What is a Fractional CFO & How CFO Services Work

In later-stage funding events, investor terms may state that a CFO must be hired upon completion of the round. The right time to hire a fractional CFO depends on a company’s stage of growth or financial tasks at hand. The benefits https://www.bookstime.com/ derived from hiring at the right time are many and long-lasting to a business. As an experienced entrepreneur himself, he has served in various C-suite leadership and advisory roles across a wide spectrum of industries.

Let’s say your company is struggling to stay afloat because your clients pay at different times. A fractional CFO could come up with a new plan for billing or negotiate better payment schedules. So, if you want to grow your startup into a new market for example, https://www.bookstime.com/articles/fractional-cfo a fractional CFO can help you figure out what that might cost and what kind of profit you could expect. That way, you can have reliable forecasts and budgets at your fingertips. So, say you run a subscription-based business, and too many customers are canceling.

CFO vs Controller: WHAT DOES A FRACTIONAL CFO DO COMPARED TO A FRACTIONAL CONTROLLER?

A CFO will manage everything from the budgeting process – pulling the data from the Controller – through to the forward looking strategy around the best use of resources. While many think of the CFO as someone who is solely focused on money, their job is much deeper than that. The CFO must be familiar with all parts of the business that they’re working with.

This can include taking on consulting or advisory roles, or even volunteering your services to non-profit organizations. 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. At DHJJ, we believe that every business needs a CFO, but we know that hiring in-house isn’t always feasible or the best strategic decision. Our interim and fractional CFO services let our clients reap all of the benefits of a CFO without the costs or inconveniences.

What is the Difference Between a Fractional CFO and an Interim CFO?

There are several reasons why startups are continuing to rely on fractional CFOs. Most new business owners and first-time entrepreneurs don’t have the experience to navigate an audit successfully. One trend that continues to grow in popularity for small businesses trying to scale is the hiring of the fractional CFO. New Life CFO sources contractors with a wide variety of industry experience who have served at least ten years as full-time CFOs. If your company needs help with your financial big picture, we’re happy to discuss your needs. If a company suddenly lost its CFO and needs a qualified executive to fill the seat while an extensive search is conducted, a fractional CFO can be an ideal solution.

Having a finance expert on the team from the start helps in ways that founders typically don’t realize until they hire a fractional CFO. Fractional CFOs are finance experts, strategists, and operationally minded. Fractional CFOs are usually paid on a contract basis, many times with a monthly retainer agreement involved. In this case, it may be difficult to locate a fractional CFO with the required expertise, so the business may have to locate a full-time CFO to fulfill the duties. The CFO role also typically works closely with other C-Suite executives to help them better understand the financial state of the company. Moreover, CFOs can play a critical role in representing the business in fundraising efforts and attracting investors, potentially leading to increased growth and success.

How To Run A Business In the Face of Rising Interest Rates

A fractional CFO could dig into the data, uncover the root of the problem, and suggest strategic ways to improve customer retention. For example, Acuity’s fractional CFOs have been instrumental in helping startups raise the funds they need to grow. If you’re trying to raise money for your startup, a fractional CFO can really help. 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. The average hourly rate of a fractional CFO is $300, but rates vary depending on location, scope of a project, experience, and other factors. Of course, developing a solid services agreement isn’t something you should do alone.

If you’re working with multiple clients at once, time management skills will help you stay on top of deadlines and deliverables. Your clients need someone who can make sense of their numbers and help them make informed decisions. This means you’ll need a deep understanding of everything from financial statements to accounting principles, budgeting, forecasting, etc. This type of schedule gives you the freedom to prioritize what matters most in your life.

How to Hire a Financial Controller: A Comprehensive Guide

See if they can charge you a flat rate, otherwise set a retainer with a lower hourly rate. This will provide you with a lower hourly cost and stable monthly payments while giving them predictability in their monthly income. Founders should take their time to find the right fractional CFO for their startup. It’s important to choose a CFO that fits your needs, work ethic, and experience requirements. Finding the right CFO for a startup is a tough task and is the main reason why Shiny exists!

Some companies will hire this expert to help them as an interim CFO while they look to hire a full-time, experienced CFO. While other companies may not need a full-time CFO and will employ a fractional CFO to run the accounting department on a permanent part-time basis. A financial controller is essentially the lead accountant for a business, overseeing and directing financial activities, including financial management, compliance, and accounting and record-keeping operations.

Starting the search

Most fractional CFOs also have experience with many different companies. This allows them to have a very unique lens to view the company through. Additionally, both the organization and the fractional CFO have the opportunity to initially work together on a limited scope and can get a sense of whether or not there is a good cultural fit for all involved.

Join our mailing list to receive the latest pro tips on tax and accounting. However, considering these factors will help you determine your business’s needs. For as little as $40,000 to $50,000 per year or $4,000 per month, you can get top-notch insights from a CFO on a weekly cadence.

Optimization of Internal Processes

Most fractional CFOs also help organizations with their financial plans for the future. Your accountants or bookkeepers can handle your current and past finances. These financial professionals can develop plans and budgets for how to spend your money and grow. As startups continue to grow and scale, they need better systems to manage the growth. This requires guidance and supervision from someone who has experience implementing systems in different situations.

• The same idea applies to hiring a firm that provides outsourced CFO services and can offer a fully outsourced finance team.
• This is a common issue we see with founders who are fundraising or doing a more complicated transaction.
• Learning about each industry and adapting your strategies and approach as required is another important skill to master in this role.
• A CFO may resign during these times, or investors may look to start a clean slate and appoint their chosen figurehead.
• With the benefits of fractional work becoming more and more apparent, it’s no wonder that so many CFOs are leaping into this exciting realm.
• Once you hire a fractional CFO, they can come in a start solving issues immediately.

If you’re looking to accomplish a specific goal, it is essential that the CFO has done it before and can share the results. A fractional CFO service can handle all your finance and accounting needs, including the CFO. With a service, you gain an entire team of financial and accounting professionals, all of whom support the CFO role. This division of duties can make a fractional CFO service an affordable one-stop shop for replacing an in-house accounting team. Most fractional CFOs charge by the hour or day, which results in different monthly costs depending on the level of engagement a company needs. You might hire a fractional CFO for a one-time project, or you may wish to set up a retainer arrangement so you can receive their advice regularly.