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CFO vs VP of Finance: Which Do You Need for Your Business?

Are you curious about the role of a CFO vs VP of Finance and which you need for your business? As an experienced professional, you know how crucial it is to have a strong finance function within any organization. In this blog post, we will take an in-depth look at what it means to be a Chief Financial Officer (CFO) or a VP of Finance and how their role has evolved over time.

We'll also explore the CFO's responsibilities, including working with different reports directly and leading the finance team in financial reporting and accounting. Furthermore, we'll discuss how the finance organization acts as a strategic partner for companies' chief executive officers (CEOs) when it comes to risk management and decision-making processes.

This article will highlight key skills financial managers who aspire to become VPs or CFOs in their organizations require. By reading this post, you will gain insight into what makes someone successful in these roles while understanding better how vital they are for any company's success.

Table of Contents:

  • Understanding the Difference Between CFO and VP of Finance
  • Responsibilities of a Chief Financial Officer
  • Compensation Differences Between CFOs and VPs
  • When Does Your Company Need To Hire A CFO?
  • VP vs. CFO – Which is the Right Choice for Your Business?
  • FAQs concerning CFO vs Vp of Finance Which Do You Need
    • Which is higher, CFO or VP of Finance?
    • At what point do you need a CFO?
  • Conclusion

Understanding the Difference Between CFO and VP of Finance

The VP of Finance is responsible for the daily financial activities of an organization, supervising staff and ensuring accurate reporting in accordance with the company's objectives. This includes managing the finance team, providing strategic guidance, and ensuring accurate financial reporting. The VP must also be able to provide support for the organization's overall business strategy. The VP of Finance should possess a thorough comprehension of accounting concepts, hazard control, and other finance-related topics. The VP should demonstrate the ability to communicate well with other higher-level personnel, displaying adeptness in discourse.

CFOs are strategic advisors to the CEO or board of directors, requiring expertise in accounting and business administration. CFOs typically report directly to CEOs or boards of directors and act as an advisor when it comes to all aspects of corporate finance. Furthermore, they must be able to think strategically about long-term goals while remaining agile enough to respond quickly if needed.

Finally, companies should consider whether hiring a CFO is necessary by looking at signs such as needing more sophisticated strategies around mergers & acquisitions, fundraising activities, and IPO processes. Generally speaking, any company that wants its finances managed efficiently by someone who understands how investments work would do well to hire a great CFO rather than relying solely on VPs when deciding which position best suits their needs.

Comprehending the distinctions between a CFO and a VP of Finance is crucial to selecting which role would be most advantageous for your company. With a better understanding of the responsibilities associated with each role, you can make an informed decision about whether or not you need a Chief Financial Officer or Vice President of Finance.

Key Takeaway: It is important to consider, that the role of a VP of Finance focuses on day-to-day financial operations while CFOs require more strategic planning and involve high salaries. Companies should decide whether they need either position based on their needs for sophisticated strategies such as M&A, fundraising, or IPOs.

Responsibilities of a Chief Financial Officer

The Chief Financial Officer (CFO) is a critical role within any organization. They are responsible for overseeing the finance function and ensuring that all financial reporting, planning, and analysis activities are properly executed. The CFO serves as a strategic advisor to the CEO, guiding important financial decisions.

CFOs must be cognizant of the current market conditions and have the capability to identify potential risks or openings for expansion inside their organization while constructing a financial plan. This includes analyzing investment strategies, capital structure optimization, budgeting processes, and forecasting models. Additionally, they will need to guide cost-cutting initiatives while maintaining quality standards throughout the business operations.

Raising capital and making acquisitions is another key responsibility of a CFO. In this role, they will be expected to identify potential sources of financing such as debt or equity offerings from investors or banks as well as assess acquisition targets based on their financial viability. They must also negotiate terms with lenders/investors in order to secure optimal financing options for the company’s needs.

A CFO's duties are far-reaching, necessitating an individual with substantial expertise in devising fiscal strategies, procuring capital, executing takeovers, and guiding top management. To gain insight into the educational background requirements and general business/investment banking experience necessary for CFO vs VP roles, let us now explore further.

Key Takeaway: The CFO can be a critical role in any organization, responsible for overseeing the finance function and providing strategic financial planning. They must be able to anticipate risks or opportunities while analyzing investment strategies and raising capital through debt or equity offerings. Additionally, they will need to negotiate terms with lenders and investors to secure optimal financing options.

Compensation Differences Between CFOs and VPs

Compensation for CFOs and VPs of Finance may be vastly different, contingent on the size, composition, and sector of a firm. Generally speaking, CFOs will have a higher salary range than VPs due to their more senior role in the finance function.

CFOs are expected to possess both savvy business acumen and deep knowledge of accounting principles. To occupy this position requires experience in corporate finance or investment banking roles. Consequently, the compensation packages they receive can be quite substantial compared to those offered to Vice Presidents of Finance due to their higher ranking within executive teams.

In comparison, VPs are often lower down on the organizational hierarchy but still play a key role in ensuring that day-to-day finances run smoothly within their respective organizations. They guide budgeting processes as well as assist with financial forecasting activities while also leading internal audits when necessary. 

When it comes to salaries, both roles come with attractive remuneration packages, although those earned by CFOs tend to be significantly higher than those received by VPs since they occupy more senior positions within organizations. Compensation disparities between CFOs and VPs can be substantial, so it's critical to comprehend the wage range for each post before making a recruitment determination. Now let's explore when your company may need to hire a CFO to make sure you're getting the most out of your financial team.

Key Takeaway: CFOs, being at the apex of finance, are typically rewarded with higher pay than VPs due to their advanced qualifications and long-standing expertise. On average, CFOS make around $200K annually compared to VP's annual wages which stand at approximately $125K.

When Does Your Company Need To Hire A CFO?

As an organization grows in size and complexity, the need for a CFO may become apparent. Once a business has attained an extent of expansion or complexity, it may be prudent to appoint a CFO to oversee its financial matters. Signs that your company needs to hire a CFO include:

  1. The finance squad is swamped with obligations like financial accounting, budgeting, prognostication, money stream regulation, etc., and is unable to satisfy the needs of the enterprise.
  2. You have multiple rounds of financing coming due soon or you’re considering raising capital from investors or making acquisitions that require more sophisticated financial planning than what your current staff can handle.

The lack of organization and insufficient internal controls within your existing finance function could prove to be a costly mistake if not nipped in the bud with an experienced professional, such as a CFO. A Chief Financial Officer is equipped with the know-how to set up robust processes and systems that guarantee accuracy when it comes to all financial matters going forward.

  1. Seeking an individual to act as a consultant and collaborative ally for the CEO of your business? A great CFO should be able to provide insight into key decisions related to risk management, investments, mergers & acquisitions activity, and other areas where their expertise is needed most in order for the business's long-term success.

A great CFO should possess the acumen to be an advisor and strategic partner for your company's CEO, helping them make key decisions related to risk management, investments, mergers & acquisitions activity, and other areas crucial for long-term success. Moreover, they must have experience leading teams of financial managers responsible for day-to-day operations such as accounts payable/receivable processing; payroll administration; billing & invoicing; bank reconciliations; tax compliance activities, etc. 

Hiring a great CFO offers many benefits, including improved efficiency across all areas of finance within an organization. This ranges from a better understanding of complex transactions and regulations to increased transparency in data analytics, resulting in better decision-making capabilities overall which translates into greater profits over time. Additionally, having access to top talent brings fresh ideas on how best to utilize resources available while also keeping costs low, thus increasing ROI potential significantly.

Recognizing the need for a CFO is essential to ensure optimal business performance. Weighing up the merits of a VP or CFO for your organization necessitates assessing multiple elements before settling on an option.

Key Takeaway: A CFO is a valuable asset to any company, providing strategic insight and superior financial management capabilities. With their help, organizations can realize greater efficiency and ROI potential through improved decision-making processes backed by enhanced data analytics transparency. Ultimately, having access to the right talent with fresh ideas makes all the difference in achieving long-term success.

VP vs. CFO – Which is the Right Choice for Your Business?

A VP of Finance and a CFO are indispensable for any organization's fiscal success, deciding as to which is appropriate for one's business an important one. Both positions are essential in providing guidance and direction for the finance function, but which is right for your business?

The primary difference between these two roles lies in their focus. The VP of Finance generally looks after daily financial matters, supervises the finance division, advises on short-term aims, and ensures adherence to applicable laws. On the other hand, CFOs take a longer view by developing strategic financial plans to help drive long-term growth and profitability. They also often act as advisors to senior leadership on matters such as capital-raising activities and acquisitions.

Generally, VP salaries are lower than CFOs due to their more extensive responsibilities, with the former typically ranging from $100K - $200K+ and the latter between $150K - $400K+.

Key Takeaway: As an advanced professional with a high IQ, it's important to note the differences between VPs and CFOs in terms of qualifications, responsibilities, and compensation. Typically, VP salaries range from $100K-$200K per annum while CFOs may receive significantly higher remuneration due to their more comprehensive obligations.

FAQs concerning CFO vs VP of Finance Which Do You Need

Which is higher, CFO or VP of Finance?

The CFO, the top financial job in a business, is responsible for managing all fiscal matters. The VP of Finance is subordinate to the CFO, charged with implementing the financial strategies set forth by their superior. Therefore, the CFO outranks the VP of Finance in terms of seniority and responsibility.

At what point do you need a CFO?

When the need arises to make financial decisions that will impact a business's long-term success, it may be time to hire a CFO who can offer strategic insight and direction on vital fiscal matters. A CFO can provide strategic direction and guidance on key financial matters such as budgeting, forecasting, investments, tax planning, and compliance. They are also responsible for providing accurate financial reports and analyses to help inform decision-making. By bringing in an experienced professional with expertise in these areas, businesses can ensure their finances are managed effectively so they can reach their goals.


It is important to consider the roles and responsibilities of a CFO vs VP of Finance when deciding which type of financial leader your business needs. Both positions are integral parts of any executive team, but each brings different strengths that can help maximize a company’s success. Ultimately, the selection of a suitable financial leader for your business relies on an appreciation of their qualifications and knowledge concerning the aims of your organization.

If you are unsure of which financial position is best for your organization, consider consulting a professional to determine the most suitable option. Contact us for more information about what may suit you best.  With expertise and knowledge, we can guide how to maximize efficiency and profitability in both CFO and VP of Finance roles.