The CFO and CEO Relationship: 4 Things To Communicate

Clear communication among the company’s executives is essential for business success. Without it, your organization can fall under a complex web of confusion and business-impacting mistakes. When looking after your finances, keeping the CFO and CEO relationship on good terms is necessary. 

What’s the difference between CFO and CEO? 

The CFO (Chief Financial Officer) is responsible for the financial health of the company, while the CEO (Chief Executive Officer) is responsible for the overall direction of the company. These two roles are closely linked, and they need to work together effectively in order to achieve the company's goals. 

According to Gartner, more than 80% of CFOs have strong relationships with their CEOs, which only signifies the importance of maintaining a good working relationship between the two business executives. The alliance between them is critical to an organization, especially when making pivotal business decisions.  

So, what should and how should these leaders communicate? Here are some. 

CFO and CEO Relationship

1. Financial Condition of the Company

Even if the company’s financial condition is at its worst, telling the bitter truth to the CEO will be the CFO’s duty. Sure, your performance may take a hit, but at least it gives the company’s management the ability to make the right decisions based on your organization’s financial capabilities. Not doing so will cost your company huge amounts of resources and your job. 

Take for example the case of Glyn Raines, a former CFO of New South Wales-based Hastie Services. After the Australian Securities and Investments Corporation investigated, he was charged of conspiring to falsify the books and conspiring to give false information to an auditor together with three other senior officials of the company. He pleaded guilty last December 2016, and is currently facing a possible five-year jail term, to be sentenced this June 2017. 

Read: The 3 Key Traits that Every Modern CFO Needs to Have 

2. Budget Preparations and Expenditures Monitoring

In every business venture, the budget allotted to it is considered as its lifeline. CFOs must communicate the budget allocation for each project to the CEO. This will allow them to adjust the expected outcome and timeframe. 

Keeping the CEO updated on the expenditures of current operations is also a good practice in maintaining a great CFO and CEO relationship. Doing so helps your CEO to decide if there are adjustments that need to be made to achieve the goals set by the management. 

3. Reports to the Board

In every report, one of the most important pieces of information that the Board expects from the CEO is the financial performance of the organization. If you fail to coordinate with the CEO about the information you have on hand, you will end up with conflicting reports to the board, something that you surely don’t want to happen. 

Having a meeting with the CEO before you report to the Board does not only ensure that your data is in sync, but it also gives you an opportunity to check if they are accurate and gives you time to prepare beforehand. 

Read Next: The CFO's Critical Role in Driving Business Transformation 

4. Unexpected Changes

You can expect unexpected changes to happen. They may come tomorrow, next week, a few months from now or even just seconds after you have read this article. But once they do, it is in your discretion to report them to the CEO. 

However, we recommend you report changes that will surely have a huge impact on your organization. In any case, keeping your CEO informed on abrupt cases as soon as they happen won’t hurt. 

There are clear differences between a CEO and a CFO, and they are not equal in terms of roles, responsibilities and organizational hierarchy, but that doesn’t mean that one doesn’t need the other to perform his duties well. For one, the CEO’s role is to call the shots from time to time, but it is the role of the CFO company to make sure that the CEO makes informed decisions, finance-wise. This means that keeping an excellent CFO and CEO relationship is not only in the best interest of your finance department but also of your company as a whole. 

Hire the Right Expert 

Are you a CFO struggling to effectively communicate with your CEO? Do you find it challenging to convey the crucial aspects of your financial operations? If you need assistance, it's time to hire the right expert. Look no further than D&V Philippines. We offer a competitive suite of outsourced CFO services that can handle all your financial needs. Let us handle your financial requirements and provide you with reliable services. Schedule a free consultation with us today to learn how we can help you. 

You can also download our whitepaper, Finding the Right Talents: D&V Philippines’ Solutions to Modern Accounting Firms, to learn more about our services.    

This post was first published 4 May 2017 and edited 20 September 2023. Edited by: Angelica Garcia