Managing money is a critical task for every business. It’s also an area where one mistake can be extremely costly. It’s no surprise that, as the business grows, money becomes one of the most challenging things to deal with.
That’s why, in most organizations, the CEO deals with critical money-oriented tasks. At least in the very beginning.
However, this lasts only until the company starts growing rapidly.
Organizations are forced to create new leadership positions to sustain that growth. This includes money-oriented roles.
The two key and often confused roles that focus on the money in the business are the roles of the Chief Financial Officer (CFO) and the Chief Revenue Officer (CRO).
In this article, we’ll take a closer look at the differences and similarities between the two. We’ll also try to find out if your company needs to maintain both positions.
CFO and CRO: what do they have in common
When we think about the roles of a CFO and CRO, the first thing that pops up is that both are leadership positions.
To become either, you need solid leadership skills.
The second one is that both focus on the money.
And while each approaches it differently, they both share the goal of helping the company fuel its growth.
To achieve it, they both help align the work of different departments to put them on the path to the right outcome.
They also motivate, create a strategy, set KPIs, and share feedback.
They also keep an eye on specific (but different) metrics. That way, they can understand if their strategy takes the company in the right direction.
And while that’s where the similarities end, the two often end up working together.
In fact, despite their many differences, their cooperation is key to achieving synergy. This, in turn, helps businesses grow faster.
Key difference: revenue vs. profit
Despite their mutual focus on the money, it’s also where the positions of a CFO and CRO differ significantly.
The biggest difference is that while a CFO focuses on the profits, a CRO only cares about the revenue.
The role of a chief revenue officer is to coordinate marketing and sales and expand the revenue. CROs help their teams cooperate, brainstorm new revenue streams, and expand existing ones.
However, they don’t care about accounting, financial risk, or budgeting.
That’s where the CFO comes in to save the day. While the CRO brings in the money, the role of a CFO is to own it. Then, they want to ensure that as much of it as possible turns into profit.
For the most part, the position of the CFO focuses on controlling the expenses. They’re responsible for managing the company’s finances, budgeting, or managing risk.
Of course, the scope of their work will heavily depend on the size of the company.
For example, in some companies, a Chief Risk Officer may take some of the CFO’s tasks.
Similarly, the responsibilities of a CRO may be split between different executives.
Interestingly, in 11.34% of companies, CFO is the person responsible for a centralized revenue operations team:
However, in this article, we focus on the differences between the “typical” positions of the two executives.
And the focus on profits vs revenue, while significant, is not the only one.
It’s not just about the money: other key differences
Outside of money, there are four areas where the job of each of the officers differs:
They focus on different metrics and goals
A chief financial officer cares about the profit. So their key metrics are those related to money and profitability.
These include gross profit margin, working capital, quick ratio, current ratio, and the profit itself.
They also look at all metrics that drive the costs up, including fixed expenses or employee count. Of course, as a money-oriented person, they don’t ignore CRO’s main area of focus — revenue. But, for the most part, they focus on how it affects profitability.
On the other hand, revenue-related metrics are every chief revenue officer’s key focus. If there’s a metric that affects revenue — the CRO is on it.
The first metric that comes to mind is the ROI of all marketing and sales campaigns and initiatives. Other key metrics for every CRO include MRR/ARR, CLV, and the value of different customer segments. Here’s a quick overview of key metrics for each position:
|Key Metrics for CRO
|Key Metrics for CEO
|Profit: gross profit margin, profit per share
Efficiency ratios, quick ratio, current ratio
Rates of return
|Return on InvestmentMonthly/Annual Recurring Revenue
Average Order Value
MRR/ARR/Order Value per Segment
Customer Lifetime Value (including renewals and upsells)
Cost of customer acquisition
They work with different departments
Both the CFO and the CRO are leaders who coordinate the work of multiple teams.
The departments of a CFO include those responsible for accounting, budgeting, and risk analysis.
In the meantime, CROs coordinate teams responsible for marketing, sales, or customer success. Of course, as the impact of technology on companies increases, they may also lead other teams. These include those responsible for marketing automation or revenue infrastructure.
There’s also a difference in the way they approach leadership. Often, a CRO puts more emphasis on connecting the departments and working closely with them. They know that poor cooperation between sales and marketing is detrimental to revenue.
Their responsibilities encompass different tasks
Because they oversee different departments, their day-to-day work involves different tasks.
A CFO analyzes financial strategy, manages budgets and expenses, and keeps an eye on the cash flow. They also create financial forecasts and evaluate financial risk.
Plus, as a person responsible for the financial health of the company, a CFO often works closely with the CEO. One of the areas where the two often work together is technology, with 60% of traditional financial tasks already being automated:
On the other hand, the tasks of a CRO focus on expanding the revenue. They create strategies, look for new revenue streams, and seek untapped customer segments.
They also align the work of sales and marketing. The feedback they share helps those teams create pricing, sales, and retention strategies. Lastly, just like CFOs, they have to be very well-versed in technology. However, their main focus is on how it affects company revenue.
The time range and the overlap of responsibilities
One last important difference between the two roles is the time range that they focus on.
When it comes to business money and finances, the CFO takes a more long-term view of things than the CRO.
Of course, that doesn’t mean the CRO doesn’t plan for the future — quite the opposite. After all, they’re the ones creating a long-term revenue strategy.
However, a part of their work focuses on helping their teams find “short-term revenue boosts, so-called quick wins”.
Lastly, whenever there’s an overlap of responsibilities, it’s usually the CFO doing the work of the CRO. Things rarely happen the other way around. In fact, the role of a CFO is often viewed as more valuable for the company, which is reflected by their salaries.
According to Salary.com, the median salary of a CFO is 38% higher than that of a CRO:
This, on top of the aforementioned differences, may lead to conflicts between the two. Which, if not taken care of, can stall the progress of the entire company. Let’s look at the most common reasons why the two executives clash.
Common reasons for conflicts between CROs and CFOs
There are plenty of reasons why different executives clash. These may be anything – from their personalities to the way the business is structured.
However, when it comes to a conflict between a CRO and CFO, three things are usually to blame:
Conflict of responsibilities
The overlap of responsibilities is the key conflict driver between any executives. We all want to feel that our work has a meaning and like to take pride in what we do. We also don’t like to let go of things we’re responsible for (and good at).
After all, nobody likes when someone else tries to take credit for our work. Or when they are tasked with doing the same thing yet do it differently, thus changing the initial idea.
Unfortunately, in many organizations, the roles of a CRO and CFO are quite fluid.
This is especially the case in small organizations. Often, the two roles are introduced too early and, as a result, are not defined clearly.
This leads to overlaps that make the two positions focus on the same tasks.
As mentioned earlier, a CFO usually tries to take over some of the CRO’s work. In fact, many CFOs believe that the tasks of a CRO that are close to finances should belong to them.
Conflict of revenue/money ownership
There are many areas where responsibilities tend to overlap. But the most common one is, without a doubt, that of revenue. And because of how they approach revenue, either party can be responsible for igniting it.
Because the CRO drives the revenue, they believe they are responsible for the number.
At the same time, CFOs believe they’re the ones who are responsible for the company’s financial position. As such, they may be trying to influence company revenue (or take credit for it). And it’s usually the latter that sparks the conflict.
Conflict over investments
The last common area of conflict is that of investments. It’s also where a chief financial officer often has the upper hand over the CRO.
Usually, the conflict happens when a CFO blocks CRO’s investment or marketing budget. Often, the CFO will argue the investment is too big, while the CRO will argue it’s essential for growing revenue.
Sometimes, the lack of green light has solid financial reasoning behind it. However, in some cases, the CFO may be blocking the CRO out of the need to assert dominance and to show who’s in charge.
Sadly, such roadblocks often lead to a situation where the investment, if it gets approved, is either too small or too late. This, in turn, results in much lower revenue for the company.
Thankfully, it’s possible to mitigate most if not all conflicts. The key is to have the two roles and their responsibilities clearly defined.
And if the two can work together, their mutual cooperation can greatly benefit the company.
Key benefits of cooperation between CFO and CRO
Because of the high risk of conflict between the two roles, getting the CFO to work together with a CRO can be tricky. However, there’s a lot to be gained from their collaboration:
Better growth strategy
Each of the two executives has a slightly different view of finances. They come from different backgrounds and are experts in two very different fields.
This allows them to look at money, and especially revenue, from a different angle.
For example, thanks to the CRO’s feedback, the CFO can better see the intricacies of the company’s revenue.
At the same time, a CFO can help the CRO optimize resource allocation. This, in turn, can lead to higher revenue growth.
Higher ROI, lower risk
Moreover, because CFOs are skilled in finances, they can help CROs optimize other areas besides just the management of resources.
Thanks to their in-depth understanding of risk, they can help CROs (as well as other executives) make better investment decisions (and at the right time). This helps achieve better ROI and reduces the risk that the investments will lose money.
Streamlined decision-making process
Lastly, when there’s no conflict, there’s room for making faster (and better) business decisions.
When the CRO and CFO want to cooperate, they can exchange knowledge, insights, and data. And it’s the latter where the two can benefit heavily from mutual cooperation.
According to Deloitte’s The Analytics Advantage report, CFO is the second most frequent leader of analytics in big organizations. As such, they have access to huge amounts of data they can share with other executives.
At the same time, they often lack access to operational data, which is what CROs live and breathe.
So when the two exchange data, it’s easier for the company to avoid unnecessary risks and make more accurate decisions. Not to mention that such decisions better reflect the current business landscape.
This helps the company react to changing market conditions faster (and more effectively).
Of course, while there are some undeniable benefits to having a CRO and CFO working together, not all companies need both positions. Here’s why.
Does your company need both positions?
In startups and many small companies, the tasks of a CRO and CFO often belong to a CEO.
As the company grows, the CEO has to create new executive positions and delegate some of the work.
And when they do, the role of a CFO usually comes before a CRO. According to IBM’s Institute for Business Value Report, CFO is viewed by CEOs as the most crucial role in the company.
Often, the two roles stay merged together, at least until the company reaches a certain size.
Of course, that doesn’t mean that a CFO oversees both finances and marketing.
Rather, they keep an eye on the numbers while a CMO or CEO deals with marketing or sales tasks.
And while a CRO could take over these, hiring one could be overkill. That’s at least until the company reaches a certain size.
However, as the company keeps growing, hiring both a CFO and CRO can greatly benefit the company, especially as the number of responsibilities and complexity of decisions goes up.
CFO and CRO – A perfect financial duo
For some people, the two roles may seem interchangeable. But, when you look closely at their areas of interest, it becomes clear they’re two distinct positions. Especially once your business grows big. Even though a chief revenue officer is often seen as the new kid on the block, that doesn’t mean they have little to bring to the table.
And while initially you might be tempted to cut down the costs and stick to just a CFO, it’s not always a good idea. If you’re growing fast, having both a CRO and CFO can skyrocket your competitiveness from the very beginning.
That’s because you need the two to get together to get all the benefits, which include better financial decisions, risk management, and the discovery of new revenue streams.
And, speaking of the latter, one of the keys to finding and generating new revenue streams (or expanding existing ones) is marketing automation.One of such revenue-focused automation tools is Encharge. Book a free strategy call, and let’s talk about your business to find out if we’re the right choice to grow your revenue.