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CEO vs. CFO

The differences between the roles of a CEO and a CFO

What is CEO vs. CFO?

People outside the business world often get confused with the roles played by the CEO vs. CFO. The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) take on different but equally important responsibilities in an organization.

On the one hand, the CEO assumes the main role of overseeing the operations of the entire company, from sales to administration. He holds the highest rank in the company and only reports to the board of directors. On the other hand, CFO assumes the highest-ranked financial position in the company. The main focus of a CFO is the financial development of the business.

 

CEO vs. CFO

 

What is a CEO?

The CEO is the most senior manager of an organization, particularly in an independent legal entity like a non-profit institution or a company, who oversees the activities of the whole organization. Chief executive officers manage different organizations, such as government entities, non-profit organizations, and private and public corporations.

The CEO usually reports to the board of directors of the company and is responsible for maximizing the entity’s value, including revenues, market share, share price, etc. In the government and non-profit sector, chief executive officers typically seek to achieve results that relate to the mission of the organization, such as increasing literacy, reducing poverty, etc.

 

What is a CFO?

The CFO is a senior manager with the primary role of overseeing the management of the company’s finances and financial activities, including financial risk management, financial planning, financial reporting, recordkeeping, signing checks, and sometimes, analysis of data. The CFO is comparable to a controller or treasurer.

The chief financial officer usually reports to the CEO, as well as the board of directors. They may also assume a seat on the board. They are the head of the company’s finance personnel and are also the key financial spokespersons. They normally support the Chief Operating Officer (COO) on both tactical and strategic matters concerning cost-benefit analysis, securing of new funding, forecasting needs, and budget management.

 

CFO

 

Differences between the CEO and CFO Roles

The significant differences in the roles played by the CEO vs. CFO are listed below:

 

1. Key Responsibilities

The chief executive officer’s main duty is to keep an eye on the big picture, overseeing the operations in all departments and making sure that the long-term goals of the company are realized. The CEO doesn’t involve himself/herself in the detailed tasks of every department but maintains a general oversight with the aid of consistent reporting from chief managers from every department.

The chief executive officer usually focuses on things like articulating the vision of the company to personnel and potential clients, executing decisions made by the board of directors of the company, developing leadership in the company, staying within the overall budget of the company, encouraging as well as rewarding productivity, and ensuring a strong position is maintained in the market.

The CEO is chiefly accountable for the overall company performance. The role is usually determined by the board of directors. On the other hand, the CFO is responsible for the financial part of the company only. The CFO is the top financial manager of the organization. The CFO is, in most cases, is responsible for a number of departments that are financial-related, such as budgeting, accounting, compliance, auditing, and more.

 

2. Strategy

The CEO assumes the responsibility for the general strategy of the organization and the procedures used to accomplish that strategy. The CFO is in charge of the financial support of the corporate strategy only, meaning that they ensure that sufficient cash is available to cater for strategic needs, maintaining the company’s profitability, and alleviating its risk.

 

3. Liaisons

The CFO also plays an important liaison role, since they build relationships with lenders, banks, investors, regulators, and other financial institutions. For instance, the CFO attends meetings with private investors to discuss the latter’s interest in the company or with bankers to create lines of credit, and then report to the CEO.

The CEO, however, doesn’t assume any liaison responsibilities. They are the public face of the company and usually make speeches, as well as meet with community leaders and the press whenever necessary.

 

4. Reporting relationships

The CEO generally reports to the company’s board of directors, while the CFO reports to the CEO and the board of directors. As the chief financial officer, the CFO puts together the annual budgets of the company, analyzes financial data, tracks expenses and revenues, and reports the results to the CEO and board of directors. The CFO can also sit on the board of directors, just like the CEO.

 

5. Analysis

The CFO handles tasks that need quantitative and qualitative financial analysis. He/she is responsible for reviewing various aspects of the company to ensure that the costs of the operations are controlled in a proper manner and that the resources are correctly allocated.

The CFO also conducts an analysis of future capital investment of the company and reviews current market trends. He then reports such results to the CEO, who decides how to adjust the operations of the firm to make it more effective and efficient.

 

6. Development

It is the responsibility of the CEO to search, find, and prepare employees within the firm for positions of management. The CFO finds and grooms personnel within areas of accounting and finance only.

 

Related Readings

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

  • Finance Salary Guide
  • Leadership Theories
  • Management Skills
  • Remuneration

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