An Introduction – What Is a Fractional CFO?
A fractional CFO is a chief financial officer your business can hire on demand. A fractional CFO will have years of experience managing many financial operations for clients and can make one’s knowledge work for you.
But instead of being a permanent hire, your fractional CFO will work on a temporary basis, as you’ll hire that CFO for specific tasks that can vary based on your current needs. You can provide the CFO with what needs to be done, and that professional will meet your needs.
What Does a Fractional CFO Do?
A fractional CFO will support many functions within a business:
- A CFO can manage various financial operations.
The financial functions a business needs to manage can become complex and hard to plan after a while. But a fractional CFO will have the experience necessary to address many of these operations. The CFO can review statistics and reports and identify a suitable path for how a business can operate and function. CFOs understand how to read financial trends while finding different opportunities for helping your company use its money well.
- Your CFO can also check on different financial strategies you can use to see if what you’re running might work well.
Your current financial functions might change based on whatever tasks you’re completing and how money is getting in and out of your business. A fractional CFO can review your current work situation and find a plan for work that can help you succeed.
- You can receive a full evaluation of your financial strengths and weaknesses through your CFO.
Fractional CFOs can help you review how you are managing your funds and what you can do to improve how you run your business. Every entity has different positives and negatives surrounding how it can manage its funds. Your CFO will help you see what is necessary to help your group succeed.
- You can hire a fractional CFO to resolve many complex challenges within your workplace.
Some of the common financial struggles a business might encounter include cash flow problems, poor gross margins, and high expenses. Your fractional CFO can review your current financial situation and identify a plan for work that fits your needs.
- A CFO can communicate with others to help negotiate loans and other financial investments.
Your business will often rely on loans, lines of credit, and other assets to manage various operations. A fractional CFO can communicate with financial service providers on your behalf to help you get a loan or another asset ready. You’ll require this support from a CFO to improve how well you can get the funds necessary for your work plans.
- CFOs are also helpful for businesses aiming to grow their operations.
A fractional CFO can review growth plans within a business to identify possible changes that can work to help improve how a company operates. A CFO can establish processes and operating rules that can encourage sustainable growth within your business. Further analytical support can also be provided by a CFO to see how well certain strategies are working.
- The team management services your CFO provides can help your business work well.
You can also hire a fractional CFO to help you establish an accounting team. Your CFO can identify how elaborate your accounting group should be and what is necessary for success. A CFO can also communicate with bankers, investors, and other outside parties who might also join your group.
You can talk with a fractional CFO of interest to learn how that CFO can work for you. All CFOs operate differently, and many might engage in more advanced operations. You can see if your CFO can handle whatever projects you want to manage.
Who Needs a Fractional CFO?
A business will require fractional CFO services if it is experiencing substantial growth and requires help identifying proper solutions for managing change. Your CFO can help you get through some of the more complex reviews you might struggle to control yourself.
A fractional CFO is also helpful for smaller groups that don’t have the funds to afford a full-time CFO. Since you’re hiring a fractional CFO on an as-needed basis, you won’t spend as much money on CFO services.
You can also hire a fractional CFO if you require a representative to help you manage various financial operations. You will need a CFO to assist you with many tasks for your financial plans.
Businesses planning major financial activities could also use a CFO to help them get through some of these more complex affairs. A CFO can serve companies going through an IPO, acquisition or merger, bankruptcy, or restructuring process. Each of these points includes many variables that can influence how well a business runs, so having a CFO work on making tasks more effective is necessary for success.
The Benefits of Hiring Fractional CFO Services
There are many positives of hiring fractional CFO services to explore within your business:
- Your CFO can help you get your business up and running at the start. Startup financial operations are often tough to manage, but a fractional CFO can help you understand what you can do for success.
- Your CFO can help you plan your long-term financial goals.
- You’ll get more info on your finances through your CFO, helping you make smarter decisions.
- It’s easier to manage your business when you have a fractional CFO on hand to help. Since your CFO is running your financial operations, you won’t bear as much pressure.
- Fractional CFOs will also have access to the necessary financial tools and resources you’ll want to use for success, including extensive accounting and financial management software programs.
- Fractional CFOs understand the latest points surrounding taxes, financial regulations, and other fiscal concepts. You can consult a fractional CFO for help meeting the latest financial standards without worrying about whether your work qualifies.
How Fractional CFOs Work
How to Find a Fractional CFO
You can find many fractional CFOs who can serve your business, but finding the right one for your needs is critical. While you can look around online for a fractional CFO, your best bet is to look for referrals and references surrounding different CFOs you can hire. Look for prior reviews of CFOs to see how they operate and work for businesses.
Look at whatever prior experiences a CFO also has with managing finances. The best CFOs will have experience in various fields while managing different tasks. You can talk with a prospective CFO about what duties one can complete and how that person understands your industry.
What To Look For In Fractional CFO Services
The best fractional CFO services will help you with all your financial tasks, but not all CFOs are alike. You can use a few pointers to help you find the best fractional CFOs that can work for you:
- Look for a CFO that has worked in your industry. A CFO that understands your field will be more likely to succeed for you.
- See that your CFO is passionate about one’s work and is ready to handle your tasks without worry.
- A CFO should also have enough knowledge of the latest trends in financial technology. You can hire a CFO that can use the latest resources for work, but see that whoever you interview can work with these items.
- Fractional CFOs can work with many billing schedules, including hourly rates, by-project rates, and retainer fees. Look at what your CFO will use for billing and see if you can afford this option.
- Review how long it might take for a CFO to complete a task. You can use this timing to figure out what billing structure is right for you.
- A CFO can be accessible at various times. Search for fractional CFOs that you can consult at any point, and make sure you have a clear measure for how you’ll contact someone when you require support.
The Cost of Hiring a Fractional CFO
One of the best parts of fractional CFO services is that you can save money by having an on-demand CFO to help instead of having a full-time CFO on your staff. Whereas a traditional CFO might ask for a yearly six-figure salary, a fractional CFO will work for much less. But the amount you’d spend on your CFO will vary over the complexity of your project and how long you need to hire someone.
A typical fractional CFO could charge from $200 to $400 per hour for services, varying on how detailed your task is and how much experience the CFO holds. You can review your estimated amount of time needed for a job and hire a CFO based on that point.
You could also use a monthly retainer where you’ll get access to your CFO for that month after paying an upfront fee. That charge could be $5,000 or more a month, but it can be worthwhile if you have an extensive task that will take the whole month to complete.
Some CFOs can also charge you for the project. CFOs can set their rates over how much work they will complete and the complexity of whatever they manage. You can ask a CFO about the specific rates on has for tasks and if those charges are flexible.
You can review your plans for a fractional CFO and see how much time is necessary to get your task working well. A fractional CFO can provide enough details on your work to help you see what you could spend on services. You can use this analysis to determine what plan works for you.
Conclusion – Why Use a Fractional CFO?
A fractional CFO can work well for your business when you’re looking for someone who can assist you with your financial needs. Your fractional CFO will be there to serve your work needs, whether they entail helping your startup or resolving whatever financial issues your business holds.
Talk with us at the Wheeler Group for details on how our fractional CFOs can work for you. We are here to help you with various tasks, so consult us today to learn more about what we can do for you.
FAQs About Fractional CFOs
Can a fractional CFO work remotely?
Fractional CFOs are available for remote work, although having a fractional CFO visit your location on occasion can help you establish a better relationship with that professional.
How much revenue should your business manage yearly before hiring a fractional CFO?
There are no rules to how much revenue your business needs to bring in each year before hiring a fractional CFO. Most businesses don’t hire permanent CFOs until they get at least $50 million in revenue each year, so a smaller startup will benefit from a fractional CFO.
Can a CFO get equity in a business?
A CFO can get equity in a group that the professional works for, although you can figure out that total when you negotiate a deal with that CFO. The equity can be about 1 to 3 percent of the business value.
What is the most essential thing your CFO should do during the first month or so of working with you?
While helping you with your finances can help, your CFO should be ready to establish a positive relationship with everyone in your business. A fractional CFO should learn about the people who work there and be ready to address whatever needs the team holds.
Can your CFO help you automate tasks?
Automation is possible, although this might be more of a technical task than something a CFO can support. Check with your fractional CFO to see what one can do in this situation.