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The Future of Fractional CFOs

Author: Larry Chester, President

This just in! The use of traditional CFOs is on the decline. In fact, research from The Wall Street Journal shows that 37 CFOs resigned from S&P 500 companies in 2020, up 27.6% from the previous year.

Why might this be? The rise of fractional CFOs is one possibility. A fractional, or part-time CFO, is a great option for businesses that don’t have an individual on staff who is qualified to serve in a CFO role or for businesses that don’t have the financial strength to hire an in-house CFO.

What is a Fractional CFO?

A fractional or part-time CFO works part-time for a long time for a business (or multiple businesses!) A fractional CFO is in the office on a regular basis—from a couple of days a week to one day  a month—and serves all the typical duties of a CFO.

How Can a Fractional CFO Help Your Business?

There are various benefits of using a fractional CFO for your business.

Most often, however, a business will hire a fractional CFO to provide the same services that large businesses get from a full-time CFO, but at a lower cost.

According to Proche, “fractional CFOs can provide a level of analysis and operational expertise without the hiring and training overhead… [which is especially] important during the genesis of a new company because they can implement critical operational procedures that allow the business to scale without losing resources to inefficiencies.”

Typically, fractional CFOs provide the same services that full-time CFOs do. 

Fractional CFOs can help businesses in a variety of ways. Some of these include building a cash flow forecasting model, optimizing strategies for your business’ growth, overcoming challenges in a banking relationship, raising capital, identifying the true cost of operations, establishing internal controls, and implementing the proper systems to keep your business running. 

Day to day, this might look like a variety of things: 

  • Monthly financial reporting and analysis
  • Creation of dashboards and selection
  • Reporting of key performance indicators (KPIs)
  • Assistance with investor and lender relations
  • Cash flow projections
  • Overseeing bookkeeping and accounting
  • And more.

 

What Does The Future of Fractional CFOs Look Like?

Fractional CFOs are not new by any means. However, as the number of startups and remote businesses continues to grow, so will the use of fractional CFOs. According to Proche, fractional CFOs, now more than ever, “have a wealth of digital tools at their disposal to analyze, communicate, and strategize for their clients.”

Fractional CFOs will continue to work for and with a variety of different businesses, bringing a wide breadth of experience to each table.

Interested in learning more about hiring a CFO for your business? Read on to find out if your business is ready for a CFO.

Fractional CFOs are on the rise with more remote businesses and startups

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