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Fractional CFO: The Ultimate Guide to Drive Growth & Profitability

what does fractional cfo mean

To learn how fractional CFO services could be the right solution for your company, contact G-Squared Partners. There’s a good chance our part-time CFO services have worked for a number of businesses with needs very much like yours. The rise of fractional CFOs is changing the game when it comes to financial leadership. These talented professionals are redefining what it means to be a CFO in the modern business world, bringing flexibility, expertise, and innovation to the table. As a fractional CFO, you’ll work with clients across many different industries, each with its unique financial challenges.

  • Without advice from a CFO with startup experience, founders may be unable to fully prepare for this kind of change.
  • If we must use the term “fractional CFO”, we think of it as a way to get exactly what your company needs at a fraction of the cost of having a full-time CFO.
  • As a startup, you also need to make sure you are getting the right output for your money.
  • Check out our full-time vs fractional CFO calculator to do the math for yourself.
  • As a result of these gaps, it is quite common for fractional CFO or Controller to also play the role of strategic advisor to business owners and founders.
  • It is common during leveraged buyout (LBO) processes to change the companies’ management structure.

In fact, those in the fractional CFO or Controller position oftentimes find themselves helping to manage other departments and setting infrastructure on behalf of the company. 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.

Getting A Business Credit Card For Your Startup

When a business sale, acquisition, or major investment is contemplated, one important step in the due diligence process is the generation of a Quality of Earnings report, sometimes abbreviated as QOE. With a fractional CFO on your team, you gain confidence to make the best decisions to grow the business and/or improve your profitability. The most effective strategic decisions can make a difference in moving your business forward. But decision-making is more complex than ever—demanding that you rely on data-driven insights, not gut instinct.

what does fractional cfo mean

For the most part, they work on a contract or consulting basis with a services and/or retainer agreement in place. “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. Most fractional CFOs charge by the hour or day, which results in different monthly costs depending on the level of engagement a company needs.

Why would I hire fractional CFO Services?

Your readiness for an outsourced CFO is based less on your company’s size or stage of life and more on the goals you want to achieve and the resources you need to achieve them. By applying the right resource at the right time, a fractional approach to CFO support gives you tremendous flexibility—while allowing you to tap the skills and expertise of a senior finance professional. Better yet, you gain a CFO who brings experience across diverse environments and can lend an objective, third-party perspective on moving the business forward strategically. Hiring a fractional CFO gives you access to a highly experienced, senior-level finance professional without tying up unnecessary capital in a full-time in-house CFO.

If you’re deciding between hiring a Controller vs CFO, consider consulting with an expert who can determine which would be the best fit for your company. A well-staffed CFO firm will cover all the finance bases, giving business leaders access to an entire suite of skills and knowledge, custom fit to their growing company. Manufacturing, transportation, distribution, real estate and construction are very financially complex and require a specialty law firm bookkeeping fractional CFO. SaaS, retail, and consulting services are simpler but still deserve an experienced professional. There are many more reasons to enlist fractional CFO services, so it’s best to discuss with an advisor, your board of directors, or a finance professional. When you contract with a fractional CFO, you’re getting all the skills and experience of a regular CFO, but on a part-time basis (usually between 5 and 15 hours per week).

Make More Informed Business Decisions

“Some people in the company may not view you as a ‘boss,’ merely a contractor,” Jung says. To address that problem, his company offers a fractional CFO team, with junior and senior members who work together, he says. Below is an infographic that sums up the responsibilities a fractional CFO might assume. Feel free to download a copy for future reference, then read on for the details. There is no need to worry about contracts or how they will impact your business. Accessing Capital is finding the right capital from the right lenders or investors to fund your business.

  • They also bring the expertise of an experienced professional at a fraction of the cost, giving growing businesses access to high caliber professionals without breaking the bank.
  • They provide insight, guidance, support, financial foresight, industry expertise, and friendship to clients.
  • 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.
  • Sometimes emergencies and financial needs arise that are beyond the capability of their financial personnel to address.
  • You can leverage their expertise according to what you need right now, without paying them to spend time in areas where you do not need help.
  • This can include taking on consulting or advisory roles, or even volunteering your services to non-profit organizations.

Progressive companies recognize that it’s no longer enough to tap into historical data and use it as a guide to making future decisions. Now, organizations are taking a much more forward-looking view—using predictive and prescriptive analytics to learn from the past, anticipate the future, and apply those insights to decisions. It means going beyond just considering where you have been and forecasting where you’re headed, using financial modeling to consider and assess different scenarios. Understand that, when hiring a CFO, 20% is experience and skills and 80% is how you like them as a person and a partner. Your new CFO, although a part-time CFO, will act as your strategic partner and advisor while you grow your business to reach your goals. Hiring a fractional CFO early on in your company’s existence can be crucial to your success.

While a part-time CFO has a regular office schedule, a fractional CFO may not spend much time at your place of business except as necessary to achieve the goal(s) of their engagement with you. Because they work with a variety of companies, they may have valuable insights from that experience that can benefit your business. A part-time CFO is someone who works for your company on an ongoing basis but puts in fewer hours than a full-time CFO would. Their role is to fulfill all key CFO responsibilities, but they only need to be on hand two or three days a week on a regular basis. When they are not working for you, they may work part-time for some other 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. A fractional CFO helps guide forward-thinking financial strategy as businesses hit key growth milestones and are faced with increasingly complex decisions. A fractional CFO ensures business leadership has access to accurate financial reporting and performs analysis of that data needed for confident decision making.

External Perspective On Financial Strategy

If your startup doesn’t have the budget to hire a full-time CFO ($300,000 – $500,000 per year), then fractional CFO services are ideal. If you only need, for example, a three-year financial forecast or an annual budget that takes a few weeks to create, you can hire a fractional CFO to take care of it. Fractional CFOs are experienced professionals who know how to get the most out of financial tools and resources. They can help you access the right tools, such as financial software and data analysis tools, to streamline multiple finance-related processes. A fractional CFO can help you look to the future by strategizing toward long-term goals. They can help you develop strategies to ensure your business is on track for success and pursuing its ultimate ambitions.

what does fractional cfo mean

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