The 6 Skills You’ll Need to Become a Top Level CFO

“Chief financial officer” is the title for one of the most important executives in any company. The CFO has a lot of responsibility and will definitely be involved with every aspect of your business, from strategy to day-to-day operations. A good CFO can make or break your business—so it’s important to understand what they do and how they can help you succeed.

The CFO is responsible for financial planning, budgeting, forecasting, risk management, and accounting functions within an organization. They are also responsible for managing all aspects of finance, including investments, treasury management, tax planning/compliance, and reporting/financial analysis functions at all levels within an organization and its subsidiaries.

Now, whether you are an aspiring CFO looking to find the skills you need or a business looking for an hourly Colorado-based fractional CFO, we’ve set up a quick list of the skills that are most important to be an effective CFO that can climb through the ranks. Read on to find out more.

Get To Know the Business

It’s important to get to know the business. You need to understand the people, the culture, and the products and services. This means talking to employees at all levels. It doesn’t matter if they are in marketing or human resources; you will learn something valuable from each of them. 

You should also talk with customers and suppliers so that you can fully appreciate what it takes to run this business day-to-day. If I had known then what I know now, I would have made sure that before making any changes or trying anything new, I would have spent more time learning about my new company’s products and services—and about how it operated as a whole.

Be a Team Player

While the job of CFO often encompasses a solo role, you’ll be working with a team at some point in your career. This means having the ability to work with others and collaborate as a team.

When you’re in charge of working on projects as part of your job, it can be helpful for everyone involved if you come prepared. Having an idea of who is going to be involved lets everyone know that they are expected to participate and share their input. Plus, being clear about what’s expected will help keep things running smoothly from start to finish.

The ability to communicate effectively is crucial when coordinating work between teams within an organization; however, it’s also important for getting along with coworkers outside of your department too! Being able to communicate effectively can mean the difference between resolving issues quickly or letting them fester until they get out of hand.

For example: If someone isn’t answering emails as quickly as other people would like them to, then it might be worth reaching out over Slack instead, so we don’t waste time waiting around while they’re “busy.”

Understand the Numbers

The CFO is responsible for the financial health and profitability of a company. It’s essential that you be able to understand the numbers, especially since mistakes in accounting can have serious consequences. If you’re not comfortable with numbers or don’t have a strong grasp of them, then this might be a tough role for you. You can learn more about accounting by taking an online course or reading up on financial theory and practice before diving into this position if necessary.

Get Aligned With the CEO and Board

When you’re the CFO, and your job is to manage the financial health of an organization, it’s important that you are aligned with the CEO and board of directors. This means understanding their agendas and ensuring that there’s some level of agreement between all parties involved.

For example: when a CEO comes in as a new hire, they will have certain expectations about how things will operate or be run within the company—and so should you! One of my goals, when I join a new company, is to understand those expectations. After all, if we’re not on the same page from day one, then how can we expect things to go smoothly down the road?

Next up is understanding where your role fits into that picture. In order for us to succeed in our roles as “risk managers,” we need to know what risks are out there so we can mitigate them before they become problems later down the road or, worse yet, liabilities.

Understand Corporate Finance

The first thing you need to understand is the difference between cash flow and profit. Cash flow is the money that flows into and out of a company over time, while profit is net income after all expenses are paid.

Consider, for example, a business that has $100 million in sales this year but only $50 million in expenses (including interest payments). The company would then report a net income of $50 million ($100 million – $50 million). But how much cash did it generate? Not much! 

The firm generated only $50 million in revenue from sales during the year ($100 million x 50%). In fact, if you look closely at most businesses’ income statements (the financial statement showing profits), net income will be much smaller than both gross revenue and operating cash flow—the former two-measure what actually happened during each year while the latter measures cash generated by operations on an ongoing basis. It is crucial for a CFO to understand these basic tenets of running a business.

Excel at Risk Management and Governance

As the CFO, you are the chief risk officer. Risk management is your responsibility, and you will be held accountable if it is not done well. You must understand all the risks that your company faces and have policies and controls in place to manage them effectively.

The most important part of risk management is setting clear expectations for employees around acceptable levels of risk. If employees aren’t aware of what constitutes acceptable risk, they’ll be less likely to avoid taking unnecessary risks or reporting problematic behavior from others in their department or team.

It’s also important for you to regularly meet with your board of directors and other stakeholders who will provide input on how well your company is managing its risks.

Conclusion

You don’t need to be a numbers nerd, but you do need to understand what the numbers mean. There’s more to the role than crunching numbers. You have to have the ability to ask questions, dig deeper into financial information and use it in a way that drives the business forward.

A good CFO understands that risk management and governance are important elements of their job. They understand what impact their decisions will have on your company or project, as well as how they can help mitigate any negative impacts through careful planning or by leveraging innovative technologies like blockchain or artificial intelligence.

Finally, a good CFO is always thinking about how everything fits together in order to optimize productivity for both themselves and their team members. They know how important it is for everyone involved with a project—from CEOs down to individual contributors—to effectively communicate, so everyone knows what needs to be done at all times.

Adam Hansen