What does a financial director do?

Increasingly often, we hear about the Chief Financial Officer, or CFO, a somewhat mysterious English acronym behind a profession that is actually well-known: the financial director. Although many are already familiar with this important professional role, its functions may not be entirely clear. So let’s try to discover what a financial director is and what they do.

Who is a financial director?

The financial director is one of the most important executive figures alongside the entrepreneur/owner and the general manager. They lead the Administration, Finance, and Control departments of companies, with responsibility for the overall management and planning of financial activities. Their work is particularly crucial in crisis situations, as they oversee the management of the company’s capital and cash flows.

Therefore, they are a key member of the executive team, being responsible for the financial health of the company and ensuring the availability of the economic resources necessary for business development. In particular, the financial director ensures that the company’s management is financially stable and sustainable, maintaining a balance between investments and cost control.

What does a financial director do?

After understanding who they are, let’s see what a financial director does. As a finance expert and team leader, this professional plays a decisive role in any organization. They are essential for achieving objectives, act as controller and accountant, but their main responsibility is overseeing financial management. They must ensure its stability and improve its results, working directly with the general manager, whom they support in strategic decisions.

The financial director also handles planning and coordinates investments and equity stakes. They may also interact with human resources, participate in data protection actions, and challenge business partners. Their tasks are very broad and diversified and vary depending on the business context: sector, size, and organizational model.

In any case, the main activities and responsibilities of a financial director are:

• Budget management.
• Cash flow management.
• Financial analysis and planning.
• Investment evaluation.
• Reporting to the CEO and/or shareholders.
• Compliance management in accounting/finance.
• Management of extraordinary financial operations.

In the era of digital transformation, the CFO or financial director holds an even more strategic position. In fact, it is also important to consider the inclusion of all new digital technologies in their toolkit: analytics to extract insights from big data, artificial intelligence to analyze market trends, process automation, and more.

In this new context, the professional works alongside the CEO and other executives such as the COO (Chief Operating Officer) or the CIO (Chief Information Officer) to guide the organization’s digitalization process. For this, they must have managerial and financial skills, as well as knowledge related to technological innovation and its applications in the company.

How much does a financial director earn?

Determining how much a financial director earns is not easy. Indeed, their salary can vary greatly depending on the type and size of the company. Compensation is calculated based on various elements: professional experience, the number of resources/areas they coordinate and directly oversee, objectives achieved, and tenure in the position.

According to studies by Glassdoor, in Spain the average salary of a financial director is €38,774, but it can grow significantly, with peaks of more than €200,000–€300,000 in multinational companies. In countries with larger companies and more mature markets, the average salary can rise drastically, especially in publicly traded companies.

A financial director’s compensation often consists of a fixed part plus a variable component related to economic and financial performance. The highest-paying sectors are pharmaceuticals, finance, and banking, while financial directors in retail tend to earn less on average.

Why work in finance?

A career in finance is a career that helps build the future. There are excellent examples of CFOs who have led the transformation of major companies, driving change across society. These leaders have shown that they are not only skilled at managing numbers but also capable of driving growth and navigating challenges successfully.

Moreover, professionals with a Master’s in Financial Management, international experience, or years on the board of a multinational, can potentially rise to CEO positions. Among financial directors who achieved this are Indra Nooyi, who led PepsiCo from 2006 to 2019 after serving as CFO, Shou Zi Chew, CEO of TikTok, who was previously head of finance at ByteDance, and Peter Voser, who managed Shell’s finance team before becoming CEO.

How to become a financial director

The path to becoming a financial director can be long and winding. On average, it requires 10–15 years of experience, predominantly in accounting and finance. Strong leadership, strategic vision, and sector knowledge are also essential. Education generally includes a degree in economics, management, finance, or accounting, but the best way to learn and understand what a financial director does is through specialization, for example with a Master’s in Finance.

Additionally, postgraduate programs and courses in management, business, or economics are increasingly sought after. However, academic training alone is not enough. Equally important is gaining practical field experience in a professional firm, company, or auditing firm. Indeed, this is a high-level position that is typically reached after a long professional journey, which can nonetheless be very rewarding.