what does fractional cfo mean

A CFO can help you identify your blind spots in your business and get you to consider different angles of an important investment decision that you need to make. The best preparation for the growth of a business is ensuring that your finances and financial foundation is in good order and can sustain the growth of the business. If the financial foundation is shaky while law firm bookkeeping you are growing your business, you will be putting your business at financial risk unnecessarily. At the end of the day, your fractional CFO will effectively become the financial voice of your company and (in some cases) possess the authority to make decisions. Therefore, it’s critical to find someone with a solid professional reputation that you can trust implicitly.

Because they bring in a set of expert skills and knowledge, the activities usually can be conducted with minimal guidance from the company’s executive team. 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. In the early stages of growth, a company might start building a finance team by first hiring a bookkeeper for basic accounting duties. Next on the priority list is usually a controller, who’ll perform financial planning activities. CFOs typically work for larger companies that have more complex financial operations, while fractional CFOs often work with smaller or mid-sized companies. This is because smaller companies and startups may not have the resources to hire a full-time CFO, but still need the expertise of a financial executive to help manage their operations and growth.

Fractional CFOs provide a full finance team

Internal processes are the cohesive link between strategy, operations, and performance. A CFO is uniquely placed to understand each step’s cost and contribution and guide their optimization. CFO responsibilities include evaluating all processes and clearly understanding their financial contribution to profitability and cash flow. Doing this exercise keeps management abreast of the company’s actual performance and shareholder returns. Fractional CFOs can also build best practice processes to document these reviews to ensure ongoing continuity and time efficiency. A fractional CFO brings equivalent experience and expertise as a full-time CFO but does not require a full-time salary, vacation, and benefits.

  • The Controller is responsible for ensuring the financials are telling the right story so the CFO can correctly guide you and take your business to the next level.
  • Internal teams can sometimes be biased when it comes to making decisions.
  • Startups that hire fractional CFOs average between $5k and $8k for hours of work.
  • The pandemic has forced business owners to meet crisis navigation head on.
  • They also suggest business improvements that help achieve your goals for the business.

Scaling up or down is a lot easier, especially if you set minimum and maximum hours within the contract.Overall, a contracted fractional CFO generally comes with less hassle. They are there to get the job done, with an outside view of the company which can bring about new insight and better decision making. A CFO is responsible for managing the financial health of a business, developing financial strategies, forecasting revenue and expenses, analyzing market trends, and much more. These responsibilities require a high level of training and focus, and trying to handle them on your own can expose your business to several risks. As a startup, making the most of your budget is critical, so a fractional CFO might be a good option to avoid spending more than you have to. To determine if hiring a fractional CFO is right for your business, look at your budget, current needs, and long-term goals.

Why you should hire a fractional CFO early

In larger engagements, the fractional CFO may also be very involved with strategic financial relationships (ie. vendors, suppliers, banks, auditors) and frequently sit in on leadership meetings. Some businesses will prefer to contract virtual CFO services, meaning that the meetings and interactions will occur exclusively online or via phone, rather than meeting with the CFO(s) in person. A fractional CFO works with companies to steer financial decisions in a direction that ensures good financial health. However, this is traditionally on a part-time basis only (and at a fraction of the cost of hiring a full-time employee). Whether you’re a newly formed startup or a well-established company, scaling the business takes time and experience to do it correctly. An outsourced CFO experienced in this area can help an organization find ways to drive profitable growth and put a plan in place to ensure the growth is sustainable over time as the business grows more complex.

  • Additionally, they may need assistance launching, scaling, or shaping their exit strategies.
  • But it can be more difficult to decide if your company should hire a part-time versus a fractional CFO.
  • You can hire a Fractional CFO as a member of your team or simply bring one in for a one-time project such as financial modeling or pricing strategy.
  • If a company suddenly lost its CFO and needs a qualified executive to fill the seat while an extensive search is conducted, a fractional CFO can be an ideal solution.

Good CFOs can clearly and effectively explain complex financial concepts to non-financial stakeholders, such as founders and investors. This way, other decision-makers can understand the company’s financial situation, and everyone stays on the same page. Fractional CFOs can guide founders through best practices for startup accounting and bookkeeping as well as  helping you prepare for any potential risks.

Financial Tips

Our team’s focus is 100% on helping you define and execute on your business goals. Understanding the duties of CFO and Controller can guide your decision, but your primary goal should be to find someone who aligns with your company and brings knowledge and experience to the table. 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.