The CFO reports to the CEO—not the other way around. Despite both executives sitting in the C-suite and wielding significant influence over company direction, the CEO holds the highest-ranking position and maintains final authority over all strategic decisions, including financial ones.
The confusion makes sense: CFOs control the numbers that determine whether a strategy is feasible, sometimes earn comparable salaries to CEOs, and often present directly to boards of directors. This article breaks down exactly where each role fits in the corporate hierarchy, how their responsibilities differ, when they overlap, and why the partnership between these two positions drives company success more than the hierarchy itself.
Is the CFO Higher Than the CEO
No, the CFO is not higher than the CEO. The CEO holds the highest executive position in a company and serves as the CFO’s boss. While both roles sit in the C-suite, the CEO oversees all aspects of the business and carries ultimate responsibility for its success, while the CFO reports directly to the CEO and focuses specifically on financial health and strategy.
This hierarchy exists in nearly every corporate structure, from three-person startups to Fortune 500 companies. The confusion often comes from the fact that CFOs wield significant influence over major decisions and sometimes earn comparable salaries to CEOs, but influence and hierarchy aren’t the same thing.
Legal Authority and Board Governance
The CEO reports to the board of directors and serves as the primary link between the board and company operations. The board hires (and can fire) the CEO, delegates authority to run the company, and holds the CEO accountable for performance.
The CFO reports to the CEO and operates under the CEO’s authority. While the CFO may present financial reports directly to the board during meetings, the reporting relationship flows through the CEO, who maintains final decision-making authority on all matters including financial strategy. This chain of command exists for clear accountability—the CEO answers to shareholders and the board for company-wide performance, while the CFO answers to the CEO for financial stewardship.
Day-to-Day Decision Rights
In daily operations, the CEO has final approval authority on strategic decisions across all functions—product development, market expansion, major hires, and capital investments. The CFO provides critical financial input on decisions by modeling scenarios, analyzing cash flow implications, and highlighting risks, but the CEO makes the final call.
The CFO does maintain independent authority over financial operations like treasury management, financial reporting, audit relationships, and compliance with financial regulations. However, any decision that impacts company strategy or requires significant resource allocation ultimately requires CEO approval. Think of it this way: the CFO can say “we can’t afford this,” but only the CEO can say “we’re doing it anyway” or “let’s find another path forward.”
Where CEO and CFO Fit in the Corporate Chain of Command
The corporate hierarchy typically flows from the board of directors at the top, to the CEO, then to the C-suite executives including the CFO, COO, CTO, and CMO. The CEO coordinates all executives and ensures their efforts align with the company’s strategic direction.
Here’s a helpful analogy: the CEO is the captain who decides the destination, the COO is the bosun who manages the crew and daily operations, and the CFO is the navigator who charts the course, monitors resources, and identifies obstacles ahead. All three roles are critical, but the captain has final authority on where the ship goes and how it gets there.
Reporting Lines in Public Corporations
In publicly traded companies, the board of directors oversees the CEO, who then manages the executive team including the CFO. The CFO typically has a “dotted line” relationship with the board’s audit committee, meaning they present financial information and respond to audit committee questions while still reporting directly to the CEO.
SEC regulations require the CFO to sign off on financial statements alongside the CEO, creating joint accountability for financial accuracy. This regulatory requirement gives the CFO significant independence in financial reporting, but it doesn’t change the fundamental hierarchy where the CEO remains the boss. The board relies on the CFO for unfiltered financial information, which is why many public company CFOs attend all board meetings even though they report to the CEO.
Reporting Lines in Privately Held Firms
Private companies have more flexibility in their organizational structures. Some private company owners serve as both CEO and CFO initially, while others hire a CFO who reports directly to the owner-CEO. In family businesses or founder-led companies, you might see the CFO reporting directly to the board or owner rather than through a CEO, especially if the owner remains heavily involved in financial decisions.
However, as companies professionalize and scale, they typically adopt the standard CEO-over-CFO structure. The key difference is that private companies aren’t bound by SEC governance requirements, allowing them to structure reporting relationships based on what works best for their situation.
Reporting Lines in PE or VC Backed Companies
In private equity or venture capital backed companies, the CFO often has enhanced influence due to investor board seats and reporting requirements. PE and VC firms typically require detailed financial reporting directly from the CFO, creating a practical dual-reporting relationship.
The CFO still reports to the CEO operationally, but investors expect direct access to financial information without it being filtered through the CEO. This dynamic can create tension if the CEO and CFO aren’t aligned, which is why PE firms often bring in their own CFO candidates during acquisitions. Despite this enhanced investor access, the CEO remains the CFO’s direct supervisor and maintains authority over financial strategy and resource allocation decisions.
CEO Versus CFO Core Responsibilities
The CEO and CFO roles are complementary rather than competitive—each brings distinct expertise that the other typically lacks. The confusion often arises because both roles involve high-level strategic thinking and both executives attend board meetings, but their day-to-day focus and areas of authority differ significantly.
1. Vision and Leadership
The CEO sets the company’s vision, mission, and strategic direction. They decide which markets to enter, which products to develop, and what the company will become in five or ten years.
The CFO translates that vision into financial strategy and tests its feasibility. When the CEO says “we’re going to double revenue in three years,” the CFO builds the financial model showing what that requires in terms of capital, hiring, margins, and cash flow—then identifies whether it’s achievable or what adjustments are necessary.
2. Capital Allocation and Risk
The CEO approves major investments, acquisitions, and capital expenditures based on strategic priorities. They decide to invest in a new product line, expand to a new geography, or acquire a competitor.
The CFO analyzes options, models different scenarios, and manages the cash flow to fund approved initiatives. They identify the least expensive capital sources, structure deals to minimize dilution, and ensure the company maintains adequate liquidity while pursuing growth. At Bennett Financials, we see this dynamic constantly—the CEO client says “I want to hit $10M” when they’re at $5M, and we build out exactly what that requires and whether it’s financially feasible given their current trajectory and resources.
3. Investor and Stakeholder Communication
The CEO leads investor relations, speaks to the media, and serves as the public face of the company. They communicate the company’s story, vision, and strategic rationale to external stakeholders.
The CFO provides financial transparency, presents earnings results, and answers detailed questions about margins, cash flow, and financial projections. Both roles involve external communication, but the CEO focuses on narrative and vision while the CFO focuses on numbers and financial performance.
4. People and Culture Influence
The CEO shapes organizational culture, sets values, and makes final decisions on executive hires and organizational structure. They determine what behaviors get rewarded and what the company stands for beyond just financial performance.
The CFO impacts culture through budgeting decisions, compensation planning, and the performance metrics they track. When the CFO emphasizes profitability per employee or customer acquisition cost, those metrics influence how teams operate and what they prioritize. Financial incentives are powerful culture drivers, which is why the CFO’s measurement choices matter even though the CEO owns culture overall.
How CEO and CFO Collaborate to Drive Strategy
The CEO-CFO partnership works best when both executives view their roles as complementary rather than hierarchical. The CEO brings market insight and strategic vision, while the CFO brings financial discipline and analytical rigor—together they make better decisions than either could alone.
Setting Revenue Targets and Budgets
The CEO establishes growth goals based on market opportunity, competitive positioning, and strategic priorities. They might say “we’re targeting 50% revenue growth next year” based on product-market fit and sales pipeline visibility.
The CFO builds the financial roadmap showing what resources that growth requires—how many salespeople to hire, what marketing spend is necessary, which operational investments are needed—and whether the company can afford it given current cash and projected revenue. This back-and-forth continues until both executives agree on an ambitious but achievable plan that balances growth with financial sustainability.
Monitoring Performance Dashboards
Both executives review KPIs, financial metrics, and operational indicators regularly, though they focus on different aspects. The CEO watches customer metrics, market share, product adoption, and team performance, while the CFO focuses on cash burn, margins, revenue per employee, and financial efficiency.
Monthly check-ins allow both executives to spot when performance is drifting from plan. The CFO might notice that customer acquisition costs are rising faster than expected, prompting the CEO to investigate sales team effectiveness or marketing channel performance. At Bennett Financials, we create live scoreboards for clients that reveal exactly where performance is drifting, enabling immediate data-driven decisions instead of reactive guesses when problems become crises.
Navigating Risks and Pivots
The CEO makes strategic pivots when market conditions change or when the current strategy isn’t working. They decide to shift focus from one customer segment to another, change the pricing model, or exit an underperforming market.
The CFO identifies financial obstacles ahead—cash runway concerns, margin compression, concentration risk—and models alternative paths forward. They might say “we have 18 months of runway at current burn, but only 9 months if we pursue this expansion,” giving the CEO critical information for decision-making. The navigator role means the CFO spots the icebergs and coral reefs ahead, but the captain decides whether to change course, slow down, or find a way through.
Role Differences in Startups Versus Mature Companies
The CEO-CFO hierarchy becomes more defined as companies scale from startup to growth stage to mature enterprise. In early stages, role boundaries blur out of necessity, but professional management requires clear separation of duties.
Shared Hats in Early Stages
Founders often wear both CEO and CFO hats initially, making strategic decisions while also managing cash flow, tracking expenses, and handling basic financial tasks. This dual role works when the business is simple and the founder has adequate financial literacy.
However, as complexity increases—multiple revenue streams, larger teams, significant cash flow timing issues—the founder typically lacks either the time or expertise to handle both roles effectively. Many founders wait too long to bring in financial expertise, continuing to manage finances themselves even after the business has outgrown their financial skills.
Separation of Duties After Scaling
Clear role definition typically emerges when companies reach $2-5M in revenue, though it varies by industry and complexity. At this stage, the business generates enough cash to afford dedicated financial leadership, and the financial decisions are complex enough to require specialized expertise.
The CEO can then focus on sales, product, and team building while the CFO handles financial planning, cash management, tax strategy, and financial reporting. Companies that delay this separation often experience cash crunches, tax surprises, or missed growth opportunities because no one is fully focused on financial strategy.
Fractional CFO Option for SMBs
Service-based businesses between $1M and $10M often can’t justify a full-time CFO salary ($200K-$400K+) but desperately need CFO-level strategic guidance. Fractional CFO services fill this gap by providing experienced financial leadership on a part-time basis. If you are unfamiliar with how this model works, you can read our comprehensive guide to fractional CFOs.
At Bennett Financials, we serve as the navigator for growth-focused business owners—taking their goal (say, reaching $10M from $5M), building the financial roadmap with all the data, and identifying whether it’s achievable or what changes are necessary. We map out cash requirements, identify obstacles ahead, and measure monthly progress so the CEO can make informed decisions. This model gives smaller companies access to CFO expertise without the full-time cost. You can compare our pricing models against the cost of a full-time hire to see the potential ROI. Talk to an expert to see how strategic CFO guidance can accelerate your growth trajectory.
Qualifications and Career Paths for Each Role
The paths to CEO and CFO positions differ significantly, reflecting the distinct skill sets each role requires. These differences help explain why someone might excel as a CFO but struggle as a CEO, or vice versa.
Typical CEO Backgrounds
CEOs come from diverse backgrounds—operations, sales, marketing, product, or founder tracks. The common thread among successful CEOs is the ability to see the big picture, communicate vision effectively, and inspire teams to execute.
- Founder-CEOs: Often lack traditional corporate experience but bring deep market insight and relentless drive
- Professional CEOs: Typically have 15-20 years of progressive leadership experience before reaching the top role
- Functional leaders: May rise through sales, operations, or product roles rather than finance
Typical CFO Backgrounds
CFOs almost always come from finance, accounting, consulting, or investment banking backgrounds. They typically start as accountants, financial analysts, or consultants, then progress through roles like controller, VP of finance, or divisional CFO before reaching the top financial role.
The technical foundation matters significantly for CFOs—they need to understand GAAP accounting (Generally Accepted Accounting Principles, the standard framework for financial reporting), financial modeling, tax strategy, and capital markets. Many CFOs have experience in public accounting (Big Four firms like Deloitte, PwC, EY, or KPMG) or investment banking before moving to corporate roles.
Education and Certifications
Most CEOs have undergraduate degrees, and many have MBAs from top programs, though neither is strictly required especially for founder-CEOs. The educational background matters less than track record and leadership capability.
CFOs typically have accounting or finance degrees, and many hold CPA licenses (Certified Public Accountant) or CFA designations (Chartered Financial Analyst). An MBA is common but not universal among CFOs, while the CPA is nearly essential for CFOs at public companies due to SEC reporting requirements.
CEO vs CFO Salary and Equity Trends
Compensation reflects both hierarchy and market dynamics. While the CEO typically earns more than the CFO, the gap varies significantly based on company size, industry, and stage.
Median Cash Compensation
CEOs at companies with $10M-$50M in revenue typically earn higher base salaries than CFOs at similar companies. The gap widens significantly at larger companies—Fortune 500 CEOs often earn 2-3x what their CFOs make in base salary.
However, at early-stage startups, the gap can be smaller or even inverted. A founder-CEO might take minimal salary while a hired CFO with significant experience commands market rate, creating a temporary compensation inversion. Regional variations also matter—CEOs and CFOs in San Francisco or New York typically earn 20-30% more than their counterparts in smaller markets, reflecting cost of living and competitive dynamics.
Equity and Bonus Structures
CEO equity stakes are usually substantially higher than CFO equity, especially for founder-CEOs who might own 20-60% of the company. Hired CEOs at growth companies typically receive 3-8% equity grants, while CFOs receive 1-3%.
Performance bonuses often represent 50-100% of base salary for CEOs and 30-50% for CFOs, tied to company performance metrics like revenue growth, profitability, or valuation milestones. The CEO’s bonus typically has more weight on overall company performance, while the CFO’s bonus might include specific financial metrics like cash management or margin improvement.
Factors That Drive Pay Gaps
Company size is the primary driver of compensation gaps—CEO-CFO pay ratios are smaller at companies under $50M in revenue and widen significantly at larger enterprises. Industry also matters, with technology and financial services companies typically paying more than traditional manufacturing or retail.
Performance and tenure influence compensation as well. A CFO who has been with a company for ten years and helped scale it from $5M to $100M might earn more than a newly hired CEO brought in to lead the next phase of growth, though this is relatively rare.
When a CFO Becomes CEO and the Skills to Add
Some CFOs successfully transition to CEO roles, though it’s less common than other paths to the top job. The transition requires developing capabilities beyond financial expertise, particularly in areas CFOs don’t typically focus on during their financial careers.
1. Expanding From Numbers to Narrative
CFOs excel at analyzing data and presenting financial results, but CEOs need to tell compelling stories that inspire employees, attract customers, and convince investors. The communication style shifts from precision and accuracy to vision and possibility.
This means developing the ability to paint a picture of the future that motivates action, even when the data is ambiguous or the path forward is unclear. CFOs are trained to hedge and qualify statements (“revenue will likely be between X and Y depending on several factors”), while CEOs need to project confidence and clarity (“we’re going to achieve X, and here’s how”).
2. Building Outward Facing Leadership
CFOs spend most of their time on internal matters—budgets, forecasts, financial systems, and reporting. CEOs spend significant time on external relationships—customer meetings, industry conferences, media interviews, and investor presentations.
This shift requires developing comfort with being the public face of the company and building relationships with customers, partners, and industry leaders. It also means learning to sell—the company’s vision, products, and value proposition—rather than just analyzing whether the sales team is hitting targets.
3. Broadening Operational Ownership
CFOs have deep expertise in finance but often limited experience managing operations, product development, marketing, or sales. Becoming CEO requires developing at least functional knowledge of all areas and learning to make sound decisions about them.
This means spending time learning what drives customer acquisition, how product development really works, what makes operations efficient, and how to build high-performing teams across functions. Cross-functional leadership experience before the CEO transition significantly increases success rates, which is why CFO candidates for CEO roles often take on operational responsibilities like leading a business unit or overseeing multiple functions beyond finance.
Key Takeaways for Growth Focused Founders
The CEO-CFO hierarchy is clear—the CEO is the highest-ranking executive and the CFO reports to the CEO. However, the relationship works best as a partnership where both executives bring complementary expertise to strategic decisions.
The CEO sets direction and makes final calls, while the CFO provides the financial roadmap and identifies obstacles ahead. For businesses between $1M and $10M in revenue, bringing in CFO-level expertise (whether full-time or fractional) allows the CEO to focus on growth while ensuring financial decisions are sound and strategic.
Need strategic CFO guidance to complement your CEO vision? Talk to an expert at Bennett Financials to map your growth trajectory and identify exactly what it takes to reach your next revenue milestone.
FAQs About the CEO and CFO Hierarchy
Can a CEO fire the CFO?
Yes, the CEO typically has authority to terminate the CFO since the CFO reports directly to the CEO in most organizational structures. However, at many companies, especially public corporations, the CEO would consult with the board of directors before firing the CFO given the importance of the role and potential market implications.
Can one person legally hold both CEO and CFO titles?
Yes, especially in small companies, though this creates governance challenges and may limit access to certain financing or public market opportunities. Many startups begin with the founder serving as both CEO and CFO, then separate the roles as the company scales and financial complexity increases.
Does the CFO ever report directly to the board instead of the CEO?
Rarely in standard structures, though some boards request direct access to the CFO for financial oversight, particularly in public companies or during crisis situations. The CFO might have a “dotted line” relationship with the audit committee while still reporting operationally to the CEO, creating dual accountability for financial matters.
