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Comparing the VP of Finance and the CFO

Comparing the VP of Finance and the CFO

In a recent Business Insider column, Fred Wilson discussed the difference between the vice president of finance and the chief financial officer roles, a distinction that can be critical for companies looking to manage their finances successfully.

To distinguish between the two positions, Wilson explains that the VP of finance is typically focused on "what happened" and somewhat on "what is happening right now." The VP, Wilson notes, should be responsible for ensuring that the books and records are being accurately kept and reported and that the company is fully staffed in its finance department.

While it is often a natural move for companies to promote their VP of Finance to the CFO role, Wilson explains that there are some key differences that make a finance chief successful. Specifically, he says the CFO must have a "forward looking financial mind" focused on overall strategy from M&A to investor relationships.

One of the key differences then, Wilson says, is that the finance chief is concerned with "what is going to happen and how do we get there?"

The transition from VP of Finance to CFO is nothing new, as companies such as insurer The Navigators Group and JetBlue Airways have recently decided to promote their VPs to finance chief on an interim basis.