Finance strategy 4 min read

Finance team structure: CFO vs. VP of Finance

Elizabeth Dulcich

Depending on the size of your company, your finance team can be structured in a myriad of ways. Most SMBs and startups start small, with just one finance team member: the Chief Financial Officer, who is a Jack or Jill of all trades in the early stages of the company's growth.

As the company grows, so too do your options for how to organize your finance team. Your organization will have bigger and broader needs. These needs will dictate which types of profiles and roles you hire for.

But it can get a little confusing– should you have a CFO or a VP of Finance in the top leadership position? When do you need both? And what’s the difference between the two? This article will cover it all.

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Different finance team structures and roles

The finance team could be made up of just one person or an entire team, it all depends on the company’s activity and needs. And the team itself could be made up of a combination of the following roles (although this list is by no means exhaustive):

It is also important to note that the finance team structure depends not only on the size and structure of the company, but also where the company is in its development. 

For example, finance teams at startups look different than those of long-established Fortune 500 companies, as their needs and goals are completely different. Some companies even opt for a decentralized finance team model.

In other words, no two finance teams are structured exactly alike! So keep this in mind while we discuss CFO and VP of Finance roles within the finance team.

CFO vs. VP of Finance: key differences

If there is both a CFO and a VP of Finance on the team, then their tasks and responsibilities are distinct. However, in general, there aren’t huge differences between the responsibilities of a VP of Finance and CFO if a company opts to have just one of the two. The titles CFO and VP of Finance are sometimes even used interchangeably.

Let’s take a deeper look into the roles and responsibilities of these important positions.

Responsibilities

While CFO and VP of Finance roles have many overlapping characteristics, there are a few key differences between the two. Namely:

  • CFOs focus on the external: long-term strategy and growth, big picture thinking, forecasting and ROI, and they are the face of the company for finance-related purposes.
  • VPs of Finance focus on the internal: overseeing day-to-day company financial management of the organization and leading the finance team on internal matters.

If both are present in an organization, the CFO and VP of Finance mutually support each other.

CFO

Depending on the company’s size and structure, a CFO’s responsibilities can range from tasks like managing invoices and payroll, to big picture business strategy and planning. The CFO represents the company externally at networking events, speaking engagements, and more.

The smaller a company is, the more hands-on a CFO will be (and the less likely it is that there will also be a VP of Finance). 

The CFO is the leader and the highest-ranking member of the finance team.

VP of Finance

The VP of Finance tackles day-to-day finance team responsibilities. This frees the CFO up for more strategic decision making and planning. 

The VP of Finance oversees the more operational tasks such as payroll set up, financial reporting, budgeting process, risk management and financial analysis. 

In addition, the VP of Finance will lead the finance team – made up of accountants, financial analysts, and auditors – in internal matters. 

Of course, having a VP of Finance only makes sense if there are other vice president positions in the company, like VP of Marketing, VP of Human Resources, etc. and the company structure allows for it.

Education and experience

CFOs and VPs of Finance usually share similar educational backgrounds, although there is no one defined path to becoming a CFO or a VP of Finance. Many have a university degree in finance or accounting, plus a CPA or another accounting certification. 

It is slightly preferable for a VP of Finance to have an accounting certification, as they are more hands-on with managing the company’s finances and therefore will need deeper accounting knowledge. 

Because CFOs will have so many strategy-related responsibilities, companies look for candidates who have general business or investment banking experience. 

The most important thing for both roles is experience. Leadership is a crucial skill for both CFOs and VPs of Finance, so companies want candidates with management experience.

Hierarchy

Typically, the CFO is the highest-ranking finance team member in the company. In a traditional company hierarchy, they are usually third in line, behind the CEO and COO. The CFO reports directly to the CEO. 

The VP of Finance may report to the CFO or the CEO, depending on how the company is structured. If a company has both a CFO and a VP of Finance, the CFO sits higher up in the hierarchy than the VP of Finance

Both are leaders of the finance team. However, the CFO is the overall leader of the team, although they are less likely to be present in day-to-day functions if there is also a VP of Finance on the team.

Salary

While the roles share similarities, CFOs and VPs of Finance are not compensated exactly the same according to our data. Interestingly, our CFO Salary Benchmark found that salaries for VP of Finance roles were higher than CFO positions, even though CFOs typically sit above VPs of Finance. 

The best of both worlds

Some organizations need both a CFO and a VP of Finance. This is especially true for large companies or companies with international activities. One person simply cannot handle all the responsibilities that come along with managing a large finance team plus high-level strategic business obligations once a company reaches a certain size. 

The CFO and VP of Finance work in tandem to focus on external and internal matters, respectively. Having both roles in the company’s arsenal means that these two powerhouses can divide and conquer.

Final thoughts

There may come a point in a company’s growth journey and strategy when it will need both a CFO and a VP of Finance. 

However, there is no reason to hire one over the other if a company is not large enough to justify employing both positions. CFO and VP of Finance responsibilities and overall functions are basically the same if there is room for only one role.

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Elizabeth Dulcich

Elizabeth is a content marketer and copywriter living in Paris. She loves reading, yoga, and hiking in her native Pacific Northwest.