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Is a Fractional CFO right for your Business? Learn Everything you Need to Know

If you’re a startup owner, you’ve probably heard of fractional CFOs. But what are they, and does your business need one? In this blog post, I’ll explore the role of fractional CFOs and how they can help companies that might be just starting out.

What is a fractional CFO?

A fractional CFO is a financial expert who works with businesses on a part-time or project basis. This can be an excellent solution for startups that can’t afford to hire a full-time CFO but still need access to top-level financial advice.

A fractional CFO may also be hired on a contractual arrangement. As a contractor, they offer startups and early-stage SaaS companies CFO services, including accounting, growth and strategy experience, for a fraction of the cost of a full-time chief financial officer.

The fractional CFO is often hired on a project basis and assigned a specific focus that the company seeks to achieve. These include improving cash flow, accelerating growth or raising capital, among many other goals.

Key Roles a Fractional CFO Might Do

A fractional CFO can take on many different roles within a business. Still, they typically fall into one of three categories:

1. Financial Reporting and Analysis

2. Strategic Planning and Execution

3. Organizational Development

Some of the specific tasks that a fractional CFO might do include:

Focus on a specific challenge the business might be facing

A fractional CFO will often be hired to assist with financial challenges that the company might face that other company partners may have trouble solving with their existing pool of business and financial knowledge.

When just starting out, many SaaS and startups simply don’t have the cash flow to be able to hire a full-time CFO to fill the knowledge gaps that the company is missing.

Suppose there happens to be a full time CFO in place. In that case, the fractional CFO may act as a strategic financial advisor helping to oversee specific projects like raising capital or analysing risk and debt exposure.

Other challenges a fractional CFO might assist with include CFO services such as:

  • Cashflow Problems
  • Improving gross margins
  • Reducing long-term expenditure
  • Providing expertise on financial systems
  • Business cost reduction or budget cuts
  • Audit and end of financial year accounting

Future-Proofing the Business with Financial Forecasting

One of the most essential roles a fractional CFO can play is helping businesses to future-proof themselves with accurate financial forecasting. This can help companies to ensure they are well-positioned for future financial obligations.

Whilst many financial positions such as book keepers, financial controllers and accountants keep the day-to-day financial health of the business organised, a fractional CFO can have the ability to focus on the future strategic planning of the company.

The fractional CFO role can help you assess where your business is and where you want to go. This includes any financial growth goals and how a clear economic forecast can help the company get there.

A financial forecast acts as a blueprint to follow to achieve growth in the most sustainable way possible.

Conclusion

There are many different roles that a fractional CFO can play within a business. Therefore, if you’re considering hiring one, you must first assess your specific needs. Once you’ve done that, you’ll be in a much better position to find the right fractional CFO for your business.

Fractional CFOs can be a great asset for startups and early-stage companies that need access to top-level financial advice but can’t afford to hire a full-time CFO. 

When looking for a fractional CFO, be sure to consider their experience, what specific services they offer, and how they can help you achieve your particular goals.

In 2022 we are fortunate to be able to take advantage of expertise across many industries on a part-time or consulting basis. So take advantage of those services which would best serve your business.

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