Moving from a Vice President (VP) position to a Chief Financial Officer (CFO) role can be a challenging and enriching experience. 

While many VPs may already have the determining factors that can increase their chances of transitioning to the role, the CFO position requires different sets of expertise and skills to successfully run the position.

The Breakdown of the CFO Role

The CFO of an organisation is responsible for managing financial health, developing financial strategies, and managing financial risks.

Any VP aspiring to become a CFO will need to have a developed inner understanding of accounting and finance, strong leadership and communication skills as well as analytical skills.

The CFO position is of a senior executive in a company, typically the highest-raking financial officer who reports directly to the CEO and/or the board of directors.

As demands and trends in the industry evolve, so has the role of a CFO, becoming progressively important to the current business environment.

Some of the key responsibilities of a CFO include:

• Financial Analysis: analysing the company’s financial data to keep up to date with trends, opportunities, and risks. This includes presenting these findings to the CEO, the board of directors, and other stakeholders through developing financial models and conducting financial analysis.

• Financial Strategy: responsible for developing and implementing the financial strategy of the company by setting financial goals and objectives, seeking out financial risks, and developing plans to reduce the risks.

• Financial Planning: responsible for developing the company’s financial plans and budgets that consist of forecasting revenue, cash flow, and expenses, and making sure that the company has sufficient financial resources to achieve goals.

• Financial Reporting: responsible for making sure the company’s statements are correct and aligned with the accounting regulations and standards through the preparation of statements, overseeing audits, and communicating with stakeholders.

• Risk Management: responsible for managing financial risks which includes identifying, assessing, and reducing risks related to financial investments, operations, and other financial activities.

• Treasury Management: responsible for cash flow and other financial assets, which includes keeping banking relationships, investing, and managing foreign exchange risks.

CFO positions are demanding and challenging, and the right fit of a candidate for the position is crucial to ensure the continued financial success of a company.

Are You the Right Candidate for a CFO Position?

CFO jobs aren’t ones you can just walk into without the relevant scope of qualifications. This position is not a senior executive one just because anyone can take on the role and make a success of it. 

Apart from the skills required, extensive educational profiles, professional certifications, and experience are all sought-after requirements for a VP candidate to be considered for a CFO position.

Skills

In addition to experience and technical skills in accounting and finance, there are several soft skills that are key to succeed in the CFO position.

• Strategic thinking: be able to make decisions through strategic thinking that align with the company’s overall objectives as well as have exceptional communication skills to convey financial information effectively.

• Leadership skills: be able to manage a team of financial professionals, which includes implementing effective motivational techniques and task delegation.

• Interpersonal and collaboration skills: working closely with other executives and stakeholders, having the ability to build relationships, effectively negotiating, and joining forces with others.

• Communication skills: these communication skills include strong written and verbal techniques of communication, with the ability to effectively communicate financial information by adjusting the style of communication to different audiences.

• Adaptability: with obstacles that may arise at any given time, adaptability to changing business environments and working under pressure is essential. The willingness to grow through opportunities and learning curves will help improve resilience and flexibility.

Experience

Some of the most common paths that lead to becoming a CFO are starting out in an accounting or financial role and working up the ranks. These experiences can include working as accountants, controllers, or financial advisors before moving into a senior position. This provides them with a well-founded understanding of accounting principles and financial management with the addition of experience in financial forecasting, budgeting, and reporting.

Many CFOs also have experience in other areas of business which may include operational, marketing, or sales experience which provides a broader viewpoint on business operations and strategy. These are all valuable resources of information when it comes to understanding and communicating the implications of financial business decisions.

Experience in managing teams and driving strategic initiatives is important, which includes the ability to motivate others, effective delegation of tasks, and ensuring a clear direction. Relationship building with other executives and stakeholders is crucial to the process of moving the company forward.

Aside from the above-mentioned experience, the VP needs to have extensive experience in their current position and have to have worked in that role for several years.

Education and Certification Requirements

Educational requirements can vary depending on the organisation, the industry, and the level of experience.

• South Africa

The typical educational and certification requirements are as follows:

• a Bachelor of Commerce degree (BCom) in finance, economics, accounting, or a related field is often a minimum requirement.
• A Master of Finance (MFin) or a Master of Business Administration (MBA) can be a competitive advantage for candidates as these degrees can provide extra expertise in leadership, financial strategy, and management.
• A professional accounting qualification, a Chartered Accountant (CA), or a similar accounting qualification is often preferred or required. Additional certifications such as Certified Treasury Professional (CTP), or Certified Financial Manager (CFM) can be beneficial to candidates to show an ongoing commitment to professional development.

Additional requirements: a candidate may need to be a South African citizen or a permanent resident.

• United States of America

The typical educational and certification requirements are as follows:

• a bachelor’s degree (BA) in finance, economics, accounting, or a related field is often a minimum requirement.
• A Master of Finance (MFin) or a Master of Business Administration (MBA) can be a competitive advantage for candidates as these degrees can provide extra expertise in leadership, financial strategy, and management. An MBA may be more common for larger organisations.
• A professional accounting qualification, Certified Public Accountant (CPA) is often preferred or required. Additional certifications such as Certified Treasury Professional (CTP), or Certified Financial Manager (CFM) can be beneficial to candidates to show an ongoing commitment to professional development. A Chartered Financial Analyst (CFA) certification is also highly recommended.

Additional requirements: Some states may require additional coursework or experience beyond the CPA certification.

• United Kingdom

The typical educational and certification requirements are as follows:

• a bachelor’s degree (BA) in finance, economics, accounting, or a related field is often a minimum requirement.
• A Master of Finance (MFin) or a Master of Business Administration (MBA) can be a competitive advantage for candidates as these degrees can provide extra expertise in leadership, financial strategy, and management. An MBA may be more common for larger organisations.
• A professional accounting qualification, a Chartered Accountant (CA), or a similar accounting qualification is often preferred or required.

Additional requirements: the candidate may need to have working experience in the country’s specific regulatory environment.

Business Acumen

Business Acumen refers to the CFO’s broad understanding of the business as a whole – beyond just the finance and accounting aspects – including marketing, operations, sales, and functions allows the CFO to provide financial guidance for the company’s strategies and goals.

To build on strong business acumen, a CFO must:

• Have an excellent understanding of the industry in which the company works. An understanding of the regulatory environment, competitive landscape, and market trends makes an impact on the company’s financial performance. An in-depth understanding of the company’s services or products, suppliers, and customers is also considered beneficial to the CFO.

• Have a general understanding of business operations and strategies, including the understanding importance of customer satisfaction, and the roles of technology contributing to growth.

What VP Positions are Eligible to Apply for a CFO Position?

Before a VP can apply for a CFO position, there needs to be an understanding of which VP positions are eligible to transition into the role.

Finding the correct candidate for a CFO position is important and not every candidate applying for the job will be the best fit. It’s worth noting that while the following positions for the CFO role can set a path to taking up the position, it’s not a guarantee. The process of choosing the right candidate may be intensive to ensure that the candidate has the right set of skills and, meets all the requirements that the demanding role of a CFO needs.

There are several VP positions that are eligible and can potentially lead to a CFO position, and why:

• VP of Accounting: oversees the company’s accounting operations, typically managing the accounts payable and receivable, financing reporting, and tax compliance. This provides a strong foundation in accounting and finance.

• VP of Investor Relations: oversees the communication with the analysts and investors, managing the relationship with stakeholders, and providing counsel on financial performance. The role requires an understanding of financial markets and effective communication of financial information – an important skill for CFOs.

• VP of Finance: oversees the company’s financial operations. This role provides a solid block in the foundation of the financial aspects of a company, managing financial budgeting, forecasting, analysis, and reporting.

• VP of Corporate Development: responsible for identifying and implementing strategic resourcefulness, including mergers and acquisitions, partnerships, and joint ventures. This role includes an understanding of financial analysis which is an important skill for a CFO.

VP of Operations: responsible for managing the day-to-day operations. This position may not be as involved much in financial analysis as the above positions, it does however provide a wider understanding of how a company operates, which can be a valuable background for a CFO.

The Challenges and the Solutions of the Transition

There is a wide variety of challenges that may be faced by VPs moving into a CFO role, and these challenges will vary from candidate to candidate.

Here are some challenges that may be faced by VPs; challenges might be intense for some depending on their level of experience and skills.

• Strategic mindset: lacking the skills to understand and develop financial plans and strategies that align with a company’s objectives, which is required to have a strategic mindset.

• Financial expertise: extensive financial expertise is crucial to a CFO. It is important to have an understanding of accounting, financial analysis, and financial modeling which may not be part of the VP’s background.

• Regulatory compliance: a requirement needed to understand complex financial regulations and the capacity to stay informed with changes in regulatory requirements.

• Communication skills: communicating financial information to a wide range of stakeholders, which could include executives, board members, and investors. This requires outstanding communication skills and the aptness to interpret financial information in a simplified language. 

• Building a financial team: the ability to manage a financial team, with the initiative to identify and develop financial talent and an excellent set of leadership skills.

• Time management: with various responsibilities at hand that require constant attention, time management skills are crucial to ensure that time is correctly allocated to tasks accordingly to time sensitively and the level of importance.

While there may be challenges faced by certain VPs when considering the move to a CFO position, there are solutions to these challenges to help the candidates overcome them and be prepared for the role.

By taking proactive steps to develop knowledge and skills, VPs can successfully make the transition to a CFO job and add their contribution to their company’s financial success.

• Practice effective communication: some of the ways to increase effective communication is through creating presentations, writing reports, and speaking in front of groups to build confidence in communication capabilities.

• Financial education and training: be open to attending various courses, seminars, and workshops to develop an understanding of accounting and financial approaches. This will also help fill in any lacking knowledge in financial expertise and build on the foundation for financial decision-making.

• Relationship building with stakeholders: this can be done through networking, engaging with stakeholders in a professional manner, and attending industry events.

• Managing time effectively: focus on prioritising current workloads, task delegation, and setting goals that will help them manage their responsibilities effectively.

• Leadership skills development: managing their team, providing constructive direction, and inspiring their team to strive to reach their goals can help build on leadership skills based on the success of the direction laid out for the teams.

• Staying up-to-date on regulatory changes: constant changes in accounting and finance regulations mean that keeping up with current information is a must, and this can be done by attending conferences, networking with other financial professionals, and reading the latest industry publications.

Executive coaching can assist you with skills development. Working one-on-one with an experienced coach, who will evaluate your strengths and weaknesses, and implement techniques and methods to achieve goals.

Let’s Talk About the Money

Moving up from a VP position to a CFO role is seen as a milestone in an accounting and finance career. 

It represents a significant increase in responsibility and leadership, and it can come with a sizeable salary increase.

Even though CFOs are among the highest-paid individuals in the majority of organisations, their salaries depend on certain factors, such as the industry and the size of the company, experience and qualification levels, and the particular demands of the role.

• South Africa (based on averages):

Entry level: R420 000 annually

Experienced workers: between R1260 000 and R6 372 120 annually

Source: https://za.talent.com/salary?job=chief+financial+officer 

• United States of America (based on averages):

Entry level: $100 000 annually
Average: $137,507 annually

Experienced: up to $200,000 annually

Source: https://www.talent.com/salary?job=cfo  

• United Kingdom (based on averages):

Entry level: £57,025 annually
Average: £40,000
Experienced workers: up to £93,343 annually

Source: https://uk.talent.com/salary?job=cfo 

Disclaimer: these salary amounts are current with the time the article went to publication

Bonuses are based on different factors, depending on the industry, organisation, and performance metrics. These determining factors can include looking at how risk management was handled, meeting strategic goals and contributing to cost reduction, the company’s financial performance, and employee and stakeholder satisfaction. 

These factors are tied to performance-based incentives and it remains the company’s discretion to have bonuses paid out or not. While bonuses are a common form of compensation, there are no guarantees that a CFO will be eligible for it in any given year.

The Expectations of Moving from a VP Position to a CFO

The length of time for a VP to transition into a CFO job generally varies based on the variety of factors required for the position.

Factors that are taken into consideration include the candidate’s education, qualifications, and experience as well as the specifics of the company and the area of the industry. 

All these will need to be weighed against the requirements of the CFO position to make sure that the right candidate is chosen to fulfill the role as well as take the company forward financially secure.

The competition for a CFO role is intense, and with the limited number of positions, only a selected few candidates will be considered for the position. While there are no guarantees for success, VPs with the right combination of experience, qualifications, and education can be strong candidates for a CFO position, and can successfully make the transition to this high-level leadership position.