Your business can have all of the benefits of a CFO without hiring an in-house pro. A fractional CFO brings you the knowledge and experience of a CFO, but you don’t have to worry about salary, benefits, or bonuses.
Instead, work with our CFO professionals on a contract or retainer basis, and they provide you with all of the services of a full-time CFO. Here’s what you need to know.
What is a Fractional CFO?
One of the first questions that most people have is, what is a fractional CFO? At its core, this phrase just means a part-time CFO. Rather than a full-time, in-house employee, a fractional CFO is a part-time specialist who is contracted to work with your company.
A fractional CFO may work with your company for years or they may simply help with a specific project. In contrast, an interim CFO may also help your company with a specific project, but more commonly, they provide full-time services while you are in between CFOs or getting ready to hire your first CFO.
How are Fractional and Full-Time CFOs Different?
A full-time CFO and a fractional CFO both handle the same role. They advise leadership teams about financial matters, develop plans to address financial challenges, and work to optimize the financial performance of the company. They both get to know the company and its industry inside and out. The main distinctions being their time commitment and contractual relationship to the company.
A full-time CFO works exclusively for the company. The business needs to recruit, hire, and train them, and they require a full-time, executive-level salary and benefits. Although the exact number varies, most businesses don’t have the budget for a full-time CFO until they have revenue of at least $75 million.
In contrast, a fractional CFO doesn’t require a full-time salary, benefits, and office space. They tailor their efforts specifically around the company’s needs, and they provide all of the benefits of a full-time CFO without the costs. In some cases, a fractional CFO may guide a company for years. In other cases, they may provide interim CFO services when an organization is facing a specific challenge or between CFOs.
Does Your Company Need a Fractional CFO?
Businesses often seek out fractional CFO services for various reasons. Sometimes, they desire the guidance and expertise of a CFO, but they lack the budget or necessity for a full-time CFO. In other cases, they may be able to afford a full-time CFO, but they want someone with greater experience than their budget permits.
Occasionally, businesses hire fractional CFOs to utilize their expertise for a specific project. This may involve managing tax or compliance audits, applying for loans, or bringing in investors. Additionally, organizations may turn to fractional CFOs when their full-time CFO is on leave, and they need to fill a temporary leadership gap or during a transitional period.
Furthermore, businesses consult with fractional CFOs when they require support for financial decisions. They may want insights on where to focus their efforts, how to improve cash flow, or streamline processes for financial efficiency. Additionally, they may need assistance launching, scaling, or shaping their exit strategies. Fractional CFO can help with strategic planning or the due diligence process if the company has identified an acquisition candidate.
How Can a Part-time CFO Help Grow Your Business?
Now that you understand what a fractional CFO is, you’re probably wondering if they can really help grow your business. The answer is a resounding yes. The role of these professionals is to help businesses grow. They help you analyze your financial situation and develop strategies that maximize your growth.
A part-time CFO can help you implement accounting systems and processes. They can set up your accounting workflows when you launch, but they can also help you implement new processes as your business outgrows its existing approach. They ensure that you have the optimal processes for tracking the numbers and staying in compliance with tax regulations.
Fractional CFOS also helps you generate the reports you need to make effective decisions for your business. They turn data into insights. This helps support decision-making inside your organization, but it also gives you the information you need to entice investors, lenders, and other external stakeholders.
These professionals are especially indispensable when your business is facing challenges. They can help you weather the lean times and guide you toward decisions that support your long-term growth. Businesses often turn to fractional CFOs when they’re dealing with cash flow issues, low-profit margins, or high expenses. A CFO can help you manage your revenue more effectively.
Although most CFOs are CPAs, they take a different approach. CPAs and other accounting professionals tend to lean on historical records, but a CFO looks toward the future. They ensure that you use capital in a way that supports your short and long-term goals. They generate forecasts that can act as blueprints, and they help you understand how the decisions you make today will affect your business in six months, 12 months, or several years down the road.
DHJJ is Here to Help
Running your business is one of the most challenging and rewarding things you will ever get to do in your life, but if you don’t have a financial expert at the helm, you may miss the opportunities for growth or overlook the icebergs hiding beneath the water.
At DHJJ, we believe that every business needs a CFO, but we know that hiring in-house isn’t always feasible or the best strategic decision. Our interim and fractional CFO services let our clients reap all of the benefits of a CFO without the costs or inconveniences.
Are your business finances heading in the right direction? Do you manage your finances in a way that supports sustainable growth? Are your financial decisions aligned with your business goals? Our team of fractional CFOs can assist you in guaranteeing that the answer to these questions is a resounding “yes”. Reach out to us today to discover how our services can help drive your business towards success.
