Fri Nov 12, 2021 | | Accounting, Business, CFO Services

What Is a Fractional CFO?

fractional cfo

If your company needs top-level financial skills, try hiring a fractional CFO. This expert can increase the financial health of your small business or growing business. They also can save you money because you will not have to pay them a full-time salary, bonuses, and benefits.

A fractional CFO is a part-time chief financial officer. They are a cost-effective way to gain financial help in a hurry. Fractional CFO services can help with financial reporting, cash flow forecasting, strategic planning, and they are trusted advisors for your company. 

What Does a Fractional CFO Do?  

A fractional CFO provides financial services just like a full-time CFO. Some companies will hire this expert to help them as an interim CFO while they look to hire a full-time experienced CFO. While other companies may not need a full time CFO and will hire a fractional CFO to run the accounting department on a permanent part time basis.

Sometimes Fractional CFOs work with companies or businesses on a project basis and other times they serve as a permanent fixture for the growth and stability of the financial sector of a company. 

Here are some common way that a Fractional CFO can help your bottom line.

Handle Tough Financial Challenges  

As a small business, you might not have the accounting staff or the financial expertise you need for certain financial challenges. These pros can help. Even if your company already has a full-time CFO or someone managing the entire accounting department, a fractional CFO many times can offer advice or guidance in a different area than the current staff in place. 

Fractional CFO services can:

  • Look over the monthly books and find cash management issues
  • Manage financial reporting
  • Check over your current financial systems for low gross margins and high expenses
  • Suggest cost cuts
  • Read through financial statements and contracts
  • Talk with business contacts, customers, and banks
  • Prepare and organize paperwork when you take the company public
  • Assist with an audit
  • Coach and train your current accounting department  


Create Future Financial Strategy  

Most fractional CFOs also help organizations with their financial plans for the future. Your accountants or bookkeepers can handle your current and past finances. These financial professionals can develop plans and budgets for how to spend your money and grow down the line.

A fractional CFO can create several financial plans for your business. They might look at the short term (say, the next 90 days), the mid term (the rest of the fiscal year), and the long term (the next three to five years). With their help, you can gain a better idea of the cash flow your company has and needs.  

You will find it easier to get through bumpy times and plan for expenses such as investments, staffing, growth, and production. When you have a better idea of how to spend your money, you also can work toward maximizing shareholder profits.

Fractional CFO services can help your company:

  • Create financial forecasts and prepare budgets
  • Assess financial risk
  • Study potential markets, services, products, and possible customers
  • Discuss plans with key stakeholders
  • Organize processes related to equity and debt liquidation
  • Implement systems such as technical accounting rules and internal controls  


Achieve Strategic Goals  

Many fractional CFOs provide extra knowledge when you are working toward a specific goal, such as preparing for a merger and acquisition or raising capital. A fractional CFO who has helped raise hundreds of millions of dollars in equity and debt funding can offer valuable advice. So can a professional who has been through a sale, acquisition, or merger and solved problems along the way. 

Here, these financial professionals can:

  • Attend board meetings and present business plans to investors and shareholders
  • Create financial forecasts
  • Brainstorm cash management issues
  • Assist with strategic partnerships
  • Look over due diligence
  • Bring support and knowledge to your company  

Help with Accelerating Growth  

When you want to scale your business, fractional CFOs can help you achieve growth that is profitable, especially as your business becomes more complex. When you grow past your start-up phase, you often open new locations or launch more products. This brings more regulatory rules to follow.    

You also likely need to create different processes, tools, and business relationships to keep delivering high value to your customers without declining margins. The bookkeeping and financial systems that a lot of small businesses use to get off the ground often struggle with growth. They need more skills.

With a high-level fractional CFO on your side, you can:

  • Review costs and reorganization
  • Look over cash flow, business contacts, and real estate opportunities
  • Develop systems that support growth
  • Find causes of cost overruns, lost revenue, and other problems and suggest solutions
  • Hire new employees and develop the essential skills of current ones


What Are the Top Concerns When Hiring a Fractional CFO?

Some people worry that these professionals are not as loyal or as committed as full-time employees. Others wonder if they are good at what they do because they work part-time.

However, we have found that people who choose this path take pride in their work. They often have had successful careers as senior financial executives. They want flexibility in their schedules and enjoy new challenges at this point in their lives.  

Of course, you will want to make sure that anyone you hire has the experience you value in your industry and the skills in reaching the results you want.

You also should check that this person:

  • Has a vision of the project and a timeline that agrees with yours
  • Has communication skills and a work style that meshes with yours, your teams, and company culture
  • Has a reasonable workload so that you can remain a priority


Learn More About CFO Strategies and Our Fractional CFO Services  

CFO Strategies provides trusted CFO services just when you need them.  We tailor and customize the accounting and financial services we provide based on the specific needs of each individual client.  

We understand how part-time CFOs can ease your company’s stresses and costs, especially if your workload or your budget prevents you from hiring someone full-time.  Our financial professionals have years of experience in a variety of industries.

Learn more about how CFO Strategies, LLC can help your company achieve and surpass its goals by clicking on “Contact Us” or calling (732) 236-4454.