The depth of the hierarchy serves as a metaphor for the growth of organizations. However, these organizations come in many different forms. For instance, nonprofits, profit-making businesses, governmental entities, and many others. Companies employ a variety of tactics to guarantee growth. A select group of the company’s chief strategists determines these strategies. One such is a CEO and CFO. They are essential in formulating the company’s development model. The following blog will chalk out the in-depth CEO vs CFO differences.
Why is There a Need For CFO and CEO Positions?
The exact answer to it is – proper management and development of the company.
Many businesses have adopted a two-tier corporate hierarchy in an effort to establish a corporation where stakeholders’ interests are protected. However, the board of governors, often known as the directors, sits on the first tier and is chosen by the stockholder.
The second layer is upper management, who are hired by the board of directors. CFO vs CEO falls under this layer.
It is getting harder to keep track of what employees do and where they are on the company hierarchy as a result of the shifting business landscape. One of the key explanations for the existence of these phrases is corporate governance.
The chief financial officer (CFO) and the chief executive officer (CEO) have pretty distinct responsibilities. Moreover, these two positions and those that come with them are filled by the most significant and influential people in the organization.
They hold C-level positions at the top of the corporate hierarchy, but their functional responsibilities differ. There are certain broad distinctions to take into account, even though this may frequently vary between businesses. Let’s dive in and find out more about the CEO vs CFO positions.
Chief Financial Officer (CFO)
The chief financial officer’s main responsibility is to supervise all financial management tasks such as reporting, planning, record keeping, risk management, and data analysis. Besides, the CEO and the board of directors routinely receive reports from the chief financial officer advisor.
They also frequently provide assistance to the Chief Operating Officer (COO) with tactical and strategic concerns involving estimating requirements, obtaining new financing, cost-benefit analysis, and budget control.
Chief Executive Officer (CEO)
Depending on the sector of the business, a CEO has a varied job area. The board of directors, in particular, makes decisions on a CEO’s duties. However, a CEO’s primary responsibilities include formulating new company policies, making decisions, and speaking on behalf of the organization in public. Also, assuming accountability for the work completed in various areas.
Further, the CEO is in charge of every division of the business. The CEO of the corporation receives reports from each section of the business. In addition, he gives the board of directors this information. The board of directors then counsels the CEO.
CFO vs CEO Difference Table
|Responsibilities||It controls and leads the finance division. Accountable for developing corporate budgets and ensuring that financial resources are used to support the organization’s goal.||It controls all departments and acts as the organization’s leader. Also, the CEO is in charge of the organization’s strategy and has a broad perspective.|
|Duties||Focus exclusively on actions pertinent to the financial department, such as training, hiring, operations, and communications.||CEO has a wide range of responsibilities, including change initiatives, managing operations and public relations, and making business choices.|
|Development||The chief financial officer’s job is to train employees in accounting and finance.||The CEO’s job is to identify and groom firm employees for management positions.|
|Reporting||The CFO answers to the CEO.||Whereas, The CEO provides updates to the board of directors.|
|Contacts||The CFO maintains contact with lenders, regulators, bankers, and investors.||The CEO serves as the company’s public face, giving speeches and engaging with the media and local authorities when necessary.|
|Analysis||The CFO examines every part of the company in order to ensure that all operations costs are reasonable and makes preparations for it.||The CEO takes into account the report that the CFO has provided and makes a decision in accordance with the report.|
|Strategy||CFO is responsible for a company’s financial strategy and supporting the CEO’s strategy or vision, ensuring sufficient cash for the organization.||The CEO is in charge of carrying out business policies as instructed by the board of an organization and developing the overall company’s strategic plan.|
CFO and CEO Key Takeaways
The CEO has the following responsibilities and works strategically to ensure the success of the organization:
- Work in accordance with the company’s goals and objectives.
- Represent the business and interact with management as needed.
- Tackle the pressing problems related to everyday business.
- Choose the investment opportunity after considering the opinions of the other board members.
- Getting together with other company leaders to discuss ideas and work on the new business potential.
CFO is employed by a different division of an organization and is responsible for overseeing a company’s financial activities. Thus, the key understandings are:
- Controlling and Forecasting cash flow.
- Budgeting capital expenditure.
- Measuring and evaluating variations.
- Additionally, assessing purchase vs. leases.
- Management meetings to provide the company’s track record.
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CFO vs CEO, which has more role in hiring decisions?
The CFO is usually just responsible for participating in the recruiting and hiring processes for roles in accounting and finance. But, comparatively, CEOs are more accountable for recruiting choices. In short, the CEO finds, assesses, and hires individuals for all management positions within the business.
Can a person be both CEO and CFO?
The CEO may also serve as the CFO. However, for the sake of compliance, job separation, and validation, publicly traded corporations must have two distinct CEO and CFO positions.
Is the CEO higher than the CFO?
The CEO and CFO both fall under the same second level in the company hierarchy. But comparing in terms of roles and responsibilities of the CEO vs. CFO, the CEO is superior. Moreover, CFO reports to the CEO.
Who has a higher salary in CFO vs CEO?
CFOs are compensated primarily through variable pay, while CEOs are often paid more in base pay. According to the organization’s sector and size, CEO and CFO pay might differ significantly. However, in the United States, the average annual base salary for the chief financial officer was close to 40% of that of the chief executive officer.
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