manufacturers and healthcare providers. Specialized expertise is key for various company types, as it helps in defining relevant KPIs and metrics.

• Growth experience:

  Companies depend on CFOs to guide them through the financial challenges of specific stages of growth. The stages could be raising venture capital, raising debt or equity financing, expanding internationally, or embarking on acquisitions. Such experience is invaluable to CEOs as organizations look to raise capital and allocate it wisely for growth.

• Risk assessment and management:

  CFOs provide critical perspective in terms of regulatory compliance but also the dangers that arise from too much debt, too little liquidity, brittle supply chains, weak cybersecurity, and poorly implemented technology.

CFO Responsibilities

Liquidity

Liquidity refers to an organization’s ability to pay off its short-term liabilities—those that will come due in less than a year—with readily accessible, or liquid, funds. Liquidity is usually expressed as a ratio or a percentage of what the company owes against what it owns.

CFOs are concerned with ensuring that customer payments are made in full and on time and controlling expenses so that enough cash is on hand to meet financial obligations.

Return on Investment (ROI)

Part of a CFO’s strategic focus is on ensuring a strong return on investment (ROI) for their organizations. ROI is a measure of the likelihood of receiving a return on dollars invested and the precise amount of that return. As a ratio, it looks at the gain or loss of an investment as a percentage of the cost.

Because ROI is a relatively basic KPI that does not account for all variables—net present value, for example—CFOs add context to evaluate whether a project will deliver sufficiently robust ROI to be worth the investment.

Forecasting

Importantly, CFOs don’t only report what is—a significant part of their value to an organization is their ability to accurately predict likely future outcomes. That includes financial forecasting and modeling based not only on the company’s past performance but on internal and external factors that may affect revenue and expenses. The CFO is tasked with making sense of the various departmental level forecasts to create profit projections for the CEO and shareholders.

Internal factors include sales trends, labor and HR-related costs, the price of raw materials, and more, while external data inputs could include opportunity cost for capital, shifts in market demand, emerging competitors, and advances in technology.

To monitor the external environment, CFOs may rely on government data, analyst firms, and business and general media, supplemented with insights gleaned through trade and association memberships and the input of board members, lenders, and others.

Reporting

Financial reports including balance sheets, and P&L and cash flow statements help both internal leaders and external stakeholders understand the financial state of the business. It’s up to the CFO to attest that these statements are accurate and complete in accordance with GAAP.

Although private companies are required to file financial reports with the SEC only if they have $10 million or more in assets and 500 or more shareholders, many businesses create these statements anyway so they’re available should the company seek a bank loan or venture capital or equity funding.

CFO Qualifications & Skills

Serving as a CFO requires a background in accounting or finance and generally an advanced business degree, typically an MBA. CFOs must have expertise and experience analyzing data to make recommendations on financial and organizational strategy.

In addition to having hard skills around accounting, budgeting, and data analysis, CFOs need solid leadership and management chops, including effective communication, conflict management, and negotiation skills.

Individuals in this role must forecast and offer strategic direction to the organization based not only on internal data but also on the external environment—including macroeconomic and regulatory—and be able to advise on industry-specific challenges and opportunities.

Finally, CFOs need a firm grasp of financial technology, such as automated expense management, AI-driven financial forecasting, and cloud-based ERP systems. This includes monitoring the technologies’ evolution, options available and their applications, how to make financially sound decisions about IT investments and infrastructure, and how to communicate to and educate staff to drive adoption across the organization. If financial tech is not used effectively, there goes your ROI.

The following list outlines core skills typically expected of a CFO. The list is not exhaustive, and hiring criteria could vary from business to business.

Finance Skills

• Financial reporting: Oversee the creation and analysis of financial statements as well as verify accuracy and compliance with accounting standards.
• Financial analysis: Interpret complex financial data to provide actionable insights for strategic decision-making.
• Budgeting and forecasting: Develop and manage budgets while creating accurate financial projections.
• Cost management: Identify cost-saving opportunities and implement effective cost control measures.
• Regulatory understanding: Hold a deep knowledge of financial regulations and maintain the processes to verify compliance across the organization.
• Cash flow optimization: Manage and improve cash flow to support operations and growth.
• Investment strategy: Develop and implement investment strategies aligned with company goals.

Management Skills

• Leadership: Guide and motivate finance teams, collaborate effectively with other departments.
• Innovation: Identify and implement new financial technologies and processes to improve efficiency.
• Communication: Clearly explain complex financial concepts to non-financial stakeholders.
• Risk management: Identify, assess, and mitigate financial risks.
• Long-term planning: Develop and execute long-term financial strategies aligned with company objectives.

Soft Skills

• Emotional intelligence: Understand people’s emotions and motivations to cultivate positive workplace relationships.
• Reliability: Consistently meet deadlines and deliver high-quality work.
• Adaptability: Adjust quickly to changing business environments and new challenges.
• Critical thinking: Analyze problems from multiple angles and develop innovative solutions.
• Conflict resolution: Navigate and resolve disagreements effectively within the organization, often providing data needed for perspective.
• Good judgment: Make sound decisions based on a combination of data analysis and intuition.

Members of the CFO’s Team

A CFO’s key duties vary based on the organization’s size, industry, and public or private status but generally fall into three broad functional areas: controller, treasury, and strategy and forecasting.

Organizations may have professionals overseeing some or all of these roles, each of which reports to the CFO.

Controller

Controllers run day-to-day accounting and financial operations and often hold a CPA or MBA. They are responsible for creating reports that provide insights into a company’s financial standing, including accounts receivable, accounts payable, inventory, and payroll.

Treasury

The treasurer is responsible for the company’s liquidity, debt, and assets. That includes any investments the company may have, whether physical assets, such as buildings and equipment, or financial investments.

Strategy and Forecasting

Strategy and forecasting involves using available data and reports, both internal and external, to advise on areas including product development, market expansion, human capital management, M&A and capital investments. It’s also where structured planning and forecasting exercises, like scenario planning and FP&A, fall.

Controllers, treasurers, and FP&A analysts are invaluable members of the team, but in all these areas, the buck stops at the CFO’s desk.

5 Top CFO Challenges

Today’s CFOs face challenges on multiple fronts, even as they benefit from ongoing technological advances and the ability to analyze and forecast based on massive amounts of data. Here are five top challenges.

1. Balancing Cost Efficiency With Growth

While uncertainty is high about macroeconomic conditions, CFOs still put a premium on growth for their organizations. The big challenge is balancing costs with top-line growth, without sacrificing quality. CFOs can improve long-term performance and boost returns by creating processes that assess costs strategically, investing in what sets the company apart, optimizing the biggest operational expenses, and reducing spending on areas that don’t create a competitive edge.

2. Data Governance

Lack of clear ownership and accountability around data and analytics governance leads to information silos, inconsistent data quality, and integration challenges. To deliver reliable insights, CFOs must take an active data governance role across the organization, so that all team are using the same information gathering and reporting processes and drawing on the same financial information for decision-making.

3. Adopting ROI-Driving AI Tools

Finance leaders are helping drive AI adoption within their finance organizations, and they’re also helping assess where the company broadly should invest in AI for the greatest ROI. CFOs need to pinpoint AI applications that drive measurable efficiency gains, improve outcomes such as customer service, or offer customers a new and better product experience. This could include tools for travel and expenditures (T&E) optimization, invoice matching, and customer credit management.

4. Juggling Growing Responsibilities

CFOs are taking on more enterprise-wide responsibilities. This makes sense, given the value a well-rounded CFO can bring to any initiative. But the CFO essential function remains keeping cash flow health and the finances in order and in compliance. So, the wider the role, the more important for the CFO to have built a strong and trusted team, allowing for effective prioritization and delegation to know the core responsibilities are covered while focusing on other projects that can yield a major impact to the organization.

5. Sourcing Tech-Savvy Talent

Many CFOs lack deep technology skills, and AI is making technology adoption and strategic technology investments ever more important. External hiring for technology-savvy talent won’t be enough, CFOs need to systematically upskill their teams with the skills they need to use new technologies, including AI, for analysis, data management, and automation.

Changing Role of the CFO

Companies that look at the CFO role as more about reporting, less about strategy are or will soon be at a disadvantage. Yes, finance chiefs need to ensure that they and the management team have timely data to support decisions. But strategic planning and collaboration across all parts of the business are what drive success.

Thus, it’s no wonder that CFO surveys consistently show that evolution. Especially in small and midsize businesses, CFOs tend to wear many hats. Not only are they doing the traditional CFO job, they’re assessing cyber security risks, managing system and data integration, filling talent needs, and evaluating new technologies like Blockchain and AI.

When Should You Hire a CFO?

Organizations should consider hiring a CFO when the CEO and more junior financial staff no longer have the skills to adequately evaluate the organization’s fiscal standing, assess cash flow, forecast future financial needs, and inform business strategy. Some experts advise $10 million in annual revenue as a marker that it’s time to hire a full-time CFO. But don’t forget that part-time/fractional and virtual CFO-as-a-service offerings are available.

While many organizations may wait to create this role until they begin to experience financial challenges, we recommend a more proactive stance. Ask yourself:

Are we beginning to pursue a growth strategy? If so, you’ll need deep insights into P&L, income, and cash flow statements. Who will look at the books if you spot an acquisition opportunity? Banks and other potential investors like having a CFO attest to accuracy and completeness. Oh, and have you calculated your valuation multiples lately?

Do we have a sound, repeatable planning and budgeting process? If not, you lack a firm financial foundation. Ad hoc is no way to run a business.

Are we using our data fully, and not just in the obvious areas? For example, are we mining ecommerce data to inform customer success programs? CFOs tend to champion data use.

Do we feel confident in financial reporting requirements? For example, were intangible assets impaired due to the economic downturn? If so, how will you account for that?

Then there are industry-specific considerations. For many manufacturers, retailers, and distributors, the pandemic revealed weaknesses in supply chain operations that an experienced CFO can help address.

CFO compensation in public companies is typically a mix of cash and stock. In both public and private businesses, remuneration is based on a number of factors, from company size and industry to geography, experience, seniority, and how many finance/accounting divisions or departments report to the CFO. U.S. CFO pay as of early 2025 averaged $456,739, according to Salary.com data. But at smaller companies, pay hovers between $130,000 and $200,000.

Technologies CFOs Use

CFOs and their teams rely on technology to analyze the massive amounts of data available to them. Modern financial management software helps with informed decision-making, freeing up time to focus on strategy and the critical advisory role.

CFOs need core financial reporting, audit and compliance capabilities and should also look for integrated systems that can help in FP&A, treasury and capital structure and allocation, regulatory compliance, and corporate portfolio management and modeling.

Today’s CFOs are working long hours—54% of CFOs in a Brainyard survey say they’re working 50 hours or more per week—and juggling a lot of responsibilities. But the return is a fulfilling job where senior financial professionals are able to take advantage of their experience and work closely with CEOs to build not only great companies but rewarding careers.

Beyond traditional accounting and finance responsibilities, today’s CFOs are increasingly involved in digital transformation, talent development, and cross-functional collaboration. Whether working with a large public company or a growing private business, CFOs provide the financial expertise and strategic vision needed to navigate complex business challenges.

CFO FAQs

Is a CFO an accountant?

While a CFO may have an accounting background, that is not necessary to achieve success in the CFO role. Accounting encompasses activities around AR, AP, and maintaining financial records. While CFOs depend on these activities, many chief financial officers have a broader financial skill set and focus more on managing assets and liabilities, planning future growth, business strategies, and risk management. Unlike an accountant, the CFO provides forecasts and makes strategic recommendations on organizational direction to the board, CEO, and other senior leaders.

What is the CFO in charge of?

Chief financial officers hold the top financial position in an organization. They are responsible for forecasting the organization’s financial standing based on financial and operational data and reports provided by the finance and accounting teams and advising the CEO and board on strategic direction.

Is the CEO higher than the CFO?

The CEO is the chief executive officer of a company and is above the CFO on the organizational chart. CFOs often work closely with the CEO and weigh in on high-level strategic decisions. Both the CEO and CFO have a direct conduit to the board or directors and are entrusted with the organization’s stewardship.

How do you become a CFO?

CFOs generally come up through the ranks, holding a variety of financial positions, such as VP of finance or controller, before rising to the C-level. Many also have deep business backgrounds, often hold dual degrees in business and finance and/or an MBA and have gained industry-specific expertise. Experience at lower responsibility levels positions finance professionals to achieve the CFO role.

What qualifications are needed to become a CFO?

CFOs need operational knowledge related to accounting, finance, and general business practices and an ability to think strategically and see the big picture. Companies generally look for advanced degrees or commensurate experience.

Because of the significant impact of technology on all aspects of business, including finance, today’s CFOs must also be familiar with the software required to run a modern finance and accounting operation.