What is the difference between a cfo and ceo

Difference Between CFO vs CEO

Both the position in an organization play a vital role in organization growth. Any titles are given to a person to show what duties and responsibilities they have in the organization. This both CFO vs CEO term exists because of corporate governance. Incorporate the world many workplace titles which differ from organization to organization. To look after the interest of shareholders, many organizations follow or adopt two-tier corporate hierarchies. The first tier is the board of directors.

The second tier is the organization’s upper management (COO, CEO, and CFO). Some large companies use titles such as CEO, CFO, CTO, and so on whereas smaller organizations may use president, vice-president, director, etc. These top executives are responsible for making decisions that lead to achieving the organization’s financial and non-financial goals. All top executive positions required leadership skills and the ability to develop and implement a strategic vision to support the organizational goals. The most common and top positions across all industries are CFO vs CEO. These two positions and people associated with this position are the most powerful and influential people in the organization.

Let discuss these two CFO vs CEO positions in detail.

Chief Executive officer (CEO)

CEO is the highest or topmost position in an entire organization. The CEO is a leader of the organization and plays an important role between a board of directors of the organization and various organization levels. The CEO is responsible for the success and failure of the organization. CEO of the organization is appointed by the board of directors and report to them. One of the CEO’s major duties is to implement the corporate policy, which is directed by the organization board. The CEO provides a vision and sets the organization’s culture. CEO’s exact duty can be vary based on a number of factors, including the size of the organization and whether it’s a public or private organization.

Chief Financial officer (CFO)

CFO is the highest ranking in financial position. So as the name suggests the main role of the CFO is to manage the finance of the company. CFO is an important part of organizational leadership. CFO helps leadership in taking financial decisions and executing those decisions. CFO’s Job is to make an organization financially strong and as profitable as possible. CFO reports directly to the CEO and has substantial inputs into organization investment, capital structure, and money management. CFO’s main responsibility is to maintain and improve the organization’s financial health. CFO is an economist of the organization, responding to both macro and micro parameters. CFO spends the most time looking forward to how will next quarter or year looks like. The role of the CFO is to raise funds, understand capital markets, profit planning, Distribution of funds and profit, etc.

Head to Head Comparison Between CFO vs CEO (Infographics)

Below is the top 7 difference between CFO vs CEO

Key Differences Between CFO vs CEO

Both CFO Vs CEO is a topmost and important position in the organization. Let us discuss some of the major differences :

• The CEO is responsible for all organization activities, whereas CFO is responsible only for the organization’s financial activities or side.
• CEO reports directly to the board of an organization, whereas CFO reports directly to an organization’s CEO.
• CEO drive the organization towards its goal by implementing the corporate policy which is directed by the company board whereas the CFO job or role is to maintain and improve a company’s financial health
• CEO usually has more equity in the organization, whereas CFO not always has equity.
• CEO defined strategy and CFO figure out how to fund it.
• CFO is responsible for reviewing all aspects of the business and reports all his findings to the CEO who makes decisions based on that report.

CFO vs CEO Comparison Table

Let’s look at the top 7 Comparisons between CFO vs CEO.

Conclusion

• So from above, it is clear that CFO vs CEO are not equals. CEO Drives an organization towards its goal by keeping in mind its corporate mission and values, and CFO provides funding and planning to achieve this goal.
• While a CFO has a role in taking the financial decision, the CEO is ultimately the one who moves the financial needle in business. The CFO is nothing but a treasurer or controller of an organization.
• Good corporate governance usually recommends the separation of duties between both CFO vs CEO.
• It’s CFO’s responsibility to maintain the organization’s financial health and work closely with the CEO to achieve this, CFO is an economist of the organization.
• CFO act as a right hand to the CEO, maintain a deep relationship with key external stakeholders.
• Companies fail because they run out of cash in that case the CFO role comes in to picture, and it’s essential for any organization.

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