Is a Fractional CFO Right for My Company?

Many business owners reach a point where managing the financial side of the enterprise becomes overwhelming. Usually, this is a good thing—the company has grown to a point where simple bookkeeping and basic financial reporting no longer suffice. However, many growing companies can’t justify or afford a full-time CFO. If you can relate to the feeling, it may be time to get experienced financial leadership without the full-time salary by hiring a fractional CFO. 

What is a Fractional CFO? 

Hiring a full-time CFO is a major commitment, both in terms of time and payroll costs. These financial executives typically command substantial salaries and attractive benefits packages. Hiring a fractional CFO provides tailored support for your business, so you pay only for what you need. Fractional CFOs offer support to match the level of involvement you require, typically on a part-time or contractual basis.  

What Does a Fractional CFO Do? 

A fractional CFO has responsibilities related to the financial oversight of your operations. This includes making sure there are adequate internal controls to help safeguard the business from internal fraud and embezzlement. Fractional CFOs offer seasoned guidance on budgeting, planning, reporting, and cash flow, customized to your business needs. A fractional CFO looks beyond day-to-day financial management to engage in holistic, big-picture planning of financial and operational goals.  

Fractional CFOs take a seat at the executive table and serve as your go-to person for all matters related to your company’s finances and operations. They go far beyond merely compiling financial data; they interpret the data to explain how financial decisions will impact all areas of your business. This individual can plan capital acquisition strategies so your company has access to financing as needed to cover working capital and operating expenses. 

In addition, a fractional CFO will serve as the primary liaison between your company and its bank to help your financial statements meet requirements for loan negotiations. Analyzing possible mergers, acquisitions, and other expansion opportunities also falls within a fractional CFO’s purview. 

Engaging a Fractional CFO: What to Expect 

When engaging a fractional CFO, it’s important to find a partner with relevant industry experience, a clearly defined scope and availability, strong strategic and communication skills, transparent pricing, and a proven ability to turn financial data into actionable insights. 

Fractional CFOs need to think strategically when making their projections. They must consider how events shape outcomes across systems and how departments are affected by external factors, including production, supply chain issues, customer creditworthiness, and buying patterns. What’s more, they need access to this information in real time so company leaders can respond to changes with agility and flexibility.  

Your fractional CFO should also implement improved cash management practices to boost cash flow and strengthen budgeting and cash forecasting. They should be able to perform ratio analysis and compare your business’s financial performance against benchmarks established by similar-sized companies in the same geographic area. A CFO should analyze the tax and cash-flow implications of different capital acquisition strategies—for example, leasing versus buying equipment and real estate. 

Is a Fractional CFO Right for Your Company? 

Hiring a full-time CFO is a major commitment, and for many businesses, the financial resources may not be justified. If your business is experiencing rapid growth, increasing financial complexity, or a lack of reliable forecasting, hiring an outsourced CFO may be a good decision. Our team of fractional CFOs works in person or virtually to provide experienced financial leadership without the full-time salary, tailored to your business needs. If you have any questions or need assistance, please contact us using the form below.