CFO vs VP of Finance – How do the roles compare?

The Chief Financial Officer (CFO) and the Vice President of Finance (VP of Finance) are both vital to optimizing an organization’s financial performance. However, the responsibilities of these roles differ significantly.

We will delve deeper into the roles of CFO vs VP of Finance and examine the responsibilities and skills involved.

CFO responsibilities and what skills are required

A CFO is a strategic management role. The incumbent of this role develops and implements the company’s financial strategy and works closely with the Chief Executive Officer (CEO) to ensure optimal financial performance and planning.

The CFO is also responsible for the management of financial and credit risk in the organization and for ensuring internal audit processes and controls are in place. These responsibilities provide financial protection for the business.

In addition, CFOs ensure that debt and equity financing are optimized. This work is part of the ongoing relationships CFOs develop with investors, shareholders, and financial institutions.

Successful CFOs possess a number of vital skills to meet the responsibilities of the role.

• Proven strategic thinking and planning abilities
• Enhanced leadership abilities
• Excellent communication skills
• Comprehensive knowledge of financial regulations and compliance requirements
• Financial analysis and risk management abilities

VP of Finance Responsibilities and what skills are required

The VP of Finance is an operational role. The holder of this role manages the organization’s finance function, including day-to-day operations, such as accounting and payroll.

This role also involves developing budgets and forecasts and preparing monthly, quarterly, and annual financial statements. The insights of the VP of Finance support the strategies and goals of the organization.

In addition, the VP of Finance oversees the organization’s finance team. This leadership includes ensuring that people working within the finance function receive the training and development they need to optimize their performance and job satisfaction.

VPs of Finance require several essential skills.

• Proven analytical and problem-solving abilities
• Experience in financial reporting and accounting principles
• Exceptional organizational and time management skills
• Leadership and management abilities

How the roles of CFO vs VP of Finance compare

When comparing these roles, it’s apparent that the CFO has more strategic responsibilities, whereas the VP of Finance has more managerial responsibilities. This means that the CFO helps to drive the strategic financial direction of the business. In contrast, the VP of Finance ensures that the organization’s financial processes and procedures operate efficiently and that people within the finance function have the necessary skills and training in place.

Overall, the CFO has more influence in the organization. This is reflected in the organizational hierarchy in which the CFO normally reports directly to the CEO, and the VP of Finance normally reports directly to the CFO. The situation can vary slightly in smaller organizations. In these organizations, there may not be a separate CFO role, with the CEO taking responsibility for incorporating the organization’s financial strategies and plans with the overall goals of the business. In this situation, the VP of Finance often reports directly to the CEO.

Understanding the differences between these two finance-centric roles helps you understand where they fit in your organization.