Fractional Chief Financial Officer

 Fractional Chief Financial Officer

Grow Your Business With The Help Of a Fractional Chief Financial Officer

Running a growing business is an exciting and fulfilling experience. Yet, it is not without its challenges. One of the most common is deciding when to add new positions to your team. For example, your business may need the experience and insight of a chief financial officer but not yet have the need for a full-time executive. A Fractional financial operating officer may be the answer you’ve been looking for.

What Is a Fractional Chief Financial Officer?

A Fractional Chief Financial Officer is a top-level executive whose primary focus is on the finances of the business. The right Interim CFO can help your business overcome financial challenges and much more. Many companies may forgo this role during their initial stages for a bookkeeper. This creates a gap in which the company has some need for a CFO but not enough to justify a full-time position.

An Interim CFO is a consultant who functions as a part-time chief financial officer. Your company gets the insight of a top finance executive without having to bear the full-time cost. It is a powerful way to achieve your organization’s goals in an affordable manner.

What Does a Fractional CFO Do?

The job functions of a Fractional CFO are identical to a full-time CFO, only the job duties are performed part-time and/or on a temporary basis. Yet, the purpose of the Fractional option is often a little different and more specific than that of the full-time individual.

A Fractional Chief Financial Officer’s duties are determined on a project by project basis and tuned to the company’s particular challenges or goals.

Interim Chief Financial Officers typically partner with businesses to do the following:

  • Overcome financial challenges
  • Achieve growth
  • Optimize strategy
  • Implement systems
  • Raise capital
  • Navigate audits or transactions

All businesses have limited time, monetary, human, and other resources. Applying this capital in an efficient manner can be the difference between success and failure. For a growing business, greater efficiency can speed up expansion.

Most companies use a Fractional Chief Financial Officer on a part-time, retainer, or contract basis. This offers companies the expertise of a high-end CFO without the in-house cost—salary, benefits, and bonuses—of a full-time CFO.

Benefits Of Hiring an Interim CFO From Overcoming Challenges to Helping Achieve Growth

The most significant benefit of a Fractional CFO is getting the experience and ability of a senior executive at a large discount. Many growing companies opt to hire a less-experienced individual full time. This option is often more expensive and less impactful than engaging a Fractional chief financial officer.

By bringing a wealth of experience to your organization, a Fractional CFO can help you in many ways. Here are some possible benefits:

How Your Part-time CFO Can Help You Overcome Challenges

Remote CFOs are often brought in when an existing team does not have the manpower or skill to overcome financial challenges. Often, a company does not have an in-house CFO. In some cases, a company may have an existing CFO, and the Fractional CFO acts as a partner or advisor. The Part-time CFO helps lead separate projects such as raising capital or navigating an audit.

A Remote Chief Financial Officer is often brought in to help overcome financial challenges such as:

  • Cash flow issues
  • Low gross margins
  • High expenses
  • Outgrown existing systems
  • Need to make cost cuts
  • Navigating an audit

The Value of Forecasting and Developing Future Insights

Remote CFOs can help you forecast, optimize, and implement forward-facing financial visibility. An organized and well-documented Interim CFO focuses on the future. A Part-Time CFO is strategic in helping you get from where you are to where you want to go. Growing your business requires the strategic use of capital. Thus, financial forecasting is an important contribution of an Interim CFO. Financial forecasts serve as a blueprint to achieve growth in an efficient, accelerated, and sustainable way.

With short-term, mid-term, and long-term views of your business, you can better plan for requirements. Forecasting can help you manage during lean periods and help you plan and prioritize future business decisions. 

Fractional Chief Financial Officers can help companies:

  • Create short, mid, and long-term financial forecasts
  • Prepare budgets based on those projections
  • Analyze potential future products, services, and customer segments

How Interim Chief Financial Officers Help Manage Growth

Interim CFOs are also helpful in scaling a business, ensuring profitable growth as the business becomes more complex. This requires reinventing the tools, processes, and vendor relationships to deliver value. This is also called “bridging the chasm”, as companies start to see declining margins as they grow revenue past a certain threshold.

The philosophy of “What got you here won’t get you where you want to go” is ever-present in business once past the initial start-up phase. Businesses launch new products and open new territories. Companies also open locations, transact in new currencies, and deal with regulatory requirements. These all require more advanced thinking, tools, and techniques.

Startups typically begin with a part-time bookkeeper. But later find that they cannot sustain additional business growth with simple systems. Systems, resources, processes, and strategies must scale in sophistication as a company grows.

Remote Chief Financial Officers can help companies:

  • Develop existing employees and hire new ones that bring essential knowledge and skills
  • Implement systems that will support sustainable growth
  • Improve visibility and analytical capabilities to convert large amounts of data into actionable information
  • Explore causes of revenue leakage, cost overruns, and operational friction in a growing business 
  • Develop potential solutions

How a Remote Chief Financial Officer Can Help You Achieve Goals

A Remote CFO may help achieve specific goals such as raising capital or preparing for a sale, merger, or acquisition. Fractional CFOs may help raise debt and equity funding for companies, oversee mergers and acquisitions.

In these cases a Part-time Chief Financial Officer is helpful in:

  • Getting books in order
  • Producing financial forecasts
  • Bringing expertise and validation to the company
  • Sitting in on board meetings
  • Helping with strategic relationships
  • Analyzing term sheets and contracts
  • Overseeing due diligence

The Timeliness of Hiring A Part-time CFO 

Another important benefit of a fractional consultant over a full-time employee is the shorter ramp-up period. Hiring a new executive can be a significant resource investment. It can take months to find the right candidate. Even after finding the right person, it usually takes at least two weeks before he or she can start.

A Part-time CFO can start as soon as you engage him or her. As the individual works as a consultant, the only barrier to starting immediately is having enough scheduled time.

Your relationship with this individual can be temporary and can be concluded in a prompt manner. This temporary nature is significant because it means you can have a Fractional CFO when you need one and not when you don’t.

How Can Your Company Use a Remote or Fractional CFO?

There are numerous ways that companies use the services of a Remote CFO. One of the great benefits is that he or she can work on tasks that will bring you the most benefit. Some possible job duties include:

  • Provide input on the company’s business plan, financial and tax strategies, budgeting, and forecasting
  • Develop performance measures that support the company’s strategic direction
  • Maintain in-depth relations with all members of the management team
  • Manage the bookkeeping, human resources, investor relations, legal, tax, and treasury departments
  • Oversee the financial operations of subsidiary companies and foreign operations
  • Manage any third parties to which finance functions have been outsourced
  • Oversee the company’s transaction processing systems
  • Oversee employee benefit plans, with particular emphasis on maximizing a cost-effective benefits package
  • Supervise acquisition due diligence and negotiate acquisitions
  • Review and approve filings with the Securities and Exchange Commission (if the company is publicly held)
  • Understand and mitigate key elements of the company’s risk profile
  • Monitor open legal issues involving the company 
  • Ensure that the company complies with all legal and regulatory requirements
  • Report financial results to the board of directors; report risk issues to the audit committee of the board of directors
  • Maintain appropriate insurance coverage
  • Track cash balances and cash forecasts; arrange for debt and equity financing; invest funds

When Is the Right Time To Hire a Fractional CFO?

One of the best qualities of a fractional executive is flexibility. You can hire a Fractional CFO for four hours per week if that is all you need. The right time to start working with one is whenever you have a need for financial improvement.

Chances are that if you are asking yourself this question, you already need help with your company’s finances. Consider starting with a consultant on a short-term, limited basis to determine how much value they can bring to your business.

If you need someone to fill a financial executive role but aren’t sure you need a full-time individual, a part-time professional is the right choice. You can engage a Part-time CFO full time on an interim basis if needed. This will provide you with a chance to test your needs and the impact of a chief financial officer.

In short, interim executives are great for businesses of various sizes and in differing stages of growth. Since you don’t have to make a long-term commitment, starting a trial run is often a smart move.

Find Your Fractional CFO

Having a Fractional chief financial officer is an excellent way to get the valuable benefits of a CFO without the sizable cost. This service can also be a useful opportunity to try out the CFO role without having to commit to a full-time hire. If you have been wondering if your company needs a CFO, but aren’t committed yet, a Fractional CFO may be your answer.

Johanna is an experienced executive who can provide the Fractional CFO services your business needs. Johanna’s services include the following and much more:

  • Budget, forecast and financial analysis
  • Financing strategies and implementation
  • Revenue management and cost of sales
  • Board reports and presentations
  • Tax planning and reporting
  • Contracts
  • Bookkeeping and financial system setup and operation

Click here to contact Johanna Kimball to learn more or to engage her as your new Fractional chief financial officer.