Finance is a critical function in any organization, large or small. The finance department is responsible for managing money, assets, budgets, financial planning and analysis, record-keeping, and financial reporting. Within the finance department there are typically two key leadership roles: the Finance Head and the Finance Manager.
What is a Finance Head?
The Finance Head, also known as the Chief Financial Officer (CFO) or Financial Director, is the most senior finance executive in an organization. They oversee all financial activities and directly report to the CEO and Board of Directors.
The key responsibilities of a Finance Head include:
- Developing financial strategy and planning to support overall business goals
- Overseeing all accounting functions including bookkeeping, payroll, accounts payable/receivable, and audits
- Producing financial reports, managing budgets, and monitoring cash flow
- Leading procurement activities and contract negotiations
- Ensuring compliance with accounting regulations and policies
- Mitigating financial risks and implementing internal controls
- Representing the company to financial institutions, investors, and stakeholders
- Analyzing financial data to provide guidance and recommendations to senior management
In summary, the Finance Head takes full ownership of the finance function. They operate at a strategic level to align financial objectives with wider business goals. The role requires sharp analytical skills, leadership capabilities, and extensive financial expertise.
What is a Finance Manager?
The Finance Manager is focused on the day-to-day management of the finance department and financial operations. They report directly to the Finance Head.
Typical responsibilities of a Finance Manager include:
- Overseeing accounts payable and accounts receivable
- Monitoring cash flow and preparing cash flow statements
- Preparing financial reports and other documentation
- Supporting budgeting, forecasting, and financial planning
- Reviewing costs, analyzing variances, and finding ways to improve profitability
- Managing the payroll process
- Ensuring accuracy and compliance in bookkeeping and record-keeping
- Implementing and enforcing financial policies and controls
- Liaising with auditors and managing the audit process
- Leading and developing the finance team
In essence, the Finance Manager takes care of the day-to-day financial health of the organization. They focus on enhancing processes, reducing costs, managing the accounting team, and supporting the senior finance leadership.
Key Differences
While the Finance Head and Finance Manager work closely together, there are some important differences between these roles:
Basis for Comparison | Finance Head | Finance Manager |
---|---|---|
Seniority | Most senior finance position | Junior to the Finance Head |
Focus | Strategic thinking and planning | Day-to-day financial management |
Key Responsibilities | Financial strategy, fundraising, M&A, risk management, financial leadership | Bookkeeping, financial reporting, payroll, budgets, compliance, team management |
Decision Making | High-impact decisions with company-wide implications | Day-to-day operational decisions |
Supervision Received | Reports to CEO and Board | Directly supervised by the Finance Head |
Supervision Exercised | Oversees all finance team members and managers | First-line supervision of finance team members |
Qualifications | Advanced degree and CPA certification typical | Bachelor’s degree in finance, accounting or business administration |
Experience Level | 10+ years of finance experience at a senior management level | 5+ years of experience in finance roles |
Shared Responsibilities
While the Finance Head and Finance Manager have distinct roles, there are some shared responsibilities including:
- Supporting major accounting activities like month-end, quarter-end, and year-end close
- Contributing to budgeting and forecasting processes
- Preparing and presenting financial reports, dashboards, and analysis
- Monitoring and helping control operational costs
- Ensuring adherence to accounting principles and financial regulations
- Supporting stakeholders and various departments with financial information and guidance
- Identifying process improvements and automations for the finance function
- Setting department goals and contributing to high-performance team culture
While the Finance Manager focuses more on execution and the Finance Head provides strategic direction, they collaborate closely across all core finance activities.
Finance Head vs CFO
The terms Finance Head and Chief Financial Officer (CFO) are often used interchangeably. At many companies, the Head of Finance is the CFO.
However, at larger corporations, the CFO may take on a broader organizational leadership role beyond finance. Key differences may include:
- The CFO role encompasses leadership responsibilities outside of the finance function such as IT, strategy, HR and more.
- The CFO takes on a more external-facing role as the key liaison with investors, financial institutions, regulators, and the public.
- The CFO focuses more heavily on enterprise risk management and governance across the entire company.
- The CFO may oversee functions like facilities, legal, and procurement in addition to finance.
- The CFO may sit on and interface more regularly with the Board of Directors.
At small to mid-sized companies, the Head of Finance generally serves as the CFO and the roles are one and the same. But at larger firms, the CFO is more expansive and strategic versus the Finance Head who oversees core finance activities.
Conclusion
In summary, the Finance Head (CFO) develops financial strategy and leads the organization’s overall finance function. The Finance Manager executes day-to-day accounting and finance operations, while supporting the Head of Finance. Both roles are critical to the financial health and success of any company.
The Finance Head takes a big-picture approach to guide financial decisions and align them with business goals. Meanwhile, the Finance Manager focuses on details, processes, reporting, and managing the finance team. The Head develops the vision and strategy, while the Manager implements them at an operational level.
Collaboration between the Head of Finance and Finance Manager ensures that the strategic financial priorities get executed on a day-to-day basis. The partnership between these roles is vital for controlling costs, managing risks, ensuring compliance, and driving profitability across the organization.
Summary Points:
Here are the key takeaways in summarizing the differences between the Finance Head and Finance Manager:
- The Finance Head (CFO) is the highest ranking finance executive, focused on strategic leadership and decision-making.
- The Finance Manager has day-to-day operational responsibility for managing the finance team and accounting functions.
- The Head of Finance develops long-term financial strategy and plans, while the Finance Manager executes them operationally.
- Key roles for the Finance Head include financial reporting, budgeting, forecasting, fundraising, M&A, and risk management.
- The Finance Manager oversees bookkeeping, payroll, compliance, reporting, procurement, and team supervision.
- While their focuses differ, the Finance Head and Manager collaborate closely on all core finance activities.
- The Head provides the big picture vision for finance, and the Manager handles the tactical details.
- An effective partnership between the Finance Head and Manager is crucial for financial control and company success.