What is a CFO & What Do They Do? CFO vs CEO vs COO Explained

In this video, you are going to learn what a CFO is within a startup environment, and what their responsibilities are. Besides, what the differences are between a CFO and a CEO, and a COO.

00:00 Introduction
00:15 What does CFO stand for?
00:40 CFO's responsibilities
00:50 Team members reporting to the CFO
01:18 When the CFO reports to the CEO
02:14 How a CFO can become a COO?
02:30 What does make a good CFO?
02:50 Conclusion

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Additional Resources

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   • Tips to relieve HR stressful situations  

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Hey, it's Scott Orn at Kruze Consulting. Welcome to our YouTube channel where we talk about startup accounting and taxes and venture capital. Everything a startup needs to know.

Today we're talking about what does CFO stand for? CFO is short for chief financial officer. This is the man or woman who runs everything finance, accounting, oftentimes has a pretty big ops component to the job as well. They are running all of the stuff and are ultimately responsible for it for your startup. So they often will have like the controller reporting up to them. Controller's the person who really focuses on closing the monthly books and their staff accountants report up to the controller.

But the CFO and the controller work very closely every month to close the books for the company. Oftentimes, they'll also have HR or the people ops reporting up to them, too. Part of that is because one of the biggest expense items in any startup is people. It's like 70-75% of total expenditures is just salaries, benefits, all that kind of stuff. Also, it just kind of makes sense operationally to have the CFO managing that person. Sometimes, not always. They also report to the CEO. So the CFO works for the CEO but the strongest companies I've seen have... The CFO has a direct line to the board of directors, too. And the reason for that is the board actually wants the CFO to be kind of semi-independent and give them the straight scoop so to speak. No one wants the CFO to be bullied by the CEO into submitting incorrect numbers or sugarcoating some real serious problems. And so the board often looks to the CFO as like someone who can basically explain what's happening in a different language or give them the truth if things aren't going well.

The other thing to remember about CFOs is in my experience, the best ones, first, when they start the company, they start taking over, controlling, managing all the finance and helping with HR stuff, too. But they also start kind of demonstrating an aptitude for what I call like COO type of skillsets. So like running the business components, taking stuff off the CEO's list. This is usually before the company has a COO. Typically they'll hire a CFO and then a COO. Not always, or they'll have a VP of operations that graduates into a COO position. But just look for a CFO who's not just a numbers person but someone who actually has the ability to manage people, good personal skills because you want them to do more than just finance at a startup. Startups are growing so fast. Also, finance is not like so overwhelming at like a mid-stage startup.

So you want them to be able to dabble in other things to take the pressure off the rest of the organization. Hope that helps explain what a CFO is and what it stands for. If you have other questions on this or accounting or taxes, hit us up at kruzeconsulting.com and please subscribe to our YouTube channel. Thank you so much. Bye.