What Can a Fractional CFO Do for Your Business?
Hiring a full time Chief Financial Officer (CFO) is costly. More than that, not all businesses need a full-time CFO to run their day-to-day operations. Instead, hiring a fractional (part-time) CFO when you need one is not only cost-effective but better for your business in the long run. Here are a few benefits of hiring a part time CFO for your business.
Investor Management
If your company is looking for investors or already has investors, you can use a fractional CFO to help you manage those investors. Most investors want updates on where their money is going. They also want to know when they can expect returns and any projections on cash flow and liquidity the accounting department has available. Your CFO is in the best position to manage your investors.
Most CFOs also maintain a network of investors, making them an invaluable resource to businesses seeking investor funding. With their finger on the pulse of incoming investor funds, your fractional CFO is in a great position to help you forecast your cash flow and business projections and strategize the best ways to use the funding.
Business Strategy
Whether you’re looking to grow your business or streamline the business you already have, bringing in a part-time CFO to help you formulate a strategy is a great step. Some businesses look to update their forward-looking strategy after certain milestones, like a year-end close or a five-year anniversary. A fractional CFO will not only help you create your strategy but will also help you follow through with it.
The fractional CFO will analyze your financial records and set up your business strategy in accordance with what your company can achieve. Implementing a strategy comes with a certain amount of risk. Your CFO will also anticipate those risk factors and help your executive team set out a risk management plan.
Financial Clarity
Your fractional CFO will work closely with your existing executive team to analyze the state of your company’s financial data. They will report on return on investment data and liquidity of the company monthly, quarterly or annually to maintain the company’s financial clarity and visibility. With clear and frequent reporting from the fractional CFO, the executive team can keep track of the company’s progress toward a successful year or toward achieving their benchmarks for their implemented business strategies.
With financial clarity and visibility comes growth for your business. As you embark on periods of rapid growth, your fractional CFO will also be able to help your company adjust your processes and workflow to accommodate your new influx of business and growing cash flow.
Accounting Staff Integration
Many companies already have an accounting staff in place. A good fractional CFO will be able to integrate themselves into your existing accounting staff. Resulting in them functioning as a team. If your company has a controller, the CFO will work closely with them to implement any new processes, compile reports, establish communication between the accounting and finance staff and the executive team and more. Your fractional CFO will work to establish a rapport with your existing team and seamlessly become a member of your accounting and finance staff.
Working so closely with your existing accounting and finance team will also help your fractional CFO understand how the department operates, putting them in a prime position to understand the departments’ workflow and use that knowledge to implement financial clarity strategies.
Financial Problem Solving
Sometimes, a company is presented with a financial problem like overwhelming debt or shifts in the economy. During these problem periods, a company that previously didn’t have or need a CFO will benefit from a weathered fractional CFO to guide them. Most fractional CFOs have years of CFO experience across multiple industries. This means they’ve not only seen a lot of financial problems, they’ve also solved a lot of financial problems.
You can bring in a fractional CFO to help you through the rough patch. To set up an infrastructure for future financial problems and even assist you with implementing different processes to prevent future issues.
Profitability
A fractional CFO can help your company is in a period of either low profitability or rapid growth. In the instance of low profitability, your fractional CFO will determine where you can cut cost. They will also streamline processes to increase your profit margins and improve your company’s profitability.
During a period of rapid growth, many companies’ existing systems and processes can be inundated with the new traffic. A fractional CFO will help your company and departments augment the necessary support systems. As well as build processes to accommodate the new growth and prepare for future growth.
Decision-making Periods
Perhaps the executive team at your company is ready to make a big decision? Something like creating a new office branch or a big addition to the existing product line. When it comes to deciding whether the company’s finances can support the cost of a new branch or a new product, a fractional CFO will be a big asset to your company. Your temporary CFO will analyze whether the company’s finances can support the new move in the short and long term. The decision that your executive team makes will be the right one for the company.
What can a fractional CFO do for your business? A fractional CFO can help you with your accounting and finance needs when you need it the most. So you only pay for the time your business uses a CFO. Let a fractional CFO manage your risk or assisting you with making the big decisions.
