There is a broad range of career options in financial services. While routes like investment banking or working at a hedge fund certainly have their appeal, one of the most popular and perhaps broad reaching paths is to enter the world of corporate finance.
But what is corporate finance? Is it a good career path in finance for you?
This article explains the corporate finance career path in greater depth, let’s take a look!
- What does a corporate finance professional do?
- Why choose a career in corporate finance?
- Corporate finance hierarchy and progressing within the role
- Corporate finance salary
- How to start a career in Corporate Finance
- What qualifications are useful in Corporate Finance?
- Corporate Finance career outlook
- Corporate Finance exit options and opportunities
- Is a Corporate Finance career path right for you?
What does a corporate finance professional do?
Corporate finance jobs are basically finance roles within an operating company itself, rather than a sell side firm like investment banking or Big 4 accounting firms which provides advisory services for operating companies.
As corporate finance covers such a broad range of positions, the specific responsibilities of one corporate finance professional can vary quite significantly from another.
Some of the most popular corporate finance fields include:
- Corporate Development & Strategy is a firm’s internal strategy and mergers & acquisition (M&A) team, instrumental in deciding the strategic direction of a firm, whether it is divesting a division or acquiring another firm for expansion. They work closely with investment bankers to execute deals.
- Financial Planning & Analysis (FP&A) deals with a firm’s management accounting, ownership of P&L (profit and loss) reporting and forecasting.
- Treasury deals with a firm’s cash, liquidity and cash flow position. Cashflow forecasting and management is central to their role, ensuring a firm has adequate cash to meet its short and longer term needs in a cost efficient manner.
- Finance Controllership deals with a firm’s financial accounting and reporting, liaising with internal finance team and external accountants to represent a firm’s accounts accurately and in the best light.
Despite the breadth of corporate finance, a lot of corporate finance work involves analyzing relevant financial data as it applies to a specific project or business. This information will often be compiled with the help of software such as Excel, Spotfire or Tableau. It is estimated that up to 60-80% of an average day will be devoted to addressing these tasks, with the rest taken up by meetings and communications with various internal teams.
Why choose a career in corporate finance?
Corporate finance is quite a broad sector, and includes a wide range of roles as well as opportunities for progression. The CFO (Chief Financial Officer) position is generally at the top of the corporate finance ladder, and is a title that many working in the sector aspire to reach.
Corporate finance is generally considered a fairly stable career, especially in comparison to some other options in the finance sector, and this is one of the reasons many people choose it as a career path. Within the umbrella of corporate finance there are roles including accounting, treasury, FP&A, and a host of other positions that involve dealing with or managing the financial aspects of a business.
In terms of compensation, corporate finance can be an extremely rewarding route to take. There are plenty of options to progress, and it’s possible to achieve significant amounts of pay working in this interesting field, whilst having some work life balance.
Corporate finance roles primarily entail discovering the most optimal ways in which a company can utilize the financial resources at its disposal; working in corporate finance means being actively involved in how a company is managed from a financial perspective.
The level of involvement and responsibility of corporate finance departments therefore means that an attractive quality of working in this sector is the ability to directly impact the success of a large organization, and the lives of its employees, customers and shareholders.
There are also a host of other reasons people are attracted to corporate finance, including:
- Plenty of opportunities for career progression
- Ongoing training and support
- A wide variety of roles to consider
- A dynamic professional environment
- Generous perks such as flexible hours and a better work-life balance (for senior positions)
Due to the dynamic nature of the corporate finance industry, professionals who are highly motivated and who are drawn towards challenges will often seek such a career path.
Corporate finance hierarchy and progressing within the role
What if you wish to pursue a career in this field? Where can you begin and what type of preliminary qualifications will be required?
As there isn’t necessarily a single path to follow, let’s break down a corporate finance career into a series of steps. While corporate finance doesn’t usually offer as structured a career path as some others in the finance sector, there are a number of important roles to be aware of in order to appreciate the respective responsibilities.
Basic financial assessor and cost analyst
The first step when beginning a career in corporate finance involves the role of an analyst. As you may have guessed, these individuals are responsible for collating and logging data which will then be reviewed by others. The majority of positions will normally require at least a bachelor’s degree as a prerequisite.
While analysts are often tasked with what can be considered grunt work by some, these duties are essential in regard to learning the intricacies of the sector itself and the experience gained at this stage can open up a range of opportunities to progress.
Credit manager and/or cash manager
Once an individual has ascended to this level, he or she can begin to become involved with credit-related decisions (such as how much money can be lent to a client and at what rate). This role will require an in-depth knowledge of financial statements with a strong background in risk assessment.
This next position is normally achieved after one has already spent at least 3 years (on average) working as either an analyst or a credit manager. However, note that some firms may require a higher level of experience before the role of treasurer can be obtained. Treasury in itself can also have a range of steps, depending on the size of the organisation. Treasurers are responsible for a host of tasks including:
- Short-term investment
- Cash and liquidity management
- The capital structure of the company in question
Most companies will form teams of treasurers in order to embrace a more well-rounded approach to fiscal management. Those who ascend to the position of treasurer may also enjoy benefits such as commissions and the ability to access profit-sharing programmes.
Financial controllers are given even more responsibility in relation to areas such as financial planning, reporting, cost analysis, and due diligence. These controllers will need to possess a significant amount of prior experience; particularly in the development of pricing models which can be used to predict the outcome of a specific strategy.
In addition, controllers will often be used to troubleshoot relatively complicated cost issues; often in conjunction with auditors.
While this position may sometimes be considered below treasurers and controllers, it is mentioned in this hierarchy due to the often quite impressive salary that can be expected. Financial planning and analysis managers are involved with making complex decisions that will impact the day-to-day operations of a business.
Other responsibilities include providing support to accounting teams, drawing conclusions associated with complex financial data, communicating with upper management, and developing relationships with potential business partners.
Chief financial officer (CFO)
This is arguably the highest position which one can obtain when pursuing a career in corporate finance. Chief financial officers (CFOs) are responsible for overseeing the general operations of the firm as well as ensuring that all financial statements are in compliance. They will likewise represent the “face” of the organisation; crucial from the point of view of investor relations.
As a result, CFOs will enjoy a median salary of just under $400k in the US. This does not include stock options, equity sharing, bonuses, and similar perks which can often increase the total compensation package considerably.
Corporate finance salary
Now that we have taken a look at the basic roles and responsibilities associated with various positions in corporate finance, it is useful to get an understanding of how the salaries will increase as one continues to ascend through the ranks.
As corporate finance is such a broad industry, we’ll look at some of the most common paths that professionals might opt to follow. It is also important to mention that location will often play a role in regard to salaries, as well as the size of the company and the sector in which it operates.
|Corporate Finance Route||Position||Total Compensation|
|FP&A||Junior Analyst||$70k – $90k|
|Senior Analyst||$100k – $140k|
|FP&A Manager||$100k – $1m|
|Treasury||Junior Analyst||$70k – $90k|
|Senior Analyst||$100k – $170k|
|Treasurer||$200k – $2m|
|Financial Controller||Junior Accountant||$40k – $50k|
|Senior Accountant||$100k – $130k|
|Financial Controller||$100k – $1m|
|Chief Financial Officer (CFO)||$300k – $5m|
How to start a career in Corporate Finance
While there is no single path to enter into the field of corporate finance, previous experience is generally required. This is why many applicants will first begin by qualifying as an accountant, working in investment banking or equity research before transferring over.
Studying to be a qualified accountant is likewise a good idea, as this will demonstrate a working knowledge of the more technical aspects of this role. This will normally require three years of study and/or experience. Here are some other ways in which a career path can be established:
- Working with an accounting and/or auditing team.
- Internships immediately following university.
- Joining an advisory firm as a standard analyst after having obtained at least a bachelor’s degree.
As a general rule of thumb, those who possess the proper certifications are more likely to rise through the ranks at a faster pace.
What qualifications are useful in Corporate Finance?
Due to the highly competitive nature of corporate finance, possessing one or more industry-recognized qualifications is a must in this day and age. The good news is that there are a host of options at your disposal. Let’s examine some of the most relevant.
Accounting qualifications – CPA, ACCA, ACA, CIMA etc
Crucial for an FP&A or Financial Controller pathway, qualifying as an accountant would help you secure a job within these department more easily, since management and financial accounting is the core role.
More importantly, the industry requirement is still old school in the sense that most (if not all) CFOs still have to be a qualified accountant, so being a qualified accountant within the corporate finance department should help long term career progression.
Chartered Financial Analyst (CFA)
Becoming a Chartered Financial Analyst (CFA) is also a useful qualification for anyone wanting to pursue a career in corporate finance, especially corporate development and strategy teams. This certification demonstrates an in-depth knowledge of important financial principles, such as asset valuation and pricing, which is one of the reasons it’s valued by employers.
Master of Business Administration (MBA)
Holding a Master of Business Administration (MBA) is another certification to consider, that’s often popular with corporate finance professionals. This qualification illustrates that the candidate fully understands the role of top-down oversight in relation to corporate finance, and an MBA differs from a CFA in a few ways.
An MBA will often be used as a means to quickly rise above the role of an entry-level analyst. Other skills such as delegation, time management, auditing, and negotiation will also be reinforced through the help of an MBA. To put these observations into perspectives, the CEOs of the top S&P Fortune 500 companies hold more MBAs than all of the other possible undergraduate degrees combined.
Financial Risk Manager (FRM)
The FRM qualification is an internationally recognised, masters level programme that is particularly useful for corporate finance professionals involved in treasury and risk management. More specialized than the CFA (but with some overlap of topics covered), there are plenty of individuals who acquire both, rather than choosing between a CFA or FRM.
Choosing to do the FRM qualification depends really on what career you’re in or would like to go into. It’s helpful for areas such as treasury, risk management, banking, and other roles where managing risk is an important part of the job.
Chartered Alternative Investment Analyst (CAIA)
A CAIA (Chartered Alternative Investment Analyst) certification is yet another powerful certification that can be a valuable addition for some corporate finance professionals. This arises from the fact that alternative forms of investment are becoming increasingly important components of institutional portfolios. Those who plan on dealing with equities and/or hedge funds as part of a corporate finance role will particularly benefit from obtaining a CAIA.
Corporate Finance career outlook
Corporate finance professionals are often integral to the success of any business. As such, there will always be demand for individuals with the skills, qualifications and experience needed to fulfil the range of positions that come under the broad umbrella of corporate finance.
Often considered one of the more stable career paths in the finance, corporate finance professionals are nonetheless able to command significant salaries and can be rewarded with generous compensation packages as they rise through the ranks. This is something that is unlikely to change any time soon.
So, other than good pay and reasonable stability, what can you expect from a corporate finance career? The answer to this question will partially revolve around where the industry is headed. For instance, many analysts believe that customer-first approaches are set to become even more prominent. Some other notable medium-term trends include:
- The role of digital transformation.
- The need to enter into new marketplaces.
- Making more cost-effective credit decisions.
- Stressing sustainable business models.
While the outlook for professionals wanting to pursue a career in corporate finance is favorable, as in many areas of finance competition for the best jobs can be significant. It is becoming increasingly likely that candidates will need to demonstrate their aptitude, skills and knowledge through the use of one (or more) certifications and qualifications.
Post pandemic, it is also logical to expect average salaries and ancillary perks, such as flexible working arrangements, to continue to rise in accordance with demand as businesses compete with one another to retain the top talent.
Corporate Finance exit options and opportunities
Imagine for a moment that you are currently employed within the corporate finance sector and you wish to make a finance career change. What types of exit opportunities are available?
While this will obviously depend upon your current title as well as your experience, we can once again make some sound observations.
Some common exit options for corporate finance professionals include:
- Moving to a different corporate firm within the same industry
- Accounting advisory
- Management consulting
- Venture capital positions or investment banking (where your industry experience is a big plus)
Other potential roles include (but are certainly not limited to) private equity management and investment research. While investment banking is a viable route, it should be mentioned that candidates may require more experience before moving (where industry experience is a key differentiator to the rest of the competition); or possibly by obtaining an MBA before changing positions.
Is a Corporate Finance career path right for you?
Is pursuing a career in corporate finance a good decision?
The answer to this will partially be based around your personality, career goals and interests. Those who are the most successful are highly motivated, eager to take on new challenges and adept at building the network and relationships to progress. Of course, generous salaries will likewise play an important role in the decision to follow this path.
Some of the primary benefits of a job in corporate finance include:
- Stable career with relatively high salary and decent work life balance
- The potential for career advancement
- Learning more about the operating aspects of an industry, gaining valuable industry knowledge within finance
- Working within an extremely dynamic professional environment
- A host of exit opportunities
Still, it is only fair to point out some potential drawbacks:
- Corporate finance (and finance careers in general) can be quite stressful
- Additional certifications are often required, which incur time and cost
- Entry-level positions can sometimes be boring and quite laborious
- The competition is formidable for the very best roles, especially at senior level
Corporate finance is attractive for those who are interested in finance, keen to work with numbers and who wish to eventually take on more managerial roles. The sheer versatility associated with the corporate finance industry is definitely an advantage for a long, sustainable finance career.
We hope you learned more about corporate finance from above. Do you think this career path suits you? Let us know in the comments below!
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