When cash flow is poor, growth has plateaued, and you’re frustrated about your financial goals … if only you had a trusted partner with the financial know-how to give you advice.
The good news is that no matter the size of your company, there are accounting professionals out there who do exactly this — we’re called Fractional CFOs.
You’ve probably heard about fractional CFOs, fractional CMOs, and fractional CTOs — but who are these people and what do they actually do?
These are outsourced professionals who use their knowledge and skills to serve your business, giving you the information you need to make key decisions — in the case of fractional CFOs, about your finances.
What Is A Fractional CFO?
A fractional chief financial officer (CFO) is a person you hire to work on contract, retainer, or in another part-time capacity for your company.
Fractional CFOs are invaluable because they give experienced insight into financial issues and handle a range of financial leadership roles.
Don’t confuse CFOs with accountants. While an accountant handles the numbers, a CFO’s role is more of a consultant than boots-on-the-ground. Based on your situation, a CFO may perform a few accounting tasks alongside their primary functions, or they may have a team that delivers on the day-to-day needs.
What Do Fractional CFOs Do?
In a nutshell, fractional CFOs provide strategic advice tailored to your company’s needs without you having to provide them with employment benefits like a regular hire, nor the full-time salary you’d generally pay for the equivalent in-house services.
Outsourced CFO services are the same as those of in-house CFOs. So if you’re not sure exactly what a CFO does, this overview should help.
Some of the tasks your CFO — whether fractional or in-house — might take on, include:
- Big-picture financial management and reporting
- Formation and assessment of financial strategies
- Optimization of systems and processes
- Raising funds and growing capital
- Financial review
- Forecasting and budgeting
- Team management
- Accounting tasks
Now, you might not need all of these services at once, but you can think of the list above as a menu of sorts. While your CFO or fractional CFO team might take over accounting or bookkeeping tasks, as a rule, that’s not the main reason you hire them.
Think of it this way: with the services of a CFO and their team, you may not need as many — or any — in-house accounting professionals.
The Fractional CFO Edge
I’m just going to say it — Fractional CFOs are underrated when it comes to the advantages they provide to your business.
As you read the following benefits of hiring a fractional CFO, think of the edge you could gain over your competitors:
Larger Return For Your Money
Whether you’re scouting out an individual fractional CFO or a CFO-led financial team, you’ll be investing in something that gives you much greater returns.
Remember, you only bring on a fractional CFO to fulfill your company’s specific needs, so you’re already streamlining your expenses. Plus, they’ll let you know of any gaps and either show you how they can help fill them or recommend someone else who can.
Gain From Their Experience
Fractional CFOs are usually seasoned professionals who have “been there, done that,” in their field. The right candidate brings the full breadth of that financial expertise to your company, which comes from:
- Working with various firms of different sizes.
- Overcoming complex financial challenges and handling risks.
- Familiarity with the latest finance technology.
- Staying up to date on financial news.
The first two are where CFOs truly shine. You benefit immensely from someone who can anticipate the next stage of your financial growth and foresee risks.
In most cases, your in-house team won’t have the experience to do this with the precision of a fractional CFO.
For situations like mergers or acquisitions, you’ll need even more specialized knowledge.
With enough time and resources, your team might be able to complete such projects. OR, you can save both your time and resources through a CFO’s experience, leaving your team to focus on what they do best.
Enjoy Flexibility And Convenience
Fractional CFOs offer flexibility in that you can start and stop working with them at any time — once the contract has been fulfilled, of course!
You might bring a fractional CFO on board when:
- You already have one, but they’re taking leave.
- You need advanced help to make sound financial decisions.
- You need someone for a huge project such as raising funds or an expansion plan.
Neither you nor the CFO is tied down to each other, which means if it’s not a good fit, you can break things off as early as you want.
When you do find someone you mesh with, you enjoy conveniences like getting a quick response to your questions and dedicated support for your business.
When Do You Need A Fractional CFO?
A few signs you need a fractional CFO are:
1. You’re struggling to manage growth as your business becomes more complex.
2. You’re having major cash flow bottlenecks and can’t find a solution or workaround.
3. Your profit margins are diminishing as expenses keep increasing.
4. You’ve outgrown your current systems and need a better workflow to scale your business.
5. You’re entering new markets or working on new products/services and need specialized analysis.
6. You’re undertaking a merger or acquisition.
7. You’re working on raising new capital.
8. You want new debt or to refinance former debt.
9. You have no time to do what you love.
When You May Need Other Fractional Service Providers
A fractional CFO is just one of the many fractional service providers out there.
You can tap into a wide range of services, whether it’s bookkeeping, accounting, marketing, or information technology, without the cost of hiring individual staff members, but still benefiting from their experience.
This allows you to allocate your resources efficiently, so you have the right person doing the right job at all times.
Ideally, you should outsource these functions before you (finally) realize you can’t do it all yourself and need to lessen your burden.
Hire With Confidence
Whenever you’re ready to hire a fractional CFO, you want to be confident you’re making the right choice.
You want someone who has the reputation, background, and industry expertise to fulfill your financial goals. In addition, your CFO should be excited about what you do and be a team player.
They should have the intuition and the soft skills to guide you, your team, and theirs, so you can trust your financial team is working together for optimal results.
As with any successful relationship, the main ingredient is communication. Book a free consultation call with us for a chat about our fractional CFO services.