As you go about running a business, the hierarchy matters a lot. Positions need to be defined, so that job responsibilities are clear. To do so, you need to ensure that you have all the right people working in the business. Two of the key positions in the hierarchy include those of the CEO and the CFO. But what are the CEO and CFO meaning when it comes to businesses?
Here, we will help you understand how the two positions work in a business, and how they are different yet essential to every business. Stay tuned as we go about trying to find all the possible differences between the CEO and CFO.
The CEO’s meaning is quite simple, as it’s the person in charge of the entire organization. The Chief Executive Officer surely has a ring to it and holds a lot of power as well. The CEO signs off most of the end decisions made in a business. So, it is pretty clear as to how valuable a CEO is. The board of directors should take sufficient consideration before selecting one.
You might be thinking about how the board of directors fits in here. Well, in the case of a large-scale organization, some shareholders choose who the CEO will be. A startup might not have the same scenario. Either way, the CEO has a lot of responsibilities that they have to look after.
To understand who the CFO is, you need to know the CFO’s meaning. So, let’s take a look at it. CFO’s meaning is the Chief Financial Officer. Doesn’t this make things simpler to understand? CFOs are there to assist in all sorts of financial decisions that go on in a business. They have a highly relevant and essential position as they manage the most important aspects of a business.
So, when we talk about creating financial budgets, operations, or reporting, the CFO has all the power. But is the CFO meaning similar to that of the CEO? Not at all. The two are extremely different, even though you might feel like they sound the same.
Now, when it comes to who holds the most power, you should know this is where the CEO comes in. We’re not saying the CFOs don’t hold any power. Instead, the CFO’s power is a subset of the CEO’s powers.
So, the Chief Financial Officer (CFO) will ideally be reporting to the CEO for all finance-related matters. It can include the financial statements, budget, and everything else that comes under the CFO’s authority.
Let’s put down a list of all the things the CEO is required to do. It will give you a rough estimate as to where their powers start and where do they end.
This list is just a broad perspective of what the CEO job description includes. You can extend this list to a very long one to add more details to what exactly a CEO does.
Now, let’s get to what the CFO does or what the CFO meaning is. Here’s let’s list down the major chunk of what a CFO’s responsibilities are when running a business.
Here you can tell there are many responsibilities related solely to financial aspects here. The CFO is required to work through various aspects that all relate to the finances of the business. They’re highly important, which is why hiring a Chief Financial Officer (CFO) is a highly critical task for any business.
While we have differentiated between their everyday tasks, we’re going to get into more details about what the CEO and CFO meaning truly represent. You’ll find differentiation of both the positions and understand how using them interchangeably is not the right way. The CFO’s meaning is highly different than the CEO’s, so before any further ado, let’s start distinguishing between the two.
Every person working in a business has some responsibilities. The same goes for the CEO and the CFO. While the CEO is responsible for the entire organization, the CFO only leads its finance department.
The CEO is responsible for creating strategies relevant to business success. Whereas, the CFO is required to support these strategies and create financial plans to meet them adequately.
When it comes to the scope of CFOs and CEOs, they’re extremely different. The CEO has a broader scope where they have to manage the day-to-day operations of the business. Moreover, they’re required to deal with external affairs as well. What this means is that they’ll be handling public relations, making business decisions, and whatnot.
CFOs, on the other hand, have a relatively narrower scope. The CFO, they’re required to facilitate in all possible financial matters. They’re focused on the finance department that includes the hiring, training, and daily operations of this department.
What do these two evaluate? The CEO focuses on the big game to evaluate risks and gains relating to the business. Whereas, the CFO has mainly focused on evaluating financial risks and gains only.
The CEO is accountable for much more than the CFO as they’re running the entire show. The CFO, however, is only accountable for the financial planning of the business and reporting it to the CEO.
Now, for the last bit, a person from any background can become a CEO. For instance, they can be sales, marketing, or even accounting majors who have achieved the position. There’s no relevance of background as long as they have the skills and experience to become a CEO.
Whereas CFOs need to have an adequate financial background to carry out their responsibilities adequately. Therefore, you must choose the right CFO for your business needs. Otherwise, your finance activities might not be as effective as possible.
If you’re looking for a way to get an experienced CFO service on board, then look no further. Take a look at how our CFO services can help you with this highly technical and critical success factor.
We, at Oak Business Consultant, are experts in providing CFO services to businesses. Get your business finances on track with our service, and see your business grow! Head on to our website at Oak Business Consultant to get a free consultation.