What is a Career in Corporate Finance?
(NB: Corporate Finance can refer to the business’s finance function or to M&A (mergers and acquisitions), depending on which country you are in. This article refers to the finance function).
Corporate finance can offer an attractive career path for those who enjoy the challenge of working within a company to manage its finances. The three principal divisions within corporate finance include Financial Planning and Analysis, which is responsible for management accounting; Control, which is responsible for financial accounting and reporting; and Treasury, which manages the firm’s cash, liquidity, and cash flow. Each department includes a number of analysts and is headed by a manager who reports to the Chief Financial Officer (CFO). This role is one of the top three positions in any corporation, with chief executive officer (CEO) being the most senior, followed by chief operating officer (COO) and then CFO.
Key Learning Points
- Corporate finance offers considerable opportunities to graduates who want to participate in the financial management of a company.
- While the typical analyst in corporate finance earns less than an analyst in investment banking or asset management, salaries are still attractive and positions are much more plentiful.
- The ultimate career objective in corporate finance is to progress to CFO, a position that can offer highly competitive pay. A CFO makes key financial decisions and participates in determining the strategic direction of the business.
- Although structures differ from one firm to another, FP&A, Control, and Treasury are the three main functional areas in corporate finance.
Why Work in Corporate Finance?
Corporate finance can occasionally be overshadowed by investment banking, but the corporate finance career path offers some considerable advantages. Compensation is very attractive. Corporate finance positions are available in every industry and offer excellent potential for advancement. Corporate finance also offers greater stability since there is no direct link to financial market performance, and there are many more corporate finance jobs available. Corporate finance professionals often work with investment bankers as they represent the client company in need of financing. It is not uncommon for investment bankers to move into CFO roles with client companies. In addition, corporate finance offers a much better work-life balance than other areas of finance such as private equity, investment banking, and asset management.
Most corporate finance jobs require a bachelor’s degree in accounting, but other majors such as finance or economics are also relevant. An advanced degree such as a master’s in accounting or finance, or even an MBA, can demonstrate competence and fuel career progress. However, candidates should bear in mind that unlike degrees that focus on capital markets, portfolio management, or statistics, corporate finance requires deep knowledge of accounting. For those coming from a non-financial background, professional qualifications and certifications can be useful in demonstrating competence.
Although the role of certifications can be just as important in corporate finance as in other areas of finance such as asset management, candidates may find that most roles require an accounting qualification.
The Accountant is a CPD-certified course that provides a comprehensive and practical understanding of the techniques used to analyze financial results. Developing practical skills will help you make a good impression in interviews or in a new corporate finance role.
Other organizations that offer accounting qualifications include the Chartered Institute of Management Accountants (CIMA), the Association of Chartered Certified Accountants (ACCA), and The Institute of Chartered Accountants in England and Wales (ICAEW). Other certifications that can be an advantage include the Chartered Financial Analyst (CFA) designation, the Financial Risk Manager (FRM) designation, or the Diploma in Corporate Finance offered by the Chartered Institute for Securities and Investment (CISI).
The typical entry position is junior analyst or analyst (this depends mostly on the company and team’s size). Analysts are responsible for data-related tasks, information gathering, and all “heavy-lifting” activities.
Senior analysts usually have at least a few years of experience with the team and are very familiar with internal processes. They manage junior analysts (the number of people managed can vary significantly) and are also responsible for producing a variety of reports used by senior management.
Department heads/managers report directly to the CFO and are responsible for anything within their area of responsibility. This is a senior role and typically well compensated, especially at large international companies.
Key Skills Required for Corporate Finance
Although corporate finance is very broad and combines various functions, some of the key skills required for a successful career in the industry include:
- Strong knowledge of accounting and audit
- Interpersonal and communication skills
- Problem-solving mindset
- Knowledge of digital tools and specialist software
- Managerial experience (for more senior roles)
Corporate Finance Salary & Bonus
As you might expect, salaries vary across different organizations and levels in the hierarchy. Total compensation typically includes the base salary and an annual bonus. Top managers may also be offered stock options or equity-sharing opportunities as part of the overall compensation package.
|Position||Base Salary in USD||Bonus in USD|
|Junior Analyst||$50K – $80K||Around 10% of the base|
|Senior Analyst||$80K – $100K||Around 15% of the base|
|Manager||$100K – $200K||Above 20% of the base|
|Chief Financial Officer (CFO)||$200K +||Variable|
Corporate Finance Hours
As potential candidates might expect, working hours are much better compared to areas such as investment banking. The exact number of hours depends on the firm’s resources and the function the team performs, but rarely do working hours exceed 50 per week. However, there is an element of seasonality and longer hours are required during reporting periods. Weekend work is rare.
Corporate Finance Pros and Cons
Perhaps the most significant advantage is the abundance of job opportunities and the potential growth in most roles. The overall work-life balance is far greater than any client-facing job in the financial services industry and employees can also benefit from more stability compared to investment banking and hedge funds.
Compensation for corporate finance jobs is typically lower compared to investment banking or investment management. Career progression is subject to a combination of knowledge and skills, but office politics play a role and it is important to know the right people.
Is Corporate Finance right for you?
The suitability of corporate finance depends on an individual’s personality and personal situation. For those who value stability and work/life balance with reasonably attractive compensation, corporate finance could be a great fit. However, exit opportunities are somewhat limited and most professionals change companies to increase seniority and compensation. There are cases where professionals with a background in corporate finance are able to move into investment banking.
Corporate finance careers have lower barriers to entry and may present an excellent opportunity for both new graduates and more experienced professionals. Jobs are plentiful, and stability, lower stress, reasonable hours (outside the cyclicality of reporting periods), and a generally good work-life balance are the key selling points for corporate finance. While compensation may not be the highest in the wider field of finance, especially for entry-level positions, it can grow significantly after several years of experience.
How to Become an Investment Banker
Investment Banking Vs. Private Equity