Pathways to a CFO Position: Strategic Experiences Over Certifications
Becoming a Chief Financial Officer (CFO) is no small feat, and the journey is one that requires hands-on experience rather than just certifications. Whether you are aiming to achieve this position within a few years or gradually build your way up, the key is to accumulate a diverse set of experiences that demonstrate your capabilities in financial management and leadership.
Strategic Experiences vs. Certifications
The traditional approach of acquiring certifications to advance in a career is slowly giving way to a more experiential model. Instead of focusing on specific qualifications, the emphasis now is on gaining a wealth of practical experiences in various aspects of finance and management. Here are the key experiences you should aim for if you aspire to become a CFO:
Financial Due Diligence
To truly understand the financial complexities involved in business operations, you should actively participate in financial due diligence on at least 5-6 acquisitions. This experience will give you insights into evaluating potential business opportunities, analyzing financial statements, and assessing the risk associated with mergers and acquisitions. Each acquisition should be seen as a stepping stone to expanding your knowledge and capability in financial management.
Business Turnaround Situations
Experiencing a major turnaround situation is crucial. Whether it is about turning around a small division or a larger business, such experiences will test your ability to manage risks, identify cost savings, and drive operational efficiency. Understanding how to manage and optimize a struggling business can be invaluable when faced with similar challenges in the future.
Financial Reporting and Credit Management
Leading or contributing to the loan packaging for a new line of credit of $5 million or more, and overseeing several renewals of $2 million or more, will provide you with a deep understanding of financial reporting and credit management. Such experiences will equip you with the necessary skills to maintain and grow the financial health of an organization.
ERP Implementation
Participating in the implementation of a new Enterprise Resource Planning (ERP) system is an essential experience. Building a financial reporting package from the ground up for a company with assets exceeding $50 million or implementing an ERP for a larger organization will solidify your technical and leadership skills in integrating various aspects of financial and operational data. This experience will enhance your ability to manage complex systems and streamline financial processes.
Financial Leadership and Team Management
Being a controller for at least 5 years or leading a Financial Planning and Analysis (FPA) team for the same duration will provide you with the experience needed to manage a team of financial professionals effectively. This role involves overseeing the financial operations of a company, including general accounting, accounts receivable, accounts payable, payroll, and budgeting. Developing and training your team will be a critical part of this experience, helping you to build a strong foundation in financial leadership.
Qualifications and Certifications
While certifications are not mandatory, they can provide significant advantages. A Certified Public Accountant (CPA) certification, especially if you are working with publicly owned companies, is highly beneficial due to the unique reporting requirements and regulatory compliance. Additionally, an MBA can be a valuable asset, offering a broader business perspective and enhancing your ability to make strategic decisions. However, the core requirement is a strong foundation in finance and leadership, which can only be built through experience.
Aspiring to a CFO Role
Becoming a CFO is not a linear path; it is a journey that involves continuous learning and practical application of your skills. Rather than setting a strict timeline, focus on building a diverse set of experiences. Developing exceptional writing skills, the ability to create clear data tables and summaries, and the art of effective presentations will set you apart. Being comfortable with these skills will enhance your ability to communicate complex financial information to both internal and external stakeholders.
Moving from one role to another every three to five years can help you gain a wide range of experiences and bring a fresh perspective to each new position. This approach not only maximizes your career growth but also provides you with a second chance to address any areas where you may have previously struggled.
In conclusion, the path to becoming a CFO is more about strategic experiences than certifications. By actively seeking out and participating in a variety of financial and management roles, you can build the skills and knowledge necessary to lead a company's financial operations effectively.