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The chief executive officer (CEO) and chief financial officer (CFO) are essential roles in any company. But they have different strategic responsibilities. So, let us examine the duties of a CEO and a CFO and the similarities and differences between these two roles.
The Chief Executive Officer (CEO) is often the highest-ranking position in a company. The CEO is responsible for the planning and execution of corporate strategy in the entire company. Usually, the CEO directly reports to the board of directors (if any) on monthly or quarterly company progress.
The CEO oversees the day-to-day running of the entire company, managing in-company relationships and external relationships with business partners and government entities for compliance or collaboration.
CEOs set metrics to measure company performance and work to mitigate business risks. The CEO is directly responsible for the company’s performance and works with other senior executives to delegate strategic responsibilities. As the highest-ranking executive, the CEO oversees other C-suite executives, management positions, department managers, and other senior executives.
In most organizations, the company president is also the CEO and hierarchically ranks over everyone else, including the vice president and every other C-Suite member.
The CFO is the head of a company’s finance department. Unlike the CEO, the Chief Financial Officer (CFO) is responsible for only the financial operations of the entire company. The duties of the CFO usually cover managing a company’s financial department, financial planning to reach company goals, financial reporting, analyzing the company’s financial data, overall management of the company’s financial health, and managing the financial risks involved in day-to-day operations.
The CFO reports to the CEO as an advisor on financial matters, providing quality information and expertise for financial planning. The CFO focuses on financial strategy by creating plans that could involve payroll or operational budget planning. The CFO ensures that the company never runs out of money through expert financial crisis management, financial risk management, and creating strategic partnerships with private investors or financial institutions to extend liquidity or a credit line. The CFO ensures that operational departments have the financial support required to improve performance and achieve financial metrics.
The CFO is usually a finance major with a Master’s degree in Business Administration (MBA) or a Certified Public Accountant (CPA) with multiple years of experience in management roles.
Let’s take a deeper look at the difference between the CEO and CFO in different areas of company operations.
The CEO is in charge of the administration of the entire company as a whole. The CFO is in charge of the financial department of a company and the people who work in the department.
The CEO sets the financial goals and targets for the company. At the same time, the CFO manages the financial planning, execution of the financial plan, and quantitative and qualitative financial analysis by working with the accounting and operation teams.
The CEO manages relationships with business partners to meet company goals, while the CFO works with private investors and financial institutions to improve the financial performance of the company.
The CEO usually represents the organization or acts as the face of the organization in public. Conferences, speeches, and press releases are typically delivered by the CEO. Usually, the CFO is a background figure in public relations, managing the financial impacts that PR strategies can have on the company, but this is not always the case.
The CEO makes executive decisions for the overall company strategy, while the CFO only makes decisions that affect the financial performance of the company.
In most companies, the CEO earns much more than the CFO. According to Salary.com, the average annual salary of a CFO in the US is $420,000, usually ranging from $319,000 to $537,000, while the average salary of a CEO is $800,000 ranging from $420,000 to $1,200,000.
The CEO is superior to the CFO. While the CEO reports directly to the board on matters regarding strategy, the CFO reports to the CEO on subjects regarding the financial health of the company.
But this is not to say that the CFO is in a much inferior position to the CEO as the CFO holds the highest ranking financial position in a company and usually works as an aide to the CEO on financial aspects of the company subjects, working side by side.
The CEO and CFO are essential roles in any company. The CEO is responsible for the planning and execution of corporate strategy in the entire company, while the CFO is responsible for the financial management of the company.
The CEO sets the financial goals and targets for the company, while the CFO manages the planning and execution of the financial strategy and analyzes and reports financial data. The CEO publicly represents the organization and makes executive decisions, while the CFO advises the CEO on financial matters.
