The Future CFO – taking that step from FD
Transitioning from a Finance Director (FD) to a Chief Financial Officer (CFO) typically requires a combination of experience, skills, and qualifications. While the exact requirements may vary depending on the organisation and industry, there are some key experiences that an aspiring FD should gain exposure to, in order to make that move easier.
How do you progress to CFO?
As an FD, you should already have a strong foundation in financial management, including budgeting, financial analysis, financial reporting, risk management, and strategic planning. But acquiring in-depth knowledge and expertise in these areas is crucial for assuming the role of CFO.
As a CFO, you will interact closely with the executive team and the board of directors. Actively seeking opportunities to present and/or engage with the Board, sitting on divisional boards or leading internal project teams will all help in developing excellent communication, presentation, and influencing skills. All of which are crucial to effectively convey financial information, gain support for strategic initiatives, and importantly, be credible when providing insights to the board.
Developing a much broader understanding of the overall business operations and industry dynamics is important. You should familiarise yourself with various functions within the organisation, such as sales, marketing, operations, and human resources, to gain a holistic view of how financial decisions impact the entire company. Should the opportunity arise, leading a function outside of finance can provide invaluable business experience, but it can also enhance your leadership skills.
- Acquire in-depth knowledge and expertise in financial management
- Actively seek opportunities to engage with the Board
- Develop your communication, presentation, and influencing skills
- Develop a broader understanding of the overall business operations and industry dynamics
- Explore opportunities outside of finance, should they arise
What skills and attributes do you need as a CFO?
You should, as an FD, already possess strong leadership/management skills and a high level of emotional intelligence. But a key differentiator, is your ability to inspire and motivate your team and wider business. Effectively and impactfully communicating the Vision and Strategy internally and with all stakeholders is an important attribute to develop.
CFOs are expected to play a critical role in developing and shaping an organisation’s strategy, not just the financial strategy, so you need to have the ability to think strategically, analyse market trends, identify financial opportunities and risks, and provide insights and recommendations to drive the company’s growth and profitability.
To support this growth CFOs will have a key role in managing the capital structure of a company, including debt and equity financing. Gaining experience in capital management, including raising funds, negotiating with lenders or investors, and optimising the cost of capital, is valuable for the transition.
Finally, and depending on the industry you operate in, having a deep understanding of the specific dynamics, regulations, and challenges can be advantageous.
- Strong leadership and management skills
- A high level of emotional intelligence
- Ability to inspire and motivate
- Be able to effectively communicate Vision and Strategy
- Strategic and analytical thinking
- Experience in capital management is beneficial
- Deep understanding of your industry