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Fractional CFO: The Ultimate Guide

A Fractional CFO, also known as an Outsourced CFO, Virtual CFO or Startup CFO, is an executive-level financial professional hired on an as-needed basis to help businesses solve complex problems and scale. For many small businesses, hiring a Chief Financial Officer is cost-prohibitive. With a Fractional CFO, companies can access the skills, network and expertise of a trusted financial advisor at a fraction of the cost. The “fractional” or part-time nature of this position makes for an affordable Small Business CFO.

What is a Fractional CFO?

Some common duties of a Fractional CFO include:

• Financial reporting

• Sales forecasting and customer segmentation

• Budgeting and accounting automation

• Sophisticated short- and long-term business planning

• M&A strategy and networking

For some companies, this flexible position can offer an affordable solution at a critical juncture in their lifecycle. Strong financials can make or break companies in their earliest stages, and a Fractional CFO can be a key partner driving them to success.

Outsourced Accounting

What Are Fractional CFO Services?

One of the best opportunities of a Fractional CFO is the ability to reach experienced financial professionals with a wide-range of skills. This makes the Virtual CFO position a highly versatile one that can solve an array of business needs.

A company can choose a Fractional CFO with a background that aligns with their current goals. Here are some unique scenarios that Fractional CFO services can solve:

• Your books and financial statements are disorganized

• You are having trouble grasping cash flow

• You could use help managing debt or opening new credit lines

• You are struggling to turn a profit

• Sales are underperforming expectations

• You need to raise capital to launch a new product

• You’re hunting for an M&A opportunity but don’t know where to begin

In general, companies can outsource talent for specific financial tasks without needing to keep these individuals on the payroll. In fact, whole finance departments can be run this way with outsourced accounting services.

What Are Some Benefits Of A Fractional CFO?

By choosing to work with a Fractional CFO, companies can access a number of benefits to aid their business growth and development. Experienced financial professionals can:

• Help companies streamline costs

• Get a more accurate picture of the company’s overall financial health

• Help business leaders achieve strategic goals

Fractional CFO services enable companies to hire high-level people on a part-time basis, saving companies a lot of money and giving them access to people who can vastly aid in their competitiveness. It would be difficult to find a C-level executive for part-time work, particularly one with the exact specialization that your business requires.

But Fractional CFOs are employed full-time by outsourcing companies. This means that companies using these services can secure high-quality professionals far more efficiently than they would otherwise.

In addition to cost savings, a Fractional CFO can offer benefits such as:.

• Automation in the way you track earnings and spending

• Consistency in how you report financials to stakeholders

• Peace of mind that key responsibilities are being handled by someone you trust

• More time to focus on core obligations to run and grow your business

Read this article for a comprehensive list of benefits

Is Your Business Ready For A Fractional CFO?

From early-stage startups that don’t have the bandwidth for a full-time hire to larger businesses looking for an outside perspective, there are many reasons why your business might be ready for a Fractional CFO.

Perhaps you’re entering a new growth phase that requires an influx of capital, or seeking an independent strategic consultant that can give you an “outside looking in” opinion. Maybe you’re working on a special project that requires a temp with a unique financial skillset. There are an unlimited number of reasons why you might need a Virtual CFO because there are a million different ways this role can be applied.

To give you some guidance, this article highlights 10 specific scenarios in which your company might make use of a Fractional CFO.

Fractional CFO Can Help Launch New Products And Businesses

Fractional CFOs are seasoned in the act of driving financial sustainability. This makes them great additions to teams working on new product and business launches.

As a startup business owner, it’s crucial to have a solid team of experts who can guide new ventures and deliver financial leadership that ensure projects are a success. By outsourcing a CFO you might not otherwise be able to afford, you’ll be given financial leadership that can help you set clear goals to execute on all your business ventures.

Here are some other ways Fractional CFOs can help launches succeed:

• Offer short- and long-term strategization

• Clearly define budgets based on specific goals

• Provide guidance on whether a pivot is in your best interest

• Analyze industry trends and provide detailed reports

Is Your Business Big Enough For A Fractional CFO?

One of the best opportunities of a Fractional CFO is that they’re able to be hired for very specific purposes on a project basis. This flexibility is one of the reasons why virtual CFOs are perfect fits for small businesses.

Companies with only a handful of employees simply don’t have the resources to be able to hire sufficient financial leadership. Yet, financial leadership is one of the best ways to gain a competitive advantage. This conundrum can be sufficiently solved by tapping a CFO on a part-time basis.

This person will be able to help you build financial reports if your current ones are in disarray, construct models to help you forecast growth and improve cash flow, and design and automate budgets to keep spending in line.

I Use Accounting Technology…Do I Still Need A Fractional CFO?

If you use accounting technology, hooray! You’re already a step ahead of many other small businesses. However, accounting technology alone won't replace all the benefits of having a Fractional CFO. Financial professionals can make good use of accounting technologies, such as QuickBooks, to help your company make strategic decisions.

Accounting technologies enable companies to keep track of money coming in and out of the organization. A Startup CFO can streamline and automate these processes, then efficiently convert data into information that helps businesses grow.

Can My Law Firm Use A Fractional CFO?

Law firms and other businesses with niche focuses can especially benefit from outsourcing their finance departments. In companies where the core team often doesn’t have the ability to sufficiently meet financial and accounting obligations, a Fractional CFO can give peace of mind to business owners.

Law firm partners are often so busy handling client cases that general operations fall to the wayside. An outsourced Law Firm CFO can manage financial obligations while actively exploring ways to expand margins. Studies have shown that some of the most successful law firms employ a chief financial officer. By outsourcing key financial leadership, smaller firms can access similar financial leadership at a fraction of the cost.

How Much Do Fractional CFOs Cost?

Fractional CFOs can cost anywhere from $2,000 to $10,000 a month depending on factors such as their level of experience and length/complexity of the project. This can save companies tens of thousands of dollars a year with CFO salaries ranging from $215,000 to $600,000 nationally, according to Salary.com. That means that even the highest Fractional CFO costs are still likely to be less than a full-time hire.

By choosing to outsource this role, a company can access C-level executives that would otherwise require six-digit salaries and robust benefits packages.

Read more about the cost breakdown of a Fractional CFO

Hiring A Fractional CFO

When beginning the search process for a CFO, it’s important to clearly define company goals so that you know exactly what you need.

Here are some key questions to ask yourself:

• Do I need someone to get our books organized?

• Could I use help with accounting, budgeting and forecasting?

• Has our growth plateaued?

• Do we need money for a big initiative?

The process for finding such a high-level contractor can feel daunting. We highly recommend using an executive recruiting and outsourcing firm that specializes in financial talent. Firms such as these place talent at companies such as yours every day.

They’ll be able to quickly understand your needs and lean on their already robust rolodex of financial professionals to deliver the right person for the job. By using an outsourcing firm, you won’t need to waste valuable company time on recruiting.

The A Team Works For You

The A Team is an outsourcing company that makes securing the best candidates easy. We employ a versatile team of financial professionals who are qualified to work on a wide-range of projects and tasks. The A Team works with clients to help them define clear goals, then matches them to experts who are in-line with their budget and goals.

Interested in getting the search for your next CFO started? Let’s talk.