VP Finance vs CFO
Today on MBA Mondays we are going to talk about the financial leader in an organization. Sometimes this person is called the VP Finance and sometimes they are called the CFO. What is the difference? When will a VP Finance do? And when do you need a CFO?
Like all titles, they can get mangled. A person might be promoted from VP Finance to CFO without exhibiting the characteristics I am going to ascribe to a CFO. That happens all the time. But if you really need a CFO and you have a VP Finance, you will know the difference.
A VP Finance is what you need when you want a leader who will keep the wheels on the bus, who will make sure there are financial controls in place, who will make sure the books, records, and reports are accurate and timely and well presented, and who will make sure you have the right amount of accountants and clerical staff on hand to manage the work of the finance organization. A VP Finance is largely about "what happened" and a little about "what is happening right now?"
A CFO is what you need when you have all that I described above but you also need a forward looking financial mind at your side, when you need deep strategic thinking in the financial function, when you need to do big transactions (both M&A and financings), and when you need someone to manage your relationship with investors (particularly public investors). A CFO is largely about "what is going to happen and how do we get there?"
I generally encourage companies to wait as long as possible to bring on a CFO. Great CFOs are few and far between. And in order to recruit one of them, you will need an interesting business and a meaty role. VP Finance talent is in larger supply and they can take you very far. Get a VP Finance onboard as soon as you can afford one. They will let you sleep at night. Get a CFO on board when you are ready to take on the world. You can't do that without a strong one at your side.