The corporate structure has become very complex today with terms like CFO, CEO, COO, president, vice president and so on. With ever changing corporate horizon, it is becoming increasingly difficult to keep track of who is doing what in an organization. Especially from an investor point of view, should we be paying more attention to what a CEO is saying or give more weightage to uttering of a CFO? This article will highlight the roles and responsibilities of both CEO and CFO to enable a person to easily differentiate between the two.
It is for convenience of governance that posts like CEO and CFO exist in an organization. Both of these posts are one tier below the board of directors in the chain of management. Here is a brief introduction of the two posts. These two posts are part of the management team that is directly responsible for day to day operations and profitability of the company.
Chief Executive Officer (CEO)
CEO of a company is the top manager responsible for entire operations of the company and has to report directly to the chairman and the board of directors. His responsibility is to implement the decisions taken by the board and to see that all operations of the company are carried out smoothly without any glitches. Many a times, CEO is also one of the directors and then he has to fulfill both the responsibilities of formulating as well as implanting the policies. For the employees of a company, CEO is the big boss but in reality he is under the authority of directors who hire and fire the CEO.
Chief Financial Officer (CFO)
CFO is the person who directs company’s financial goals, objectives and budgets. They are responsible for investment of funds and supervision of cash management. They play a vital role in acquisitions and mergers and also execute strategies to raise capital for expansion of the company. They manage all financial risks while overseeing day to day operations. CFO’s also look after analysis and review of financial data and prepare financial reports of company’s performance to be viewed by the board of directors. He is a vital link between the company and the shareholders as well as Securities and Exchange Commission. His designation is equivalent to a vice president of the company. He routinely checks financial health of the company and reports to higher management.
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In brief: • The posts of CEO and CFO are very important in corporate structure today • While CEO is the big boos and overall in charge of day to day operations, CFO is the financial boss of the company overseeing all financial matters of the company • While all others in the company report to the CEO, CFO is answerable to the board of directors • CEO manages men and operations while CFO manages money and prepares financial data for the shareholders and SEC.
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