Is Your Business Ready For A Fractional CFO?


what does fractional cfo mean

A fractional CFO can help bring alignment around both the financial strategy and the growth targets of the business. Smaller companies that can’t afford full-time, in-house accounting teams should consider using a fractionalized CFO. Fractionalized CFOs respond to the growing needs of small companies that would otherwise bog themselves down with complex hiring processes and salary requirements. One of the most important questions to ask your fractional CFO is whether they have experience in your industry. Having a fractional CFO experienced in your industry places you in the best position to achieve your financial goals. To start, fractionalized CFOs can integrate essential software into your financial infrastructure to automate the correct tasks.

These stages correspond with the skills needed from talent and range from an initial bookkeeper up to the traditional CFO role. Restructuring a company requires in-depth knowledge of processes (see above), an ability to assess how to optimize capital structure, and an understanding of cost optimization and cash flows. During a restructuring, CFOs must detach from the established norms of the business and help reorganize activities and finances toward the new vision.

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It’s a cost-effective way to get the services that you need, and you can create a tailored plan to your specific business needs. Companies at $5mm to $75mm requires some CFO services, but they can’t justify adding a high-cost, full-time CFO position to their payroll. Instead, an outsourced CFO usually bills by the hour (saving your company the high cost of salary plus benefits).

We know financial stuff can be a bit complex, so we’ll keep it straightforward. They are responsible for tracking key performance indicators (KPIs), aligning revenues and expenses correctly, ensuring GAAP compliance, and preparing financial statements. Having a strong service agreement can also help to build trust and credibility with your what does fractional cfo mean clients. By clearly outlining the terms of the engagement, you demonstrate your professionalism and commitment to providing quality services. This includes understanding client needs, developing strategic plans, and communicating effectively. If you lack these skills, consider taking courses or obtaining certifications to help build them.

Benefits Of A Fractional CFO You Didn’t Know You Needed

This level of independence allows you to be the CFO maverick, forging your own path in the financial world. Gary serves clients by offering them proactive tax advice, business advisory services and consulting work as a fractional CFO. Another myth I hear is that a fractional CFO will not be as committed and loyal as an employee. Being a fractional CFO is a career choice, and those who take such positions generally do so because they want to, not because they must. Additionally, in my experience, most fractional CFOs want a set schedule with their clients.

what does fractional cfo mean

Is your company ready for a financial point person, but you’re not sure if you can afford a full-time chief financial officer (CFO)? Rather than paying for a full-time employee or going without this much needed position, there is an option in between. A CFO (Chief Financial officer) is a senior executive who is responsible for managing and overseeing the financial wellbeing of a company. Their scope of responsibilities is tailored more to the specific goals of a small business, and they usually take on fewer tasks than a full-time CFO.

Provide Clarity for Financially Sound Plans

Until then, a professional bookkeeping service can usually provide the accurate financial analysis you need to keep both the cash flow and balance sheet strong. The financial analysis that an experienced CFO can provide is second to none. Whilst a full-time CFO may be out of reach financially for many companies, a fractional CFO can bring specific expertise to important projects without breaking the wage structure. Any successful business will be consistently working toward a clear set of goals.

It may be an opportunity to become more strategic instead of just crunching numbers. A fractional CFO (aka outsourced CFO), much like the name implies, is a part-time CFO that works with organizations to solve financial problems. Having a fractional CFO on your team can be incredibly helpful when making financial decisions. The amount of financial data companies require, and track can be overwhelming.

Are There Any Other Options Than Using a Fractional CFO?

“I gravitated toward the flexibility of working in different industries and with different cultures,” he explains. To secure fractional CFO services for your business, consider reaching out to reputable accounting firms like Kruze. Another route is to ask your investors if they have specific individuals who have helped similar companies. Keep in mind, the ideal candidate should not only have financial expertise but also experience in your industry, understanding of your business model, and a cultural fit with your team. Hiring a fractional help can not only help you streamline your financial operations but also offer strategic insights to aid your business’s growth.

While larger businesses can spread financial responsibilities around, small businesses tend to put more tasks on one person’s list. “If you can get a highly experienced CFO on your team for just a day or two a week, they can really move the needle,” he says. For example, a fractional CFO can help raise capital to invest in product development or expansion to support strategies for accelerating growth. Or, they can help determine whether you can afford to hire more people or invest in a new line of business by working with your team to build a cash flow forecast. It’s essential to understand a fractional CFO’s role before deciding whether you need one for your company.

However, a fractional CFO may have a more focused role, providing support for specific financial areas, such as reporting, analysis, or strategic planning. Over time, many fractional CFOs function as an integral part of the management team, so they are involved with goal setting and strategic initiatives of the company. As they become familiar with the company’s operations, they can act on the company’s behalf with outside counsel, lending institutions and/or investors. This can free up others in the organization, like the CEO, to focus on growing the overall strategy and vision for the company. The bottom line is a well experienced CFO will be a valuable asset to your team.


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