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All About The Financial Executive Role And Why It Matters

the right financial executive is critical for your company

A financial executive serves at the monetary helm of a company to maximize profits and grow the business. Hiring the wrong financial leader (let alone not hiring one at all) can cost a company up to $1.5 million.

Here’s all the information you need on finance executives, including responsibilities, how one becomes a CFO, and the qualities of excellent finance leaders.

What is a Financial Executive?

Simply put, financial executives (or Chief Financial Officers – CFOs) manage a company’s finances. They monitor transactions, including income and expenses, and ensure their business is profitable. This can include cutting costs while maximizing profits, budgeting, managing cash-flow statements, and planning taxes.

Becoming A Finance Executive

Most financial executives possess a degree in accounting, finance, or a related field. 

After graduating from an accredited four-year university, these people typically begin working as certified public accountants (CPAs) after acquiring a couple of years of accounting work through internships or other jobs.

Being a CPA forces aspiring finance leaders to learn financial theory, accounting laws and best practices, creating financial models, and other specific areas within this field. 

After spending some time working as a CPA, an aspiring financial executive often works as a treasurer or controller. Treasurers focus more on accounting and handle loans, where controllers deal with financial planning and budgets. All of these are related to the responsibilities of a CFO.

Becoming a CFO means climbing the ladder and demonstrating your aptitude for finance and thinking as a leader. Where one can, aspiring financial leaders take management positions to learn excellent leadership skills.

Responsibilities Of A Finance Executive

As briefly mentioned, CFOs are responsible for all aspects of managing a company’s finances. In detail, this can include the following:

  • Crafting and implementing the company’s financial policies to minimize inefficiencies
  • Building budgets
  • Preparing balance sheets
  • Drafting invoices
  • Checking the status of financial records to make sure they’re updated
  • Working on audits
  • Overseeing the company’s daily spending
  • Evaluating cash-flow statements
  • Taxes 

Top Qualities Of Financial Leaders

These are the qualities possessed by the most successful finance leaders.

Leadership Capabilities

Above all else, being a financial executive means serving as an executive leader for the company. A successful finance executive knows how to bring people together and inspire action.

Being an excellent leader means possessing a host of different characteristics. These can include:

Proactivity. Thriving as a financial executive means seeing financial problems before they occur. It also means taking action once those problems are foreseen, not after they occur. The best CFOs are constantly challenging themselves to improve their company’s financial standing and don’t have to be told to take action.

Confidence. Being on an executive board is tough, especially when in charge of finances. Money is the lifeblood of any organization, and no matter how great the rest of the company is, without positive cash flow, the business is done. CFOs need confidence in themselves and their abilities so that they aren’t second-guessing when it’s time to make a critical decision.

Communication. As a leader, CFOs need to communicate with all kinds of people, from fellow executives to external leaders and beyond. Both internally and externally, leadership means communicating clearly with people.

Honesty. Everyone makes mistakes, even finance executives. These mistakes can be (literally) costly, but the best leaders own up to them and help foster an environment of trust and transparency. Mistakes are inevitable, and CFOs know that all you can do is learn from them.

These are just a few of the many traits that make up an excellent leader.

Understanding Technology

The modern world involves lots of technology, and that’s no different for finance executives. From choosing financial systems to managing eCommerce transactions, CFOs work closely with technology to drive financial gain. A basic understanding of how this tech functions and relates to the organization is vital.

As a result of the 2020 Coronavirus pandemic, the technological decision-making abilities of CFOs became more vital than ever. Whether it be the digital customer experience, deciding which metrics to focus on as it pertains to technology, or something entirely different, today’s CFOs must understand technology.

While it may be unreasonable to assume your financial executive knows everything about technology, the best ones build relationships with senior IT people to ask for help when needed.

Strategic Thinking

Being a finance executive means forecasting into the future and thinking strategically. Successful CFOs know how to think and execute in this way, even when the path forward isn’t obvious. 

In the context of finance, executives must find ways to fund the company’s long-term plans. This involves creating a financial roadmap and planning the company’s subsequent cash-related efforts.

Well-Rounded Experience

Many technically experienced CFO candidates get passed up because they’ve worked too narrow roles, such as internal auditing or taxes. Successful CFOs have worked in broader roles that encompass many aspects of finance and beyond.

The best financial executive possesses experience with:

Why Finance Executives Matter

All business choices have financial consequences. While it may be possible to bootstrap your way through the early stages, any successful company needs an experienced leader in charge of its finances.

Being a financial executive is an incredibly complex task. Not only are these individuals responsible for financial planning, but they’re tasked with overseeing the nitty-gritty, from cash-flow statements to auditing. To keep finances organized and maximize profits, a company requires a dedicated executive.

The Importance of Hiring The Right Financial Executive

Hiring the wrong executive can cost as much as $1.5 million, and this doesn’t include the wasted time that went into that hire. Any miss-hire is expensive, but at the executive level, this can be too costly to recover.

Hiring the wrong executive incurs the following costs:

  • Executive’s recruitment and compensation
  • Firing the individual
  • Replacing the individual
  • Opportunity and leadership loss
  • Employee and management turnover due to poor leadership
  • …and more.

Hiring a financial executive is not the time to make mistakes. Jennings Executive brings two decades of experience to executive recruiting and specializes in the corporate finance vertical. Let us select the perfect finance executive for your company.

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