5 Ways a Fractional CFO Can Elevate Your Startup

In simple terms, a fractional CFO performs the same function as a full-time CFO, just on a part-time basis. A CFO is accountable for a company’s administrative, financial, and risk management operations, including developing long-term financial and operational strategies and the metrics used to gauge progress. A CFO also creates and maintains control systems designed to preserve a company’s assets and report accurate financial results preventing any surprises. We’ve found that the best ones are able to take a ton of work off of the founder’s plate, while simultaneously improving the company’s financial reporting and strategy. All startups should consider hiring a Fractional CFO at least a minimum of one quarter before a new fundraise to avoid overloading the startup CEOs during a fundraise. We’ve seen hundreds of startups run with a skeleton budget, but the startups that hire a CFO are the ones that end up making critical hires, well-informed business decisions, and raising funding when needed.

• Research different networks and determine which one aligns with your goals and values.
• Due to the complex and very minute nature of audits, founders – especially first-time entrepreneurs – may not have the experience to navigate their firm through it.
• Interim CFOs are hired on as a temporary replacement for full-time CFOs.
• Businesses invest capital and resources to create value-added products or provide services and receive payments in return.
• In addition, many fractional CFOs hold professional certifications, such as Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), or Certified Management Accountant (CMA).
• They know how to navigate the world of funding, they can help you make a great pitch, and they can even talk terms for you.

Fractional CFOs most commonly partner with companies to help overcome financial challenges, achieve growth, optimize strategy, implement systems, raise capital, or navigate an audit and/or transaction. A fractional CFO https://www.bookstime.com/articles/outsourced-bookkeeping is an experienced finance professional who brings extensive business management expertise to a company on a part-time or project basis. Hiring one at the right time can add significant long-lasting value to a business.

Technology Services

A fractional CFO can help you look to the future by strategizing toward long-term goals. They can help you develop strategies to ensure your business is on track for success and pursuing its ultimate ambitions. While a CFO offers many of the same services as a fractional CFO, the main difference is in the time commitment.

• It’ll also help if you stay up-to-date with industry trends by attending conferences and seminars, and reading relevant publications.
• A modern CFO’s responsibilities are varied and complex; thus, each company’s role requirements will vary depending on their situation.
• Working as a fractional CFO, he didn’t have the same trepidation as a full-time permanent C-suite leader, he explains.
• Rather, business founders should opt to take a Chief Operating Officer title and preserve full time positions, especially during the early stages.
• They need someone capable of seeing the bigger picture through the nuts and bolts of financial reporting and accounting.
• Next on the priority list is usually a controller, who’ll perform financial planning activities.
• CFOs have a team of controllers that operate the software, but their financial expertise helps determine which processes you need to automate and which need closer manual monitoring.

Fractional CFOs can provide you with the specific services you require, no matter what opportunities or challenges your business is facing. If you’re searching for a fractional CFO, the list above provides a good starting point when assessing a candidate. As a company’s health improves as a result of the fractional CFO’s financial guidance, thoughts will naturally turn to accelerating growth. Here the focus can be streamlining financial tasks and raising capital through borrowing or equity funding to fuel ongoing growth. A fractional CFO (Chief Financial Officer) is a professional who provides financial advice and guidance to businesses on a part-time or project basis.

Pros/cons of a Full-time CFO Employee

But rather than helping one business full-time, a fractional CFO guides multiple businesses across a wide variety of landscapes. For larger companies with more complex board structures, independent board members must be free of conflicts of interest. At times, a corporate action could put a member at risk of being personally conflicted. In these cases, a fractional CFO can be parachuted in as an interim board member to oversee the event, free of any conflicts. The projects a fractional CFO can assist with are multi-disciplined and split between financial and non-financial duties. The role of the CFO is complex and can be unbundled into specific pain points and influence areas.

While the tenure of a fractional CFO is not guaranteed, neither is that of an employee. The benefit of a fractional CFO is the money you will save throughout their retention, compared to an employee. • Oversight in closing the monthly books and managing financial reporting. • Your small business is facing financial obstacles, and you need senior-level help overcoming them. The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever. Let’s take a look at some of the most popular reasons companies seek out a fractional CFO.

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They are a seasoned boardroom veteran who’s spent years leading organizations through a multitude of business challenges. This means you get someone who has the vision and foresight to help you navigate not just that which lies immediately ahead, but also that which will eventually be inevitable. Businesses invest capital and resources to create value-added products or provide services and receive payments in return.

• With company internal controls in place, you can focus on other aspects of the business.
• What you make as a fractional CFO varies but you can expect anywhere between $150 to $500 per hour (with $300 being the overall average hourly rate).
• However, since fractional CFOs work on an as-needed basis, they do not typically receive the same salary and benefits package as their full-time counterparts.
• Our premium package offers access to strategic expertise from professionals that understand your startup’s needs.
• This work involves reinventing the tools, processes, and vendor relationships the business uses to deliver value to an ever-growing and increasingly diverse set of customers.
• Hiring a fractional help can not only help you streamline your financial operations but also offer strategic insights to aid your business’s growth.

High-growth companies often find themselves in the position of having to decide where cash is best spent. Fractional CFOs help businesses with everything from financial reporting to budgeting and strategic planning. For the most part, they work on a contract or consulting basis with a services and/or retainer agreement in place. In one of the what does fractional cfo mean first experiences I had in this role, I was working with a medical practice who unfortunately found themselves in the red and needed help to get their ship turned around. Within 90 days, I was able to fix some of the bottlenecks that were causing their financial and cash flow difficulties and resolved a good amount of the debt they were in.