Distinguishing Between The Roles Of The CEO And The CFO
There’s confusion between the roles of the CEO and those of the CFO. It is very important to distinguish between the roles of the Chief Executive Officer (CEO) and those of the Chief Financial Officer (CFO). And, the roles of these two officers are very important for the smooth running of operations in an organization.
A CEO oversees operations of the organization such as administration and sales. This is at the top of a company hierarchy and reports to the company board of directors. Alternatively, the CFO has the highest rank in the financial section of the company. The main role of the CFO is to oversee the company’s financial management.
Chief Executive Officer
A CEO is at the helm of the senior management team of the company. The CEO oversees whatever happens across the organization. Various organizations have CEOs including non-profit organizations, government entities, public, and private companies. A CEO reports to the company board of directors. The major roles of the CEO include maximizing the company’s value in form of share price, revenues, and market share. For non-commercial entities, the CEO is tasked with seeking to achieve results relating to the organization’s mission.
Chief Financial Manager
A CFO primarily focuses on overseeing the management of finances and related activities in the company. These include financial planning, signing checks, financial risk management, data analysis, record keeping, and financial reporting. Consider reading the top CEO CFO magazine to discover real-life stories about the work of the CFO as a financial controller.
However, the CFO reports to the CEO and board of directors. Besides, the CFO might also sit on the company board. The CEO heads the financial team in the company and is the key spokesperson on financial matters. A CEO works with the Chief Operating Officer (COO) when it comes to handling strategic and tactical matters regarding securing funds, analyzing cost-benefit. Managing the budget, and forecasting needs.
Main responsibilities of:
Chief Executive Officer
The main roles of the CEO are to oversee the big picture; oversee operations across departments and ensuring the realization of the company’s long-term goals. However, the CEO doesn’t have direct involvement in the tasks of every department. The CEO keeps a general oversight of the company’s operations with assistance from managers of every department.
A CEO focuses on articulating the company’s vision to clients, implements decisions from the board of directors, develops company leadership, ensures a strong market position, and boosts productivity. The company’s overall performance is strongly attributed to the efforts of the CEO with key roles determined by the board of directors.
Chief Financial Officer
The work of the CFO is limited to the company’s financial department. A CFO manages the company’s finances and heads the company’s financial-related tasks including compliance, accounting, auditing, and budgeting.
Roles of the CEO and CFO in different situations
Strategy
A Chief Executive Officer is responsible for the company’s general strategy and appropriate procedures for accomplishing the strategy. The Chief Financial Officer is responsible for handling financial support regarding corporate strategy. This entails ensuring the availability of sufficient cash for covering company needs and alleviating risks.
Liaisons
The Chief Financial Officer handles building a relationship with various partners such as banks, lenders, regulators, and investors. Other roles of the CFO include attending meetings with investors to discuss interest in the company or meeting with bankers to apply for lines of credit. The Chief Executive Officer is the company’s public face when meeting the press, community leaders, and making speeches.
Reporting role
A Chief Executive Office gives feedback to the board of directors of the company. Alternatively, the Chief Financial Officer gives feedback to the CEO. The CFO is tasked with putting together the company’s annual budgets. Other roles of the CFO include analyzing financial data, tracking revenues, and expenses. A CFO might join the CEO to sit on the company’s board of directors.
Handling analysis
Qualitative and quantitative analysis of finances is the work of the CFO in the company. Other tasks of the Chief Financial Officer when it comes to managing finances include reviewing various aspects of the company. This allows proper control of operational costs and appropriate allocation of resources.
Additionally, the CFO handles future capital investment analysis and reviews prevailing market trends. Afterward, a report is sent to the CEO to decide appropriate ways to make the company’s operations more efficient and effective.
Wrapping up
Managing a business requires a strong team. At the top of the team are the Chief Executive Officer and Chief Financial Officer. Most times people confuse the roles of these senior managers in the business. As realized in the article above, the CEO manages overall operations across the company. And, the CFO handles all financial-related aspects of the business and reports to the CEO and board of directors. You should read top CEO magazines to learn more about their roles from people who hold these positions.