Introduction
How do you pay attention to your company’s health? Your company’s health in terms of finance, profits, accounts & audits, funds, investments, costs, or the future. How do you maintain that health for your company?
Well, a CFO, a C-suite executive, can transform your company's financial health if hired on time, for the perfect opportunity, by prioritizing your company's growth. HOW?
The CFO looks over every financial aspect of your company. The CFO works on the company’s accounts, taxes, cash flow, and overall financial planning and helps your business grow with the right financial decisions. However, a CFO with years of experience in managing finances also demands high remuneration to provide its CFO services.
Start-ups that have the potential to increase and mid-phase companies at a certain stage require full-time CFO services to make them more profitable with the right financial planning and decision-making. Still, a growing-seed company cannot afford a full-time CFO because of high demand.
Therefore, for organizations that require CFO services but cannot afford full-time top-level financial executives, fractional CFO services are also on the market. Do you know what a fractional CFO is? What are fractional CFO services? How can a fractional CFO help your business?
Let’s find out!
What is a fractional CFO?
A fractional CFO is hired on a part-time, contract basis by startups and businesses for their various financial solutions, strategic planning, and other financial activities. Fractional CFOs work in multiple organizations at the same time as per projects.
Companies nowadays prefer fractional CFO services over full-time CFO because they get the full-suite expertise of finances without a full-time CFO’s costs of salary, bonuses, health insurance, etc.
If your company has set the stage to grow further but does not have a sufficient budget to hire such an experienced expert in finance permanently, then worry not. You can also get experienced CFO services as per your requirements by hiring a fractional CFO.
But you may wonder how a person can do a part-time job in a top-level position that requires full-time attention. What does a fractional CFO do? What are fractional CFO services?
What services does a fractional CFO offer?
A fractional CFO offers a wide range of services tailored to various financial solutions according to businesses. Here are the top ten services that a fractional CFO offers:
1. Financial Planning & Strategy
One of the priority services of a fractional CFO is to implement well-defined financial planning and strategy aligned with the company’s goals, financial structure, and requirements.
2. Budgeting & Forecasting
A fractional CFO prepares annual budgets and provides financial forecasting. Budgeting and forecasting services help companies manage their finances effectively and make financial decisions in light of changing market trends.
3. Financial Reporting & Analysis
A fractional CFO generates financial reports and analyses of the company’s financial conditions. The company can effectively make decisions as per the report's insights.
4. Cash Flow Management
One of the main tasks of a fractional CFO is to manage the cash flow of the company effectively. A fractional CFO maintains working capital and liquidity in the company.
5. Risk Management
With years of experience in finance, a fractional CFO identifies and manages potential risks in the company's finances. They mitigate risks related to the market, credits, and operations and come up with strategies to address them.
6. Fundraising and Capital Management
A fractional CFO helps you with fundraising and manages capital for clients. Their approach to capital management stabilizes the company’s financial health.
7. Industry-Specific Expertise
A fractional CFO’s industry-specific expertise serves as an advantage to the companies. Their various industry knowledge provides unique advantages, from making decisions to updating strategies as per industry.
8. KPIs Monitoring
The fractional CFO monitors and determines key performance indicators (KPIs) in the financial strategy. Time-to-time observation of KPIs improves financial strategy.
9. Valuations
Fractional CFO effectively works on valuations as per your financial strategy. Their expertise in finance provides reliable valuation support to organizations.
10. Due Diligence
A fractional CFO is responsible for ensuring that transactions proceed properly during mergers and acquisitions.
What does a fractional CFO do?
Here are the main six operations of a fractional CFO:
1. Helps in Financial Decisions
Decision-making is always a crucial part of a business, and making financial decisions is an influential one that can affect your whole business. You need a clear understanding of finances and accountants before making decisions.
The fractional CFO here helps you make major decisions related to the finances of businesses. You get the pros and cons of making financial decisions with the help of a fractional CFO.
2. Provides accounting & taxation support
Accounting and taxation are the basic pillars of a company’s financial stability. A company has to manage them effectively so that it remains stable financially.
A part-time CFO provides accounting and taxation support to your accounts team for clarity-based account management. Your organization gets an expert auditor who can review and audit your business accounts.
3. Maintains Cash Flow
Day-to-day cash flow management is an important task for any organization, whether it is a small, medium, or big business.
A contract-based CFO further maintains your business's cash flow. The effective management of cash flow by the CFO saves your business from budgeting and overspending and controls unusual expenses.
4. Generates Financial Reports
Businesses need analysis of finances to plan and strategize, and every business like yours is looking for perfect reporting and analysis of the finances you invested in the business.
Here, a fractional CFO analyzes and generates clean financial reports for your company. CFOs make financial reporting easy for businesses by generating guidance-based financial reports.
5. Makes Financial Strategies
When a fractional CFO generates financial reports and analyzes the company’s current finances, there is also the goal of strategizing for the near future by learning from the current financial reporting and analysis.
After getting thorough reports on finances, fractional CFOs make financial strategies for the company’s different requirements.
6. Forecasts Financial Health
An experienced CFO can understand market trends and the company’s finances in sync. Because of their expertise and experience, CFOs forecast the client company’s financial health in the upcoming times as per their performance in the business.
Advantages of hiring a fractional CFO
1. Professional Expertise
A fractional CFO comes into the organization with professional expertise in finances. The role and responsibility of the part-time CFOs evolve around their excellence in the field of finance.
2. Qualified Experience
Fractional CFOs have qualified experience in the finance field. Their years of work experience help businesses survive financial instability. The advantage of their experience is reflected in their financial planning, which further helps your business.
3. Cost Friendly Hire
Without going for a full-time, in-house C-suite executive, your business gets a top-level finance expert on a contract, part-time, or project basis, which is a cost-friendly hire for small-scale startups and medium-growing businesses.
4. Deep Financial Insights
As a fractional CFO, your business gets financial insights from an expert who has explored the financial industry for years. Your business gets the advantage of the CFO’s insightful financial view for the future.
5. Strategic Advantage
Your business also gets the strategic advantage of having a CFO associated with the overall finances of your company. A fractional CFO helps you strategize your business.
6. Industry Relationship Building
Your business builds industry relations via a fractional CFO. A fractional CFO’s industry network can contribute to your business relations in the industry.
7. Capital Raising
A fractional CFO helps start-ups raise funds from investors as well. Startups, after hiring a part-time CFO, get the benefit of capital raising through the CFO’s wide investor relations.
8. Profit Scaling
Your business can scale up in profits because of the CFO’s expertise in financial decisions, financial reports & analysis, and financial strategy. The CFO works closely on strategic planning and financial actions to scale up profits at the end of the financial year.
Let’s discuss how a business can hire the right CFO.
How to Hire the Right CFO
1. Industry Network
You can use your industrial network to get a good fit CFO. By networking with other industry partners, they can help your business hire the right CFO including expertise in finance, years of experience as a full-time CFO, a proven track record of managing company finance actions, etc.
2. Professional References
You can also go for professional references from various businesses. You can get several professional references by asking your fellow professionals to help you find a skilled CFO for your business.
3. Executive Search Firms
You can also contact executive search firms to find a fractional CFO for your business. Executive search firms list, screen, and interview numerous candidates to find a project-based CFO.
4. CFO Services Firms
Currently, the best option for finding a fractional CFO for your business is CFO Services Firms. CFO Services firms provide overall CFO-related services with their teams of CFOs who work in various businesses as Fractional CFOs and have years of experience.
Conclusion
This way, fractional CFO is an exceptional fit for businesses, startups, small and medium enterprises (SMEs), fast-growing companies, etc. to streamline their financial actions with proficient financial strategies.
If you are looking for a Fractional CFO for your business, then our top-tier CFO Services is here to support your business finance.
We, Virtue CPAs & Advisors, are a professional accounting & advisory services firm in the United States since 2016. We also serve competent CFO Services to businesses across diverse industries. Contact Us now for qualified CFO services.
