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A Team’s Guide to Hiring A Fractional CFO

CFO Coaches Corner

Are you looking for a C-Level financial consultant without the burden of hiring one full-time? A Fractional CFO, also known as a virtual CFO or start-up CFO, can be hired on a project basis to help companies achieve a myriad of tasks along their strategic path.

These part-time and often remote CFOs have a sophisticated level of industry knowledge and experience, perfectly positioning them to execute high-level strategic plans that propel executives and their teams toward their long-term goals.

CEOs might consider hiring a Fractional CFO as a core team leader who can leverage their experience and connections to manage big projects and help businesses along their path to achieving important milestones, such as:

  • Funding rounds
  • Acquisitions
  • Divestitures
  • Key partnerships
  • Financial reporting
  • Compliance
  • Overall financial department oversight

Since Fractional CFOs are hired as external contractors, they can inject valuable new perspectives and resources into organizations that can make it easier for companies to identify new areas of growth and execute on existing opportunities. 

In this article, we’ll break down some of the most alluring qualities of a Fractional CFO.

Am I Ready For A Fractional CFO?

There’s never a bad time to consider hiring a Fractional CFO, however there are particular times when a part-time finance expert can accelerate a company’s goals more than others. Business owners, often deeply rooted in the company’s day-to-day processes, can find it difficult to determine when they are ready for this critical financial role. Here are a few signs that you may be ready:

  • You require a trusted figurehead over your accounting department to ensure compliance with regulations and act as a strategic financial planning officer
  • You are engaged in mergers or acquisitions, experiencing rapid growth, divesting, or facing a downturn
  • You have lost your financial manager or full-time CFO and need an interim CFO to maintain departmental health
  • You have a special project that requires budgeting, forecasting, financing, capital contributions, system implementations, and other time-sensitive tasks
  • You are experiencing unexplained cash-flow problems, losses, or need assistance to uncover errors, inefficiencies, or fraud
  • You require financial prowess to attract new investors and manage existing investor relationships
  • You are considering buying a company or divesting an underperforming part of your business
  • A new product launch is imminent, and you need financial expertise to align cash flow with capital-intensive projects
  • You need a leader to communicate performance to investors, board members, partners, shareholders, and external relationships
  • You aim to maximize enterprise value and proactively create, chart, and meet future goals
  • You are contemplating new product development, exploring new market verticals, or expanding into new territories
  • You seek an executive-level manager with a fresh perspective who can provide an objective vantage point

A Fractional CFO can lend meaningfully to any of these efforts and more, helping small- and medium-sized companies realize new value from their enterprise at all stages of growth and development. Whether you’re working to raise capital, need to resolve cash flow issues, or require temporary assistance with a specific project, The A Team’s Fractional CFOs provide the impartial guidance and high-level expertise that drives success. A Fractional CFO gives you – the business owner – the support and information you need to make sound business decisions.

Benefits Of Hiring A Fractional CFO Vs. Full-Time

When hiring a start-up CFO, companies are able to access vast experience at a fraction of the cost of hiring a full-time CFO, a role that typically requires all the bells and whistles of expensive salary and benefits packages. 

Since these financial experts can be hired on a project basis, companies can either nurture their partnership with a trusted financial professional to execute on a spectrum of tasks, or pick and choose different people for different projects in order to maximize their various skills, expertise and connections at strategic times. 

One type of virtual CFO might be able to open up new doors for a company through their already extensive industry knowledge and network, while another might excel at accounting technology and spearhead an organization’s migration to cloud-based software.

How Fractional CFO Consulting Can Help Businesses Grow

By hiring a Fractional CFO, businesses gain access to a higher level of financial understanding at a fraction of the cost of hiring a CFO full-time. They can make decisions on behalf of, or in consultation with, their clients to help CEOs achieve short and long-term goals.

Ways in which Fractional CFO Consulting Services Can Be Of Service: 

  • Improve cash flow
  • Launch new products
  • Preparing financial reports
  • Help businesses expand their reach and grow their customer base by providing insights and advice on tapping into new markets
  • Identify investment and partnership opportunities
  • Leverage deep understanding of business finance and accounting
  • Conduct research on target market, demographics, competition, and financials
  • Build Budgets and Forecasts Across All Business Segments
  • Collaborate with individual business divisions or the C-Suite
  • Track the effectiveness of business initiatives and planning for the future
  • Recommending suitable accounting software and business technologies, including QuickBooks, Expensify, and Sage Intacct that streamline operations

Typical Fractional CFO Responsibilities

There are endless possibilities to hiring a CFO part time since their breadth of experience can aid companies through multiple challenges and goals. As a top-level strategist, they can consult on key business development plans. They can manage relationships with key business stakeholders and spearhead key financing initiatives.

Internally, they can manage day-to-day tasks and conduct wide-scale industry research and analysis on internal processes designed to improve financial transparency and efficiency. They can oversee and revamp finance departments, audit and repair financial statements, regulate liabilities and improve cash flow. They can increase profitability within individual projects to enhance overall project management and performance.

Is A Fractional CFO Worth The Investment?

Since poor cash flow management is the culprit for an estimated 82% of business failures, a CFO can serve as a crucial ally and partner for founding entrepreneurs who might not have the experience to adequately manage business finances. These C-Level allies have the experience and vision to keep smaller and newer businesses grounded. They are also highly skilled at business leadership, management and communication, which injects a fresh level of professionalism that can meaningfully serve newer CEOs and founders as they navigate a landscape of new challenges.

Since startups tend to have smaller teams that are firing on all cylinders, it can be advantageous to hire a CFO who can alleviate some of these responsibilities from the team working on core initiatives. A Fractional CFO can help ensure that due diligence is given to overall financial management and accounting so that business leadership can focus on their strengths to propel the company forward.   

How Much Does A Fractional CFO Cost?

Fractional CFOs can cost as low as $2,500 per month to as high as $15,000 per month, depending on the comprehensiveness of services provided, the amount of work they’re putting in, and the extensiveness of their network and experience. 

Costs vary based on the needs of individual companies, tasks and projects. Some companies might have the demand and budget to hire a CFO for a demanding workload, while others will require fewer hours per month.

With the right part-time CFO set-up, small businesses can get critical financial partnership without fielding the unmanageable costs of an internal C-Level hire.

Does A Fractional CFO Cost Too Much For Small Or Medium-Sized Businesses?

With the right package in place, small to medium-sized businesses can get the CFO support they need without paying for full-time executive positions.

At The A Team, we evaluate our clients’ needs and budgets and advise what level of Fractional CFO services will fit so that the Fractional CFO cost does not exceed the agreed upon budget.

Why Is A Fractional CFO Less Expensive Than A Full-Time CFO?

One of the best things about a Fractional CFO is that they make high level services available to small and medium sized businesses who need their expertise but don’t have enough high-level work to keep them busy 40 hours each week. With a Fractional CFO, you only pay the cost of the high-ranking executive for the time needed to get the job done. So, the Fractional CFO cost is much more manageable than a 40-hour per week employee.

Why Fractional CFOs & Accounting Technologies Are A Perfect Combo

Accounting technologies have quickly become a favorite tool of financial professionals because of the transparency they provide to operational processes. Business technologies like these are powerful tools when used by a person savvy with their capabilities and intimate with corporate finance. Comprehensive overall accounting platforms, such as QuickBooks and Sage Intacct, help CFOs manage numbers and conduct deep dive analysis and forecasting to surface strategic growth and planning initiatives. 

A Fractional CFO can spearhead a business’s migration to new cloud-based technologies and create customized workflows and dashboards. They can then use this system to save the company time and money by streamlining operational processes. Through a technology such as Expensify, for example, companies can easily track corporate and employee expenses, then integrate data as it changes in real time with the overall company ledger. 

With QuickBooks Budgets, Financial CFOs can conduct visionary forecasting based on in-the-moment spending behaviors. This helps business owners glean insights into how their hard-earned money is flowing into, through, and out of the organization. Generally speaking, financial CFOs provide data-backed perspectives on the financial health of the organization, and whether cash flow is aligning with broad goals and priorities.

How To Find & Hire A Fractional CFO

In order to successfully begin a search for a Fractional CFO, outline your business needs to get a solid grasp on the kinds of attributes and experience levels you require in a trusted financial partner. 

Considerations For Hiring A Fractional CFO

1. What are your current needs?

  • The size of your business
  • The amount of support you’ll need
  • How many hours you’ll want them to work each month
  • Specific tasks you’re looking to delegate 
  • Whether you want a workhorse or strategic visionary 
  • How much you’re willing to spend 

2. Do you need a Controller or financial strategist (CFO)?

  • Here are some tasks a Controller can help with:
    • Organize financial books
    • Automate budgets using accounting technology
    • Prepare financial statements 
    • Track cash flow and spending 

3. Here’s what to expect from a Fractional CFO:

  • High-level financial analyses
  • Financial funding procurement to power new initiatives
  • Guidance on whether a pivot may be required
  • Detailed reports on industry trends
  • Strategizing around near- and long-term objectives
  • Execution on key business KPIs

4. Tailor monthly hours and budget to business needs:

  • Determine the amount of support and hours needed from the Fractional CFO
  • Define your budget and be clear about how much you are willing to spend
  • Consider outsourcing multiple roles or tailoring monthly hours based on specific needs

Final Checklist Before Hiring A Fractional CFO

  • Verify Reputation and Recommendations:
    • Seek recommendations from trusted sources
    • Check reviews on platforms like Clutch or G2, or ask for referrals from the outsourcing company
  • Check Alignment with Requirements:
    • Confirm the Fractional CFO’s experience 
    • Assess whether they align with your company’s mission and culture
    • Ensure they have a clear understanding of your goals and can provide suitable solutions
  • Evaluate Expertise and Solutions:
    • Assess the Fractional CFO’s expertise and track record
    • Verify their ability to address specific challenges and provide valuable insights
    • Determine if they bring relevant solutions and strategies to the table

A Team’s Fractional CFO Services

The A Team makes hiring a customized Fractional CFO easy. Our versatile team of financial professionals can be hired on an as-needed basis to help your organization execute on a variety of projects, tasks and milestones. Discover your unique strategy and define your budgetary requirements with an A Team Consultant, and we’ll match you with the best candidates based on your unique needs.

Would you like to learn more? Reach out today to get started.

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