Working with an experienced CFO on a fractional basis can improve the financial management of a growing small business to a lower middle-market company. By hiring a part-time CFO, companies get valuable Chief Financial Officer experience without incurring the cost of hiring a full-time CFO until it’s affordable. We include a fractional CFO definition.
What is a Fractional CFO?
A fractional CFO is a part-time Chief Financial Officer typically hired by startups on a contractual basis to share their expertise in finance, strategic planning and other CFO-related activities. 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.
What is a Fractional CFO?
A fractional CFO is a part-time Chief Financial Officer typically hired by startups on a contractual basis to share their expertise in finance, strategic planning and other CFO-related activities. 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 .
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.
What Services Does a Fractional CFO Offer?
A fractional CFO provides executive management team services.
Fractional CFO services include:
- Strategic planning
- KPIs
- Business plans and pitch decks to raise venture capital
- Financial modelling
- Valuation
- M&A due diligence
- Deal room documents
- Forecasting and budgeting with variance analysis
- Cash flow management
- Banking relationships
- Business intelligence
- Financial analysis (FP&A)
- Reports and presentations
- Decision-support
- Negotiations, and
- Investor relations.
A fractional CFO may prepare presentations for board meetings and present them to the Board of Directors if invited. Although small businesses generally don’t own real estate, a fractional CFO can negotiate office space leases and equipment leases.
A fractional CFO will perform more project services upon the CEO’s request. An experienced CFO working on a part-time basis can serve as a trusted advisor, helping CEO entrepreneurs and business owners make effective business decisions and strive to reach profitability.
The types of fractional CFO services provided by a professional Chief Financial Officer depend on whether the part-time CFO is working alone or affiliated with a business. A part-time CFO business offers more CFOs to choose from and other independent contractors for hire, including a bookkeeper, financial professionals, and controller to perform accounting services.
Most Common Problems that Fractional CFOs Help Solve
Common problems that fractional CFOs solve are:
- Helping with business plans/pitch decks and venture capital raising
- Assisting companies with M&A deals or pre-IPO preparation
- Collaborating on growth and profitability strategies
- Improving cash flow
- Enhancing financial systems
Experienced fractional CFOs can assist companies with these types of projects and problems that many companies face as they grow. A fractional CFO may serve as a turnaround specialist to improve cash flow and profitability and obtain additional financing. Fractional CFOs can consult with a company to recommend new software for added efficiency or improve their financial systems.
Is Your Business Ready for a Fractional CFO?
Your business is ready for a fractional CFO if it is growing rapidly, needs advice or professional financial services from an experienced CFO but only has the budget to hire a fractional CFO instead of a full-time CFO. Your business can decide whether to hire the fractional CFO on a project or part-time basis.
