As businesses grow, their financial needs become more complex, while their ability to hire someone full-time to manage that complexity may not keep pace. This causes business leaders like yourself to consider hiring a fractional controller or fractional CFO who can provide must-have financial oversight and guidance without exceeding the budget with a full-time salary plus benefits.
Understanding the differences between these two roles is crucial in making the right decision for your business. While both positions offer invaluable expertise and support, their responsibilities, focus areas, and impact on your company’s financial health can vary significantly. By exploring the distinct functions of a fractional controller and a fractional CFO, you can determine which role best aligns with your company’s current needs and long-term goals.
What Is a Fractional Controller?
This is an outsourced financial professional who manages all of your accounting functions on a part-time basis. Their responsibilities often include overseeing other accounting professionals, maintaining financial records, and ensuring compliance with financial regulations. Ultimately, these individuals verify accuracy and put the necessary controls in place to reduce errors or omissions.
What Is a Fractional CFO?
A Fractional CFO, or Chief Financial Officer, is a highly experienced financial professional who provides part-time or temporary CFO services to a business. Unlike controllers who focus more on historical data and ensuring it’s accurately reported, a CFO analyzes historical data to develop projections, creates financial models based on changing and often unknown variables, and applies that forward-thinking to create strategies and plans based on those forecasts.
How Are They Different?
The main difference between fractional controller vs fractional CFO lies in their focus and scope of work. A fractional controller oversees the day-to-day accounting functions, ensuring the accurate management of financial details. In contrast, a fractional CFO serves as a strategic advisor, stepping away from daily accounting tasks to focus on the bigger picture. While both roles rely on data, the CFO’s ability to take a broader view allows them to identify trends and patterns that inform long-term strategy.
For example, where a controller might celebrate cutting costs in a specific category (a close-up view), a CFO will assess how those changes affect other expense or revenue categories and, more importantly, the overall business objectives (a big-picture view). Both perspectives are essential. Businesses need granular insights to make informed daily decisions, but without considering how those decisions impact long-term financial health through forecasting and strategic planning, future challenges may arise.
When to Hire a Fractional Controller
You’ll know you need a fractional controller when:
- You’re struggling to ensure data accuracy and compliance.
- You don’t have the capacity or budget to hire someone to manage day-to-day accounting procedures and professionals.
- Your accounting needs can’t justify paying a full-time professional to oversee accounting.
- You’re looking for a cost-effective way to manage accounting without paying a full-time salary and benefits.
While these four exist in almost every company that needs a controller, every business is different and requires a unique combination of skills and services. At DHJJ, we tailor our controller services to meet highly specific business needs based on your existing strengths and weaknesses. For example, some of our clients need internal controls, audits, forecasting, and financial advice but aren’t ready for a CFO and a controller. In these cases, we customize our outsourced controller services to meet your needs.
When to Hire a Fractional CFO
On the other hand, you may be better served with a fractional CFO when:
- Your greatest need is strategic guidance for growth and expansion.
- You have the basic controls in place, but you need to focus more on financial planning, forecasting, and analysis.
- You have a significant event coming down the pike, such as a merger, acquisition, interstate/international expansion, or fundraising.
When faced with events like these, getting it right can impact your organization financially, not just in the short term but for years or decades to come. The fractional CFO benefits become apparent in these complex scenarios. You might also consider a virtual vs. in-house CFO as part of this decision.
How to Select an Outsourced CFO or Controller
Choosing the right outsourced CFO or controller is a critical decision that can significantly impact your business’s financial health and strategic direction. With the right fit, you gain not only expert financial oversight but also a trusted advisor who understands your unique business challenges and opportunities. Here are some key factors to consider when selecting an outsourced CFO or controller for your company:
Experience – Seek professionals with a strong track record in your industry and a history of delivering results.
Credentials – Ensure they possess relevant certifications and qualifications to provide expert guidance.
Fit – Evaluate their ability to integrate seamlessly with your team and align with your company culture.
Technology – Confirm their expertise with your financial software and tools, and their capability to implement essential financial automation and communication systems.
References – Review feedback from previous clients and check for endorsements from industry peers to assess their reliability and effectiveness.
Specialization – Inquire about their specific experience in your industry to ensure they understand your business goals and needs. Industry expertise is crucial for aligning with your CPA’s strategic vision.
DHJJ is Here to Help
At DHJJ, we offer both fractional CFO and fractional controller services. Our team of experienced CPAs have industry specialization and can tailor either of these services to best suit your unique needs. Both industry peers and clients trust us to provide the strategic and operational support small to medium businesses need. Are you ready to optimize your accounting with either controller or CFO support? Contact us today to learn how we can assist you in selecting the right financial partner for your business.
