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Bringing a financial expert onto your team can propel your business forward

As a CEO, your success hinges on the growth and evolution of your business. But has that growth and evolution started keeping you up at night?

As the company’s success increases, so too do the consequences of each financial decision. Stagnant profits, unexpected cash-flow problems, and complicated operational decisions can create a level of unpredictability that makes it difficult to move forward. As each financial decision is second-guessed, paralysis sets in.

It’s usually at this point that CEOs begin wondering, Is it time to bring on a chief financial officer? Such an executive can not only rein in the company’s finances, but execute the proper plans to move the business forward in regard to the CEO’s vision.

Yet, your company’s specific needs may not require a full-time chief financial officer. Instead, many smart business leaders hire a financial executive to lead the business forward on a fractional or temporary basis.

We call this executive a fractional CFO. Here, we’ll discuss what exactly a fractional CFO is, the different categories thereof, and how your business can benefit from their services.

What Is a Fractional CFO, Exactly?

A fractional CFO is a person with a solid CFO background who is brought onto a team part-time or temporarily to help the organization with its financial needs. From raising capital to navigating an audit, the fractional CFO works with the company to help it realize its financial goals.

There are different “categories” of fractional CFOs, the details of which can help you determine the appropriate choice for your team.

  • Temporary CFO: Also known as an interim CFO, this financial expert joins a company full-time for a set period of weeks to months. Most companies bring on a temporary CFO when going through a period of financial crisis or flux. For instance, when the company is preparing for a large sale; when the company is between CFOs; or if it’s discovered that the firm is bleeding money and a thorough and speedy solution is required. Such crises require full-time attention, but with an end date in mind.
  • Part-Time CFO: This executive provides their financial services to a company on an ongoing part-time basis. Essentially, they provide their services for as long (or briefly) as you need. As the most popular option for fractional CFOs, the part-time CFO is typically brought in to help company execs interpret financials and make sound decisions moving forward. They may be tasked with raising capital, reinvesting profits, or improving company profitability. Ultimately, the part-time CFO provides the much-needed financial expertise the company needs without jumping into full-time territory.
  • Virtual CFO: Just as their name suggests, virtual CFOs perform their services remotely, as opposed to in-person. They typically work on a part-time, contractual basis. This means that your part-time or temporary CFO can also be your virtual CFO; the terms are not mutually exclusive.

What Can a Fractional CFO Offer Your Company?

Now that we understand the differences between the categories of fractional CFOs, let’s delve into how these executives can benefit your company.

There are significant advantages to bringing on a fractional CFO. First and foremost, with a seasoned financial executive on the team, the CEO can focus on growing the overall vision of their company and pass the strategic initiatives onto the fractional CFO—all at a fraction of the cost of hiring a full-time equivalent.

And unlike a bookkeeper, accountant, or controller, the CFO implements best financial practices that look to your company’s future. He or she helps the business reach its fullest potential by leading and driving toward specific targets, all with the future health of the company’s finances in mind.

Whereas your business requires a bookkeeper for day-to-day financial tasks, a CFO is required to marry the company’s forward-looking vision with its financial health. The fractional CFO accomplishes this by taking full responsibility for:

  • Cash Management: Ensuring the company’s cash flow not only covers its bases, but goes beyond to fund growth and investment.
  • Operational Planning: Managing the company’s capital structure to ensure each segment of operation is financed properly.
  • Performance Management: Monitoring key performance metrics to ensure that the correct staff and best practices are in place to produce quality results in a financially sound way.
  • Financing: Building and analyzing financial reports to ensure compliance and profitability.
  • Strategic Planning: Coordinating and executing transactions and contracts to position the company in the most profitable way and in regard to the CEO’s goal for the business.
  • Risk Assessment: Acting as the first line of defense in mitigating the company’s potential financial risks, from maintaining internal controls to cost-benefit mapping.
  • Business Incentives: Identifying and securing tax credits and incentives at federal, state, and local levels.

In the long run, the duty of the fractional CFO is to work shoulder-to-shoulder with the CEO to develop and execute strategies that will fulfill the business owner’s vision.

When Is It Time to Hire a Fractional CFO?

The ultimate test of whether or not it’s time to bring on a CFO is to ask yourself if you, as the CEO, are spending more time on administrative and financial tasks than on growing your business.

As your business grows and becomes more complex, your financials can become overwhelming not only to you, but to the average bookkeeper or accountant. At a certain point, the complexities of your finances will demand a more seasoned executive.

Other times, your business may be experiencing growth, yet for reasons you can’t understand, your profits are stagnant. There may be underlying issues that a CFO can not only identify, but remedy in order to grow your profitability.

Though it may seem wise at any of these points to hire a full-time CFO, take a moment to assess. Full-time chief financial officers typically pull in hefty six-figure salaries, and for good reason. However, if your business only requires the work of a CFO for a few hours a week, or full-time for a short period, then hiring a fractional CFO is absolutely the smart move.

To glean whether or not your business can benefit from hiring a fractional CFO, and to determine if now is the best time to hire one, take advantage of CREDO’s business inspection service.

When using our service, an authorized CREDO representative meets with your business’ management team to determine the specific areas, if any, where your company can most benefit from a CFO. You can trust that the following price quote is completely tailor-made for your business’ specific challenges and goals. Ultimately, we wish to be an extension of your team, not a traditional accountant or one-time vendor. As such, we guarantee honest, clear proposals that can work for you and your team.

To learn more about CREDO’s business inspection service, click here.

Aaron Jaeger