Employees of small and medium-sized businesses (SMBs) wear a lot of hats. They juggle various roles to help operations run smoothly, even if the company doesn’t have dedicated departments and teams for each business function. Maybe one employee handles marketing activities and customer service, while the business owner oversees sales and accounting.
Eventually, the business might grow to the point where it needs someone with dedicated financial knowledge and expertise to help it manage cash flows and create a strategic financial plan.
These duties shouldn’t become the second priority or be handled only “as time allows”. Neglecting these tasks could cause businesses to miss out on potential growth opportunities and mismanage their finances.
Thus, bringing on a fractional CFO to oversee such tasks can help business owners focus on what they do best while a seasoned financial executive gives these matters the professional attention they deserve. Below, we’ll discuss what a fractional CFO does and the specific benefits they can provide to SMBs.
A fractional CFO is an experienced financial executive who works for a business on a part-time or contract basis.
Rather than working as a full-time employee to oversee all financial activities of an organization, they are typically hired to provide financial guidance and expertise on a specific project or problem the business is facing.
While no specific certification or license is needed to become a fractional CFO, these professionals have typically held the role of CFO for multiple companies in the past. In addition, many fractional CFOs specialize in serving companies in a specific industry or niche, such as SaaS, e-commerce, professional services, and others.
The role of a fractional CFO is versatile. It is based on the person’s unique background and skills, paired with the specific financial challenges or objectives of the business.
Thus, fractional CFOs can handle a wide range of tasks to help businesses strategically grow operations and improve financial performance.
In general, here are some of the common tasks and responsibilities of fractional CFOs:
Thus, at nearly every stage of business growth, there’s a valid reason to hire a fractional CFO to receive expert guidance and insights. From a company that’s raising capital for the first time to an organization that’s preparing for a buyout, a fractional CFO can offer strategic support every step of the way.
To understand the various benefits of hiring a fractional CFO, here are the many reasons why companies choose to use their services:
Additionally, companies will hire a fractional CFO when they don’t possess the expertise and resources in-house to make strategic decisions or plans. A fractional CFO is experienced in the field, often having a successful history of supporting businesses in similar industries to grow and enhance performance.
Thus, businesses can improve financial management with the help of a fractional CFO, which wouldn’t be possible otherwise. This includes optimizing cash flows, reducing costs, improving profitability, and creating standardized processes for better efficiency,
Particularly if the company is trying to raise capital and secure investors, a fractional CFO’s professional network can be highly valuable. Whereas many business owners haven’t been through the process before, a seasoned fractional CFO has successfully gone through funding rounds, helping businesses access the funds they need to support and grow operations.
Fractional CFOs can bring an outside perspective, helping the company view its financial situation and operations in a new light. This enables them to discover new opportunities they haven’t previously recognized. Plus, it can help them perform detailed analyses and uncover crucial insights that help them make more informed decisions.
Not every company that needs financial guidance from an experienced executive has the capital to hire one full-time. Similarly, they may require assistance on a specific project or for a certain period of time, but it is not enough to justify hiring a full-time CFO.
This is one of the key benefits of hiring a fractional CFO. Rather than paying a full-time executive salary, benefits, bonuses, and other compensation, you can pay a more affordable rate for fractional CFO services. The exact pricing structure can vary between CFOs. However, it’s common for them to charge an hourly rate or fixed fee per month, so it’s still easy to predict how much it’ll cost based on the scope of the engagement.
Similarly, fractional CFOs offer flexible and scalable support, meaning they can become more or less engaged with a business depending on their needs. This can be convenient when businesses only need support on a one-off project, as they don’t need to sign up for a long-term engagement. But, if they need more support as the company grows, it’ll be easier to increase the fractional CFO’s hours–as long as they’re available.
Hiring a fractional CFO provides a wealth of benefits to businesses of all sizes and at all stages of development. For optimal results, it’s best to find a fractional CFO that offers the specific expertise and industry experience for your business. For instance, if you’re an online retailer, you may not get a ton of value from a fractional CFO that’s only worked with healthcare organizations.
Luckily, the expert team at Bob’s Bookkeepers has an average of 20+ years of experience working with businesses across all industries–including fashion, e-commerce, and SaaS. We offer strategic financial guidance through our fractional CFO services, offering deep financial expertise to help your business thrive.
If you want to learn more about our custom fractional CFO services, contact us today. We’d love to hear from you.
