The chief financial officer and vice president of finance both play essential roles in the business and share several responsibilities and tasks. It is entirely dependent on the firm’s size and whether you require a CFO or VP of Finance, and it has been observed that most businesses begin small with only one finance staff. When your firm expands, so do the organization’s needs. You hire additional individuals in finance and a full-time CFO who can think outside the box and oversee the organization’s external and internal financial concerns.
Related: VP Finance Interview Questions
CFO vs. VP Finance: The Differences
The significant distinctions between the CFO and the VP of finance are listed below:
Definition
The VP of finance is part of the senior management, where they handle the financial aspects of the company. They assist the organization in achieving all their company goals seeking chief financial officer’s assistance. The vice president of finance is responsible for the following tasks:
- Managing and handling the day-to-day operations of the finance department.
- Managing the department resources to achieve the business objectives.
- Monitoring and auditing corporate spending.
- Creating reports on finances for investors as well as shareholders.
- Recruiting and training new employees for the finance team.
- Providing financial advice to firm leaders and management.
The chief financial officer, on the other hand, is a C-suite executive who is concerned with the organization’s future. They make corporate choices based on financial data presented by the vice president of finance. The chief financial officer is expected to perform the following roles:
- Monitoring and managing the long-term objectives of the finance department.
- Creating business budgets as well as expense reports.
- Building relationships with investors, donors, and shareholders.
- Forecasting revenue creation and spending power.
- Improving finances and revenue of the organization.
Hierarchy
You are the organization’s top financial officer at the C-suite executive level as the chief financial officer. You make the organization’s ultimate financial decisions and answerable to the CEO as well as the board of directors. On the other hand, the company’s vice president reports to the chief financial officer and is part of senior management. You provide financial reports directly to the chief financial officer so that they may make decisions for the business.
Experience
The experience required ultimately depends on the firm and what they are seeking. However, it has been observed that the chief financial position is the top finance job in the organization, with at least 20 years of experience expected. Compared to other jobs, the C-suite executives need the person to have a rich experience. In contrast, the vice president of finance is a senior management post that requires at least 5 to 10 years of experience in finance.
Related: Why do CFOs Get Fired?
Focus
The chief financial officer must make financial choices for the firm. After studying the financial data supplied by the vice president of finance, they develop goals and plans for the organization’s financial strategies. On the other hand, the vice president of finance handles day-to-day financial activities and maintains the company’s accounts for short-term goals.
Responsibilities
The chief financial officer collaborates with the other executive members to manage the organization’s financial strategy and create future profit and revenue growth plans. On the other hand, the vice president of finance is responsible for assessing and evaluating the department budget and assisting with daily accounting operations. The vice president of finance studies the organization’s cash flow and submits the financial report to the chief financial officer for analysis.
Compensation
The chief financial officer is the organization’s senior finance executive, requiring at least 20 years of financial management expertise. This suggests that they are paid more than the organization’s vice president.
Qualifications
They both have the exact requirements for their positions; the only difference is their amount of experience. Depending on their years of experience, the vice president of finance may be elevated to the position of chief financial officer. A bachelor’s degree in finance or a similar discipline is required, and some people pursue a master’s degree to further their job in finance or to progress in their industry.
Related: CFO Interview Questions
Skills of chief financial officer and vice president of finance
The abilities listed below are essential for this role for them to accomplish their duties effectively:
Communication skill
Communication is essential in both positions since the chief financial officer develops strategies and goals for the firm and discusses them with the chief executive officers, investors, stakeholders, and others. Communication is also vital for the VP of Finance since they must coordinate day-to-day duties with other members and present financial information to executives. They also help with interviewing and training new staff, so excellent communication skills are required.
Analysis skill
The chief financial officer and vice president of finance must have good analysis skills since they make business choices, anticipates quarterly revenues, and create the organization’s yearly budget.
Risk management skill
This talent is essential since they make financial decisions for the business, which is the firm’s primary emphasis, and any wrong actions might result in losses. Risk management skills are required for both roles when choosing which initiatives will be advantageous and which will not.
Related: Finance Director vs CFO
Wrapping up
The positions of chief financial officer and vice president of finance are crucial for any firm to improve its finances and make decisions after analyzing reports. They have parallels and distinctions explored previously and will provide an understanding of both jobs and their obligations to the business. The organization’s size determines whether the CFO or the VP of Finance is employed.
![CFO vs VP Finance: Key Differences [2024] (2024)](data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAQAAAC1HAwCAAAAC0lEQVR42mP8/h8AAvMB+NzmkbcAAAAASUVORK5CYII=)