How to Become a CFO: Skills, Qualifications & Career Path Explained

The Chief Financial Officer (CFO) position is considered the pinnacle of a finance professional’s career. They play a strategic leader role in terms of the organisation’s financial health; they also shape the business direction, drive growth, and ensure long-term sustainability. 

In today’s dynamic business environment, CFOs are expected to do far more than oversee accounting and manage budgets. They are key advisors to the CEO, financial strategy architects, and innovation and risk management champions.

This article explains how to become a CFO, including key qualifications, career path, industry insights, skills needed, challenges faced, salary expectations, and specialised roles.

What Is a CFO?

Chief Financial Officer (CFO) is an individual of the highest level, in charge of the financial well being of the firm. The long term strategy of the firm is the foundation of work for the CFO, and he is responsible for managing budgets, cash flows, as well as monitoring investments and long term finances. They are responsible for presenting important financial information and work hand in hand with the CEO, among other high-level executives. As the finance division head, the CFO is also in charge of regulatory compliance and laws and is responsible for preparing and certifying the company's financial reports.

Educational Qualifications Needed

A solid academic qualification in business or finance is most commonly the initial requirement to becoming a CFO. B.Com. (Bachelor of Commerce) and BBA (Bachelor of Business Administration) are standard undergraduate degrees offered in India, many with specialisations in accounting, banking, or finance. Core subjects like business law, financial accounting, and economics are learned through these programs.

A post-graduation qualification is the next step for most aspiring CFOs. An MBA in finance or strategy is most coveted, especially from premier institutions like XLRI, ISB, or IIMs. Some also do M.Com or master's degrees in economics or finance. At senior leadership positions, these degrees enable one to understand corporate finance, financial strategy, and decision-making better.

Professional Certifications to Consider

Professional qualifications enhance specialised skills needed to deal with sophisticated business. Professional qualifications assist in developing skills necessary to handle long-standing financial debts, with degrees serving as the foundation. Some of the best-known qualifications in India and around the world are listed below:

• Chartered Accountant
• Chartered Financial Analyst
• Cost and Management Accountant
• Certified Public Accountant
• Chartered Certified Accountant

Each of these adds value depending on the career focus. For example, those who already hold a CA qualification often pursue a CFA to deepen their investment and analytical skills and improve global employability. If you're interested in pursuing CFA after CA then this combination is highly regarded in the finance industry for great career opportunities.

Skills Required to Become a CFO

Good accounting, financial analysis, and budgeting skills are important for an effective CFO. For making rational decisions to fuel the business growth, they should know about capital structure, M&A, and financial projections. 

Also, one should know about tax legislations, compliance paradigms such as Ind AS and IFRS, and financial regulation in general. Second, being a part and parcel of the financial planning and reporting these days, CFOs should be privy to the use of such technology like ERP systems, model-based modeling within Excel, latest technologies in finance function, as well as analysing data. Furthermore, soft skills involving team leading, presenting complex finances to non-financial departments, and aligning financial goals with corporate business objectives are very vital. 

Career Path to CFO

There's no one recipe to be a CFO, but certain steps are straightforward that the majority of professionals pursue. They begin their career, in most cases, as an accountant, a tax adviser, an auditor, a financial analyst, or another role providing reliable experience in reporting and analysing the finances. 

Majority of them enter the position through corporate financial functions, banking, or one of the Big Four accounting firms. After 4-8 years, professionals move into roles like Finance Manager, Accounting Manager, or Controller, managing budgets and teams. Some branch into areas like internal audit or treasury. Next come the positions of VP of Finance, Head of Finance, or Director of Finance. These positions provide experience in strategy development for the business and handling finance functions. 

Applicants typically need to have ten to fifteen years of experience in finance functions before they can take the position of CFO, particularly if they have experience in working for a broad range of finance functions and firms as well. 

Industry Experience and Networking 

Industry experience matters equally to become a CFO. A technology CFO, for instance, must possess some knowledge of SaaS revenue models and financial impact of R&D spend, whereas an aspirant aspiring to switch to infrastructure must possess knowledge of capital expenditure budgeting and project finance. 

Likewise, Indian banking and insurance sector CFOs must be knowledgeable in RBI or IRDAI regulations and financial services background. Healthcare finance executives are supported by hospital billing knowledge, healthcare-specific cost control, and compliance. Such industry-specific intelligence is a goldmine to anybody wondering how to become a CFO of a bank, or how to become CFO of a hospital. 

Technical skills aside, networking plays a key role in becoming a CFO. Internal referral, executive search, or word-of-mouth referral are common ways for CFOs to get a new position.Active membership of professional networks like finance clubs, CFO forums, LinkedIn groups, ICAI, and ICMAI would create visibility, and new opportunities may arise out of it.

Building strong relationships and adjusting to changing industry needs can also be done by attending industry conferences or executive education programs, especially those provided by institutions like IIM. These are the steps that would be of immense value to anyone who wants to know how to become a CFO in India.

Challenges Faced by CFOs 

The changing and dynamic environment in which the CFO works today also presents some challenges. To remain updated of ongoing advancements in regulatory and compliance needs like tax reforms, amendments to company law, and industry-par benchmark financial reporting norms, is the utmost priority. In turbulent market conditions, when fluctuations in interest rates, fluctuations in commodity prices, and exchange rates can determine the financial wellness of a business firm, risk management of finance is crucial.

Digital transformation is another issue of significance. Implementing cutting-edge financial technology like cloud accounting software, ERP software, and AI forecasting software is generally in the domain of CFOs. There is potential to enhance productivity with these technologies but, along with it, comes risks like organisational change resistance and cyber attack. CFOs also need to ensure that they keep the cost minimal while driving innovation and business growth.

CFO Salary Expectations

CFOs rank among the best and highest-paid jobs in any organisation. Experience, geography, firm size, and industry are some of the determinants of a CFO's salary. An average Indian CFO will take home around ₹36.1 lakh per annum. Top-tier CFOs in large organisations or multinationals can have a salary of up to ₹75 lakh per annum, and CFOs can earn higher than ₹1 crore. With experience, their pay can grow exponentially.

Because of the existence of high-paying industries and corporate headquarters, professionals working in cities like Delhi, Bangalore, or Mumbai are earning higher than the national average wage rate. Aside from this, better pay packages are usually found in industries like the technology, banking, and financial sectors. Stock options, dividends, and bonuses tend to complement base compensation and therefore contribute to overall earning capacity.

Industry-Specific Career Paths to the CFO Position 

Although there are certain steps that can be universally taken in becoming a CFO, the career path differs greatly depending upon the industry. Individuals applying for hospital CFO positions need to have financial expertise and experience with the healthcare system. Having a degree in hospital administration or health management is highly advantageous, along with experience in hospital budgets, medical billing, and insurance compliance. These are specifically needed if you are interested in becoming a hospital CFO.

Bank CFOs, however, require proper exposure to accounting report standards and compliance. Most bank CFOs possess a background in finance or accounting like CA or MBA in Finance and have experience in risk management, audit, or credit control previously. It is necessary to be aware of RBI regulations and filings to be successful in this position. A bit of financial services experience is necessary for anyone who wants to be a CFO of a bank. 

Virtual CFOs take another path and prefer to provide outsourced financial services to startups and small-to-medium enterprises (SMEs). Strong consulting skills, entrepreneurial spirit, and finance experience are all required to be successful in this position. Virtual CFOs tend to have several customers, do work from home, and use cloud-based software. Building a thriving virtual CFO practice comes with getting exposure in startup communities and building client relationships. Venturing into being a virtual chief financial officer requires you to be client-oriented and adaptable in delivering service.

It is not merely being financially literate that makes an individual a chief financial officer. The goal is to develop a balanced profile of leadership, industry knowledge, and numeracy. What actually stands out is how you bring together that knowledge across functions and industries, whether your journey begins with a B.Com or MBA or you are working towards professional certifications like CA or CFA. No matter what industry such as banking, healthcare, or startups, to become a CFO is a matter of skill, experience, and foresight. With a well-defined plan, becoming CFO of a company is a reachable target.