Everything to Know About Fractional CFOs

what does fractional cfo mean

Top fractional CFOs look beyond the numbers and see the bigger picture of how the startup’s financial decisions will impact its overall growth and success. They can provide valuable advice and guidance on long-term financial planning and help the startup make intelligent decisions to drive growth. Times of growth and expansion are exciting for startups, but success brings new obstacles. One of the biggest challenges scaling startups face is figuring out how to manage their financials without breaking the bank.

So, the Fractional CFO cost is much more manageable than a 40-hour per week employee. Since startups tend to have smaller teams that are firing on all cylinders, it can be advantageous to hire a CFO who can alleviate some of these responsibilities from the team working on core initiatives. A Fractional CFO can help ensure that due diligence is given to overall financial management and accounting so that business leadership can focus on their strengths to propel the company forward. The role of Chief Financial Officer (CFO) is an undeniably integral one in any type of organization—large, medium or small.

Advantage #3: fractional CFOs/controllers require little direct management

Without advice from a CFO with startup experience, founders may be unable to fully prepare for this kind of change. For example, CFOs use cash flow projections to help founders understand how much money is coming in and out of the business and where it is coming from. The projects a fractional CFO can assist with are multi-disciplined and split between financial and non-financial duties. The role of the CFO is complex and can be unbundled into specific pain points and influence areas.

Fractional CFO can help with strategic planning or the due diligence process if the company has identified an acquisition candidate. Hiring a fractional CFO as an independent contractor (instead of a full-time CFO) reduces business costs. It provides access to higher-level strategic planning, cash flow, advisory, negotiation, and financial analysis skills beyond preparing financial statements. Similar to a consultant or outsourced professional, the fractional CFO or Controller will typically require less direct supervision or management from the company. 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.

What is a fractional CFO salary?

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, https://www.bookstime.com/ or high expenses. 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.

what does fractional cfo mean

To make the most of your budget, you need to consider key financial tasks that will support your growth. With fractional CFO services, you can take care of those key tasks without overspending. These are some of the best outsourced CFO services you should consider to boost your startup’s growth.

Should I hire a fractional CFO, Controller or both?

If, however, you wish to use some of the features offered on the Website, you may be asked to provide certain Personal Information (for example, your name and e-mail address). Fractional CFOs usually come armed with cross-industry experience and can offer insight that you might not otherwise gain from an in-house hire. On the surface, these may simply seem like different titles for the same role, as there is a lot of crossover between definitions. Understanding your needs and goals will help you ask the right questions so you can make the most valuable hiring decision. Keep in mind that you may set out thinking you need one type of engagement when, in reality, you need another.

What should I look for in a fractional CFO?

  • Cash runway / management.
  • Strategic planning.
  • Financial modeling and analysis.
  • Cap table planning.
  • Fundraising strategy and support.
  • Board / investor support – KPIs, Board Deck assistance, etc.
  • Mergers and acquisitions.

Again, depending on the region, an average pay might be around $100 an hour. During the no-commitment consultation, you’ll have the opportunity to ask more questions about how fractional what does fractional cfo mean CFO services work and meet one of our CFOs. This agreement serves as a contract between you and your client, providing a clear understanding of expectations and responsibilities.

A Team’s Guide to Hiring A Fractional CFO

While it may sound like a fractional CFO and a Controller have very similar job responsibilities and you only need to choose one for your business, that isn’t necessarily the case. Gary serves clients by offering them proactive tax advice, business advisory services and consulting work as a fractional CFO. In addition to providing fractional CFO services, BerganKDV provides an array of business, financial and technology solutions. 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.

  • Additionally, not having a dedicated CFO can prevent your business from accessing the financing and investment opportunities it needs to grow.
  • As a fractional CFO, you can provide outsourced CFO services for multiple small businesses, as opposed to just one business in a full-time role .
  • A full-time CFO, fractional CFO responsibilities go beyond basic bookkeeping.
  • The services contract should also include fractional CFO pricing and maximum contracted hours or a monthly retainer amount to define the cost of financial services.
  • I worked alongside the owners of the practice as we navigated through these difficult times.
  • Technology and empowering their accounting and  FP&A teams, for example, are playing a role in helping that happen.

Companies at $5mm to $75mm requires some CFO services, but they can’t justify adding a high-cost, full-time CFO position to their payroll. Instead, an outsourced CFO usually bills by the hour (saving your company the high cost of salary plus benefits). Fractional CFOs are often brought into an organization when there are financial challenges that the company’s existing team does not have either the skills or manpower to overcome. In some cases, however, the company may have an existing CFO, and the fractional CFO acts as a partner or advisor or helps lead separate projects such as raising capital or navigating an audit.

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