The CFO and the Financial Director jointly perform economic and administrative functions and are two of the most important positions that handle a company’s finances.
There often needs to be more clarity in the designations of a CFO vs Financial Director. In this article, we look at how these roles are different from each other.
CFO vs Finance Director
Before we dig deeper into the differences between them, we need to understand the meaning of each term.
1. CFO: Chief Financial Officer
CFO or Chief Financial Officer are senior executives who direct the finances of a company. CFO manages the company’s cash flows, and financial plans, identifying the company’s strengths, evaluating the weaknesses of its finances, etc. The CFO is one of the most important and highest positions in the company in the C-suite.
The CFO is not just responsible for preparing financial statements — instead, the CFO analyses financial trends, identifying opportunities, reducing costs, as well as identifying threats to the company. Additionally, the CFO ensures that all financial decisions are made in the company’s best economic interest. CFO supervises diverse finance/accounts teams, as well as oversees the business’s overall performance.
CFO reports directly to the CEO or the Board in most cases, but they remain one of the highest positions in the company.
2. Financial Director
The financial director is often called the CFO’s primary accountant, which means they provide any financial information to help the CFO make decisions. Financial directors work to ensure that an organization's finances are strong. They also assist their subordinates to be more productive to help the company grow.
The financial director works with the Chief Financial Officer (CFO) to plan the finances of an organization. This includes reviewing the finances of each department, analyzing budgets, etc., to determine the current needs of a company.
Financial directors report directly to the CFO. Their main responsibility is to provide important financial data that allows the company’s executives to make business decisions.
Example: Financial directors create reports to ease and clear the vision of the CFOs, such as the Profit & loss statements, and balance sheet analysis.
The Difference – CFO vs Finance Director
Although the Chief Financial Officer and the Financial Director oversee the same sector in the company, these two positions certainly have differences.
1. The hierarchy
First, as mentioned above, the biggest difference between a CFO and a Financial Director is the hierarchy itself. The CFO is in the highest position, almost the same as the CEO.
In the financial field, the Financial Director is under CFO. They’re not part of the executives, but they are still one of the more senior managers of the company. The financial director reports directly to the CFO.
Second, the difference between a CFO and a Financial Director is their experience level. CFOs normally have over 20 years of experience in the financial areas since they handle one of the most important tasks. Commonly, a CFO has between 8-10 years of experience as a financial analyst at a company. This is a perfect way to show that to be successful in a company, all the employees need to have skills, knowledge, and experience.
On the other hand, finance directors may need 5-10 years of experience in the role of administrative or financial manager.
The third difference between the two positions is responsibility. The CFO focuses on corporate strategy in the financial field. They are the highest decision-makers on everything related to the company’s finances.
Meanwhile, the Financial Director is somewhere in between the CFO and the other financial staff. Their job is more likely to analyze department budgets, handle internal conflict, but also prepare financial reports for the CFO. Thus, the Financial Director performs both tactical and strategic tasks about the company’s finances.
CFOs and Financial directors each have different duties in the company. Although they have different scales and levels, they will always be connected so that financial management in the company, both internal and external, is maintained properly.