Someone in the field of finance looking for career growth would often find the positions of CFO or VP of Finance to be the top positions. The roles of a Chief Financial Officer (CFO) and a Vice President of Finance (VP of Finance) are both important for the financial success of a company, but they have distinct responsibilities and functions. Let us get to know more about these two titles – CFO vs VP of Finance.
Who is a CFO?
A CFO is the top financial executive in a company and reports directly to the CEO. The CFO is responsible for the overall financial strategy of the company and for ensuring that the company’s financial goals are met. This includes managing the company’s financial team, overseeing the budgeting and forecasting process, and ensuring that the company’s financial statements and reports are accurate and compliant with legal and regulatory requirements. The CFO also plays a key role in fundraising and investor relations and works closely with the CEO and the board of directors to make strategic financial decisions.
Read: The Role of a CFO
Who is the VP of Finance?
A VP of Finance is a senior financial executive who reports to the CFO. The VP of Finance is responsible for managing the day-to-day financial operations of the company, such as managing the company’s accounting and financial systems, overseeing the company’s financial planning and analysis, and ensuring that the company’s financial statements and reports are accurate and timely. The VP of Finance also works closely with the CFO to develop and implement financial strategies and may also be involved in fundraising and investor relations.
Responsibilities of a CFO vs a VP of Finance
The role of a Chief Financial Officer (CFO) is a senior-level position that is responsible for the overall financial strategy and management of a company while the role of a VP of Finance is responsible for the day-to-day financial management and operations of a company. Some of these responsibilities overlap, but their overall outlook is different.
Here are the responsibilities of both roles.
Responsibilities of VP of Finance
Responsibilities of CFO
There are many other responsibilities of these positions but above mentioned responsibilities basically focus on CFO vs VP of Finance.
Skills of a CFO and a VP of Finance
The skills required for a CFO and a VP of Finance are different depending on the work but some are also overlapping. Let us take a look at the skills required for both these positions and understand the similarities and differences.
Both CFOs and VP of Finances need to have a strong understanding of financial concepts and principles. They also need to be able to analyze and interpret financial data and communicate financial information effectively to both internal and external stakeholders. In addition, both CFOs and VP of Finances should have strong leadership and management skills, as they will be responsible for leading and managing the finance team.
However, when you compare CFO vs VP of Finance, there are some specific skills that are separate:
VP of Finance
A CFO needs to be able to think strategically and understand the big picture of the company’s financial situation. They need to be able to develop and implement financial strategies that support the overall goals of the company.
A VP of Finance needs to be able to manage the day-to-day financial operations of the company, such as managing the company’s accounting and financial systems, and ensuring that the company’s financial statements and reports are accurate and timely.
|Fundraising and investor relations
CFOs play a key role in fundraising and building relationships with investors. They need to be able to work with investment bankers, venture capitalists, and other financial institutions to raise capital for the company and manage the company’s relationships with its existing investors.
As a VP of Finance, you need to be able to identify cost-saving opportunities and implement strategies to control costs and improve profitability.
CFOs are responsible for identifying and managing financial risks that could impact the company’s financial health. They need to be able to assess the impact of potential economic or market conditions and implement strategies to mitigate those risks.
A VP of Finance needs to be able to ensure that the company’s internal control procedures are effective and efficient in detecting and preventing fraud, errors, and noncompliance with laws and regulations.
Salaries of a CFO vs VP of Finance
According to data from Glassdoor, the average salary for a CFO in the United States is around $320,184 per year. However, CFOs at larger companies or in certain industries, such as technology or finance, can earn significantly more.
On the other hand, the average salary for a VP of Finance in the United States is around $316,576 per year, according to Glassdoor. However, as with CFOs, VP of Finances at larger companies or in certain industries can earn more.
The salaries of both positions aren’t much different and depending on the work and company the salary can vary.
CFO vs. VP of Finance: education requirements
The education requirements for a Chief Financial Officer (CFO) and a Vice President of Finance (VP of Finance) are generally similar, and both typically require a strong background in finance and accounting.
A common educational path for a CFO or VP of Finance is given below:
- Relevant undergraduate degree: As you know finance is a difficult field without the right foundation. There are only a few degrees that will help you to build the foundation for the finance field. The subjects that you can opt for are finance, accounting, or economics.
- Right master’s degree: For getting high-level positions such as VP of finance, a master’s degree is often considered a must. A master’s degree not only prepares you for hard skills but also for soft skills such as management skills, communication skills, etc. Let us take a look at the degree that would help in advancing your career.
The Global MS in Finance program from the Richard DeVos Graduate School of Management is engineered around the most advanced financial theories, quantitative models, and industry practices. This program includes subjects such as risk management, portfolio management, corporate financial decision-making, etc., which prove to be very helpful in investment analysis. Post finishing this program participants will be eligible to participate in the US OPT – Optional Practical Training program for F-1 students upon the completion of the degree.
In addition to formal education, many CFOs and VP of Finances also obtain professional certifications such as the Certified Public Accountant (CPA) or the Chartered Financial Analyst (CFA) to demonstrate their expertise and credibility in the field. Professional certifications can be beneficial for obtaining a CFO or VP of finance position, but they are not always required. A background in finance, accounting, or a related field, and experience in the industry, can be more important for a CFO or VP of finance.
CFOs and VPs of Finance usually share similar educational backgrounds, although there is no one defined path to becoming a CFO or a VP of Finance. It is slightly preferable for a VP of Finance to have an accounting certification, as they are more hands-on with managing the company’s finances and therefore will need deeper accounting knowledge. Because CFOs will have so many strategy-related responsibilities, companies look for candidates who have general business or investment banking experience.
While both the CFO and VP of Finance are important for the financial success of a company, the CFO is responsible for the overall financial strategy of the company and for ensuring that the company’s financial goals are met, while the VP of Finance is responsible for managing the day-to-day financial operations of the company and ensuring that the company’s financial statements and reports are accurate and timely.
Here are the top 3 important things your CFO should be providing you: 1. data reports, 2. financial planning and strategy, 3. necessary feedback.