Compared to other positions, the wide-ranging and eminently impactful nature of the CFO’s work is one reason experience and longevity are key for the CFO role. A good CFO knows their accounting cycle and budget management. A great CFO is a strategic advisor drawing on a wellspring of knowledge and frontline experience.
To that end, firms increasingly leverage the fractional CFO as a cost-effective means of accessing a tailored financial service to elevate the company and help cross the next step on its maturation journey.
Here’s how a fractional CFO can deliver the financial results, insight, and mentorship you need – at a fraction of the cost.
Budgeting and Daily Operational Financial Management
While a large firm has a whole in-house bookkeeping service or can afford to outsource to a major agency, smaller companies typically rely on just a handful of crucial accountants to manage the enterprise. While these small teams are often terrific at their job, they’re typically hamstrung by something you can’t educate or teach your way around: experience.
But fractional CFOs with decades of experience have seen it all. They’ve watched budgets shrink and expand according to economic cycles, seen how creative accounting backfires, and know all the best cost-cutting techniques that don’t materially impact operations.
In this sense, your fractional CFO is a mentor and guide to your existing financial team and sets the bar for all to aspire to. At the same time, since they’ve seen and done it all, they can often offer Day One fixes to some of your most pressing budget and operational issues.
Strategic Guidance
Of course, you aren’t hiring a fractional CFO to act as a glorified accounting manager. That’s just a side perk.
Ultimately, a fractional CFO’s critical function for firms is their strategic guidance, oversight, and tailored approach to financial leadership. The budget and day-to-day tweaks are, in fact, an outgrowth of that function. A quality fractional CFO will dive into your financials and structure to:
- Deliver insight into your current status and trajectory compared to peer groups further ahead in their business journey.
- Immediately obvious problem areas to fix – the “easy wins,” as they’re common known.
- Educate you – whether you’re a startup founder or small business owner – on financial prudence and how to understand the metrics they interpret. A great fractional CFO teaches you and your company team how to do their job. This commitment to mentorship will help your firm grow in their absence, reducing reliance on full-time help.
External Interfacing
There are many reasons your firm interacts with third-party investors. Maybe you’re a startup interested in selling equity to venture capital. Maybe you’re a small business negotiating with private equity in a roll-up. Or maybe you’re fiercely independent while negotiating with a private credit fund for a loan. Whether understanding cap tables or structuring debt, a fractional CFO can help navigate the tricky world of private investment without letting GPs take advantage of what you’ve worked to build.
Likewise, a fractional CFO is often experienced in corporate tax law, if not a certified tax planner themselves. A fractional CFO can help ensure compliance with tax regulation and cultivate relationships between your firm and tax authorities – a relationship that more than pays for itself in time, headache, and even penalties if you’re on the wrong side of tax law.
Tailored Leadership in a One-Size-Fits-All World
Today, far too many software and service solutions seek to fit your business – no matter size, scale, scope, or industry – into one of just a few categories. This streamlines operations on their end, of course, ensuring maximum output. But it comes at the cost of efficiency and accuracy for you.
Fractional CFOs are the counter to today’s cookie-cutter corporate solutions. Fractional CFOs custom-fit their approach and services to your needs today and tomorrow to help you grow alongside your business by applying a vast kit of adaptable tools to any problem you may face.
This article was written in cooperation with Amrytt Media and first published in the Jerusalem Post
