A job as a CFO, or the chief financial officer, of a company is second only to the big hoss him- or herself: the CEO. But since a CFO deals directly with the finances of the company on a daily basis, you could argue that the CFO has more influence on the direction a company takes.
The CFO is responsible for the past and present financial situation of the company. They oversee the capital structure and determine what is the best mix of debt, equity, and internal financing that the company should have. The job requires one to report on financial situations and make crucial decisions on when and where to invest money. In short, a CFO is the integral piece of the management and finances of a company.
Sounds like a role for you? You will definitely think so once you discover that the average yearly salary for a CFO for an S&P 500 company is $3.8 million USD. But even if you don’t crack into the ranks of these companies, salaries for a CFO of other decent-sized companies are around $300,000 USD.
If you are now or have always yearned to reach the title of CFO for a company, there are three distinct career pathways in corporate financing that can get you into the big chair (next to the slightly bigger chair of the CEO). We will discuss them below.
The first path: financial planning and analysis
Also known as management accounting, financial planning and analysis (FP&A) as a department is in charge of a company’s profit and loss statement, forecasting the bottom line, or net income.
Working in FP&A reports to the CFO and is tasked with providing a good idea on what will happen in the coming years to different line items. Some variables that may affect the bottom line may include the projection of net sales, increased cost of goods sold or sales and marketing expenses, and any other anticipated one-time expenses. As you may guess, this job requires plenty of data consolidation and variance analysis. Other ad hoc reports would be required from you as well.
The FP&A department is one of the top strategic ones in a company because you project where the company can, could, or should be in the next five years.
This career path is demanding, but rewarding. You may be expected to work around 60 hours per week, with quarter and year-end closing periods being the busiest times of all. The compensation for entry-level analysts is around $70,000 USD; senior analysts net between $100-130,000 USD. An FP&A manager for a smaller company or a division of a global company can earn around $200,000 USD, while the global manager will enjoy a 7-figure salary.
If you are ready and willing to embark on a 5-year journey to be a senior analyst, and then another 5 years to be a manager, this career path is a solid one to take towards a CFO role.
The second path: controllership
Controllership, or financial accounting, has a reputation for being a boring accounting job, but there is actually more to it than most people realise.
In addition to checking journal entries, accountants are in charge of maintaining the integrity of the balance sheet. Accountants must jump into action any time there are issues with the financial statements of a company. Auditing is another crucial task of an accountant.
Additionally, accountants are the middlemen between the CFO and investors. In general, CFOs are aggressive in their approaches in order to reach a net income target. But this may require the CFO to cut corners. This is where the accountant comes in: they will find solutions to satisfy the strategy of the CFO while ensuring that financial statements are not inaccurate. Faulty statements will mislead investors, and the clash that ensues is one no company wants to experience.
Accountants in a company are divided according to region or product. A controller is the head of this department, and they would report to the CFO.
If the role of accountant is deemed to be mundane, then so too is the position’s working hours: usually strictly 40 hours per week. The average salary for an entry-level accountant is $40-50,000 USD. The way to get to the CFO seat from this career path is to aim for the controllership position. The working hours and salary for this position is similar to that of the FP&A roles.
The third path: treasury
The truth on how much money a company is generating or losing does not slip past those working treasury.
Treasury handles all that is related to cash and cash flow. Treasury analysts forecast how much money a company will need in the future, and then, importantly, they make sure that this money is available at that time in the future. The treasury can employ some tactics to ensure this happens. For example, they can emit bonds, raise equity, borrow through commercial paper, or negotiate credit lines with banks.
Constant contact with banks and investors is something that treasury analysts do. This is so they can secure funding and support for the company. They are responsible for balancing the cash position of the company’s accounts so that none of them are negative and costing the company extra in fees. Dabbling in the investment of short-term funds is another aspect of the job. This lets the come gain some interest of the investments.
The treasury department comprises analysts of different specialities, from bond emissions to cash positioning. The sizes of these departments vary by sector. Banks, for example, have very large treasury departments.
Hours vary for treasury analysts. If all is going well for the company, an analyst will work 40-50 hours per week. If the company is in a pinch, hours will increase to 70-80 per week.
The salaries for analysts, senior analysts, and treasurers in the treasury department go from $70-90,000 USD; $100-170,000 USD; and $200,000 to $4 million USD, respectively. The wide pay range is because the size of the company can dictate how much those in the treasury department make.