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What qualifications does a CFO need?

fractional CFO working at a desk

What qualifications does a CFO need, when does your company need a full time CFO, and where can you find one?

First things first, when it comes to a modern-day CFO, you’ll need to look well beyond finance and accounting. A CFO worth his or her salt will have management skills, the necessary work experience, risk management skills, and a strategic and analytical mindset.

Let’s break down CFOs, their qualifications, and where you can look for a quality CFO candidate.

What is a CFO and what are their job duties?

Today’s CFO has broader responsibilities than their predecessors of 20 years ago. A CFO is no longer just responsible for internal financial controls and ensuring compliance. Instead, their responsibilities have amplified, and CFOs are also now called upon to be leaders in strategy development, driving growth, and spearheading innovation (particularly in relation to technology that can enhance efficiency).

Why would your company need a CFO?

Nearly every company can benefit from a strategic, forward-looking financial partner. CFOs fulfill this specific business need.

Controllers and accountants report the past, and CFOs analyze that past data (in addition to future trends and opportunities) to create long-term, strategic recommendations for the company.

CFOs ultimately partner with the CEO to ensure company goals are achieved.

When is the right time to hire a CFO?

If you are a CEO/business owner of an organization that needs a strategic financial partner to help you maximize the value of your company, then you need a CFO.  (Read our latest article on Fractional CFO Services.)

However, if your company is between $5M – $100M in revenue, partnering with a fractional CFO (with experience in your industry) is a great first step.

A fractional CFO will work with you on a part-time basis and cost much less than hiring a full-time CFO with all the required benefits. Typically, if a company is $100M+ in revenue, then they have the workload to fully engage and afford a full-time CFO.

What are CFO qualifications and skills?

With a CFO’s new and more broad responsibilities, good CFOs need qualifications and skills beyond accounting and financial analysis.

That said, a CFO needs to have a Bachelor’s Degree in Finance or Accounting (at a minimum) with an MBA (Masters of Business Administration) usually being preferred.

Certifications such as CPA (Certified Public Accountant), CMA (Certified Management Accountant), and CFA (Certified Financial Analyst) are also a plus.

In addition to education and certifications, a CFO must also possess:

  • Communication Skills: The CFO must be able to deftly communicate with internal and external stakeholders in a confident, transparent, personable manner that’s void of accounting jargon in order to ensure messaging is fully understood and embraced.
  • Operational Mindset: A CFO needs to have deep knowledge of how each area of the company impacts each area of the income statement and balance sheet in order to know what levers to pull in any given situation. This is critical in their ability to partner with other functional leaders to drive EBITDA.
  • Technology Comfortability: Technology, especially that related to employee or plant efficiency, is increasingly coming under the purview of the CFO. A CFO doesn’t need to be an IT savant, but they must be comfortable with exploring and evaluating new technology as it comes available.
  • Strategic and Analytical: The CFO is an innately strategic role (as it is forward-looking); however, an analytical mindset is also required to be able to adequately evaluate the long-term strategic options.
  • Relationship Builder: Internally, a CFO has to build relationships with other functional departments and leaders to accomplish goals. Externally, CFOs are the key communicator of business performance to investors, bankers, board members, and other key stakeholders. They must build relationships with these constituents to establish mutual trust. Some CFOs also engage with key customers, vendors, and community leaders to ensure company success across the broader ecosystem and in negotiating complex contracts.
  • M&A deal Maker: A strong CFO will take the lead in vetting acquisition targets and negotiating the deal to ensure a smooth integration and exceptional ROI.
  • Growth Mindset: Rather than simply analyzing an opportunity for why it may be too risky, good CFOs have a growth mindset and first analyze the opportunity for why it should be done. What is the ROI on the opportunity? What priority should be assigned to the opportunity? What could be done to increase the ROI by decreasing aspects of risk?
  • Innovator: Related to growth mindset, is the need for the CFO to be a champion of innovation in product, process, and people (in addition to technology).
  • Education and Experience: In terms of years of experience, it depends on the size of the organization, but most will expect a minimum of 15 years’ experience across a broad spectrum of financial roles (i.e. financial analysis, accounting, treasury, etc.) with at least 5 of these years in a senior executive financial role. This ensures the CFO has a competent base of knowledge required for the role.

Where is the best place to look for a CFO?

Depending on your company size, budget for salary and recruiter fees, timeline to hire, personal time availability, and current network size, there are a variety of options for finding a CFO.

  • Professional Recruiter: For larger organizations ($300M+ in revenues), this is typically the “go to” choice. This is because they typically have a short timeline to bring someone on board, and they also have the funds required for a $300k+ salary (as well as the associated recruiter fee).
  • Fractional CFO:  Hiring a fractional CFO is an excellent choice for businesses in the $5M to $100M range. A quick Internet search for fractional/virtual CFOs in your area will provide several for you to evaluate.
  • Networking: Contacting other CFOs you know for recommendations and networking groups that focus on financial executives can be a good source – but can take a bit longer to come to fruition. Reaching out to other financial professionals (such as tax CPAs, wealth managers, or bankers) can also be a good networking source.
  • LinkedIn: CFOs that are exploring new opportunities are usually very active on LinkedIn, and they are regularly scanning for roles of interest and are open to networking.
  • Other Job Boards: Job boards like Indeed and ZipRecruiter typically concentrate on lower level roles and are not normally frequented by C-level executives. You may want to avoid these platforms until all other avenues have been explored.

Need help finding a new CFO?

At New Life CFO, we provide fractional CFO services for businesses of all shapes and sizes, and we’d love to help you, too. If you’d like to learn more about how to get started with fractional CFO services, give us a call, reach out to us online for a free consultation, or check out our additional CFO resources.

If you need improved financial results immediately, watch our three-part series on how to create financial stability now and improve profitability for the long term.