What Is the Difference Between a CEO vs. a CFO? (With FAQs)

By Indeed Editorial Team

Published July 26, 2021

A company's CEO and CFO are important leaders who work to ensure business growth and profitability. While these roles are similar, there are some differences in job responsibilities, rank, and qualifications between a CEO and a CFO. Knowing how to distinguish these executives can help you better understand their contributions, especially if you're considering becoming a senior executive within a company. In this article, we discuss the differences between the CEO vs. CFO of a company, explain how to choose a career between these roles, and answer frequently asked questions about both executives types.

What are the differences between a company's CEO vs. CFO?

The main difference between the two positions is that while a chief executive officer (CEO) is the highest managerial position within a company, a chief financial officer (CFO) is the highest financial position. Here are essential differences between a CFO and a CEO:

Primary responsibilities

A CFO's focus is to evaluate financial risks and benefits and ensure the company's financial success. They manage and oversee all financial operations of the company. In comparison, a CEO evaluates business risks and benefits and ensures the company's overall success. A CEO develops the company's strategy, which a CFO supports financially. For example, suppose the CEO introduces a new product to improve customer retention. The CFO may support this strategy by seeking funding, reallocating resources, or developing financial plans.

While both executives monitor the progress of strategies and efforts, the CFO's focus is on the financial implications. For example, it's the CFO's duty to advise the CEO on strategies that can affect the company financially. The CEO typically uses these findings to decide on the next actions to take.

Rank within a company's hierarchy

The CEO and CFO are both C-level positions. C-level, or "chief" suite, refers to a company's team of top executives. In any company with a C-suite, the CEO has the highest rank. Other C-level positions, such as the chief operations officer (COO) and CFO, rank below the CEO.

Educational qualifications

While a company's CFO typically has a background in accounting or finance, CEOs may have varying backgrounds. A CEO may have a business background, such as in operations, marketing, or sales, or experience in what the company does. For example, a hospital's CFO may have an accounting background, while the CEO may have a medical background.

Employers rarely establish required educational degrees for a CEO and a CFO. Many C-level executives earn a bachelor's degree and additional certification, or advanced degrees like a master's degree or doctorate.

Who they report to

A company's CEO reports to the board of directors. A board of directors refers to people who ensure a company complies with all applicable laws and work on activities that interest stakeholders. In some organizations, the CEO may be a board member or the chairperson.

A CFO first reports to the CEO. CFOs may also report to the board of directions and serve as board members. For example, a CFO may present new investment opportunities to the company's board of directors.

Who they collaborate with

A CEO represents a company to the public. Part of their responsibilities is to maintain the company's reputation. CEOs interact with investors, important community members, company stakeholders, and the press. In contrast, a CFO collaborates with financial institutions, such as banks and credit unions. They attract financial partners to a company and maintain positive relationships with current investors.

Who they oversee

CEOs coordinate all departments in an organization. Understanding each department's function and contributions towards reaching the company's goals is important. CEOs typically meet with department managers to ensure the company's success.

CFOs oversee the finance or accounting department within a company. They may collaborate with other executives that affect the company's financial success. For example, a company's CFO may meet with the sales manager to discuss product costs.

Role in the hiring process

CEOs take part in hiring for management roles. They may also search for suitable candidates for C-level positions. For example, a CEO may recommend the company hires a new COO. CFOs typically participate in recruiting for roles related to accounting and finance.

Salary

As senior executives, an organization's CEO and CFO typically earn six-figure salaries. According to Indeed Salaries, the national average salary for a CEO is $126,228 per year, while that of a CFO is $118,428 per year. These estimates may vary depending on the company, your experience, and skill set. Where you live may also influence how much you make as a CFO or a CEO. For example, in Ontario, a CFO receives an average salary of $124,425 per year, while a CEO makes $124,290 per year.

What does a CFO do?

A CFO works to maintain and enhance a company's financial health. Some of their duties include:

  • Executing financial strategies for the company

  • Developing financial plans to increase profit while reducing the company's expenses

  • Identifying investment opportunities and potential investors

  • Managing company mergers and acquisitions

  • Handling accounting procedures through the company

  • Performing quantitative and qualitative financial analysis

What does a CEO do?

A CEO is the head of a company and their typical duties include:

  • Managing the company's assets and liabilities to ensure growth

  • Leading ideation, planning, and implementation of policies and strategies

  • Making major decisions in the organization

  • Setting and measuring strategic business goals

  • Approving contracts

  • Managing the company's operations

How to decide between becoming a CFO or a CEO

If you're considering a career in a C-suite position, follow these steps to decide between becoming a CEO or a CFO:

1. Gain work experience

You typically need years of professional experience to work as a CFO or a CEO. Take courses to improve your decision-making skills and consider working for a company that interests you. Commonly, you need management experience to work as a CFO or a CEO.

Related: How To Become a Management Consultant

2. Consider your abilities

Perform a self-assessment to understand your core values, skills, and greatest strengths. For example, if the ability to forecast financial plans is one of your greatest strengths, consider becoming a CFO. Similarly, if your versatility makes you unique, consider searching for CEO positions.

Read more: Self Assessment Tests: What You Need To Know

3. Seek advice

Reach out to your network to determine what role aligns with your professional experience, qualifications, and personality. Your career coach, mentor, trusted friend, or family member may give you insights to help you decide. You can also contact professionals who work as CEOs and CFOs to understand what each position entails. Consider scheduling informational interviews. Informational interviews are discussions with professionals that help you learn more about their careers or work roles.

Read more: Five Principles for How To Choose a Career

FAQs about CEOs and CFOs

Review these answers to frequently asked questions about these two executive positions to learn more about the similarities and differences:

Can the CEO also be the CFO?

If the company is a private organization, the CFO may also act as the CEO. For example, medium-sized companies may have a manager working in both positions. Many organizations separate these executive roles to prevent performance issues. For example, separating a CEO's position from a CFO's role can help ensure both executives perform their duties and responsibilities.

Is the CEO the owner of a company?

A company's CEO may be the business owner. For example, the owner of small businesses may also be the CEO, whereas larger companies may hire for the CEO position.

Related: CEO Interview Questions and Example Answers

What qualities are useful for a CEO and a CFO?

CEOs and CFOs need soft and hard skills to work effectively. Soft skills are qualities that describe how you interact with others, which you learn through experience. In comparison, hard skills are qualities you learn through education and training. Essential skills of a CEO and a CFO include:

  • Leadership and management: CFOs and CEOs direct and must be able to lead others.

  • Communication: like other C-level executives, CEOs and CFOs require the skills to explain goals effectively. This includes speaking publicly, leading meetings, and giving presentations.

  • Decision-making: every day, CFOs and CEOs make decisions that impact a company. They must be able to analyze situations critically and be decisive.

  • Problem-solving: executives often face dilemmas at work. Having good problem-solving skills helps them find the best solutions to situations.

  • Time management: CFOs and CEOs typically complete several tasks every day. Having good organizational skills and knowing how to prioritize work are crucial for meeting goals.

Salary figures reflect data listed on Indeed Salaries at time of writing.