A Full-Time CFO may be an expense that only a few small organizations can afford. A Fractional CFO Services is a viable and suggested option to a full-time resource. This provides the benefit of offering a senior-level financial expert at a fraction of the expense of a full-time employee. A fractional arrangement can work indefinitely, up until the necessity for a full-time CFO arises.
What is Fractional CFO Services?
A fractional or outsourced chief financial officer (CFO) is a person with CFO experience who works part-time for a company, either on retainer or more commonly on a contract basis, to help them with their financial needs.
What is the role of a Fractional CFO?
Like a full-time CFO, a fractional CFO delivers such expertise while also providing significant flexibility and cost savings to satisfy the needs of smaller businesses. Raising funds, installing a new accounting system, handling a specialized project like an audit, or any other important financial transaction are all examples of financial problems. When a fractional CFO is brought in for one project, they are frequently given more opportunities to assist the company in achieving its strategic goals.
Support during Financial challenges
There will be times when businesses face financial difficulties that necessitate the technical expertise and the strategic vision of a CFO. These are often one-of-a-kind situations that are ideal opportunities to draw into a fractional CFO’s experience, primarily if the CFO has previously dealt with the issue.
- Putting together a package for potential lenders
- Developing a go-to-market strategy for the early phases of equity finance
- Existing accounting systems are being overhauled.
- Getting through an external audit
- Detecting cash flow problems
Financial Visibility
Financial statements and management reports are accurate and timely, with predictions, actual results vs. forecasts, cash flow forecasts, and other key performance indicators that improve insight and promote proactive management. The goal is to raise net income by increasing visibility and efficiency.
Drive Growth
Hiring a fractional CFO to handle the financial and administrative aspects of the firm frees up the business owner to focus on doing the business rather than running it. A CFO can deal with administrative areas such as human resources, facilities, insurances, legal and compliance, IT, and banking partnerships, in addition to financial and accounting knowledge.
Lead specific goals
Hiring a fractional CFO can help to get books in order. For a productive future, producing financial forecasts is essential. A Fractional CFO can also help lead by:
- Expertise and validation to the company
- Advising in onboard meetings
- Helping with strategic relationships
- Analyzing term sheets and contracts
- Overseeing due diligence
Why hire Fractional CFO services?
A fractional CFO is a part-time CFO who performs the same functions as a full-time CFO. A CFO is responsible for a company’s administrative, financial, and risk management activities, including creating long-term financial and operational strategies and the tools used to track progress. A CFO also designs and maintains control systems designed to preserve a company’s assets and disclose accurate financial results.
A fractional CFO, for example, can assist the company in raising financing for product development or expansion. Alternatively, by working with your team to create a cash flow prediction, they may help you to assess whether you can afford to hire more people or invest in a new line of business. But that’s just the beginning. Before deciding whether or not your firm needs a fractional CFO, it’s critical to understand what a fractional CFO does.
How to use Fractional CFO services to your advantage?
The benefits to the company might be substantial. The option to have a seasoned veteran on the team for a fraction of the expense of hiring a full-time comparable is probably the most evident advantage. In addition, the majority of fractional CFOs have worked for a variety of businesses. This provides them with a very distinct perspective on the organization. Furthermore, both the company and the fractional CFO will have the opportunity to work together on a limited scale to see a strong cultural fit for all parties involved.
Many fractional CFOs become a vital part of the management team over time and are involved in the company’s goal-setting and strategic activities. They can act on behalf of the company with outside lawyers, lending institutions, and investors to get more familiar with the company’s operations. This frees up others in the business, such as the CEO, to focus on the company’s overarching strategy and vision.
FAQ’s on Fractional CFO Services
What fractional can CFO do for small businesses?
Working with a fractional CFO can provide small business owners with high-level financial advice without hiring a full-time CFO. Many small businesses lack the strategic financial knowledge they require to improve over time. They could benefit from the expertise of skilled financial professionals to assist them in making informed strategic decisions, but they lack the financial resources to support a full-time financial department.
How to choose a fractional CFO?
Even though fractional CFOs function at a higher level than many other outsourced positions, the foundations of hiring one remain the same. If you don’t already have a reputable provider for outsourced accounting and bookkeeping services, give your hiring process special attention. Look for contract CFOs with experience in your industry and, ideally, who have worked with businesses of similar size to yours.
How much do fractional CFO services cost?
The range of expertise attached ultimately depends on the amount of work and value of the company.
What is the advantage of Fractional CFO Services?
Key advantage of Fractional CFO are as follows:
- Better financial information
- Better decision-making
- Better Internal Controls
- Improved Flexibility
- On-Site Support
- Specialized Skillset
Want to speak to a Fractional CFO from SattvaCFO?
Contact us to see if your business growth can be driven by our CFO services.
Also read:
