When do you need a Fractional CFO?

Author: Larry Chester

At CFO Simplified, our CFOs have the goal to improve your profitability and your understanding of the data that drives profitability. As you examine whether now is the right time for your company to bring in a fractional CFO you may be asking certain questions about the role a part-time CFO plays. What exactly does a fractional, outsourced or part-time CFO do, and when does your business need one? 

What does a fractional CFO do? 

The difference between a CFO and say, a controller is at the basic level, a Controller is tactical, whereas a CFO is strategic.  A CFO will: 

• Evaluate the company’s past financial performance
• Dive deeply into your present financial performance
• Strategically plan for the company’s future 
• Safeguard the company’s cash position.  
• Address operational structure
• Create initiatives to implement for your team 

Creating a comprehensive strategy for your company’s finances is the role of a CFO.  The roles of the Controller and staff accountants are to support the CFO’s initiatives and perform the daily reporting and insights that will keep the initiatives on track to success. At its core, the CFO’s role is to protect and improve your company’s financial health. 

According to the Wall Street Journal, 60-80% of business owners don’t know what their financial statements are telling them.

In conversations with business owners, however, we rarely encounter leaders who know that the information they are getting from their financials is incomplete.  In fact, most business owners feel they have a firm grasp on their company financials.    

Take our 1-minute quiz to find out if you are part of the top 10% of business owners who truly have their finger on the pulse of their company finances. Most importantly, there are insights that a trained CFO can share with you to make what is already good in your business even better. 

How does a part-time CFO move your business towards improved profitability?

If your business is growing rapidly there are strategic, operational, and hiring decisions that will need to be made in order for you to expand into different market segments.  To know when to make those moves, what financing you may need and when you will need it in order to fund your growth and who to hire at what time, you need the insights of a CFO.  Growing a business is complex enough, ensuring that your utilization rates match up with your projected growth path is just one way your fractional CFO can facilitate healthy profitable growth.  

If your company is struggling with cash flow issues, there may be hidden inefficiencies, accounting practices, and operational issues that can be addressed by a CFO who looks at the big picture. Where many companies go astray is that they start to cut back on the kind of insights and guidance that can save them just at the time when they need that guidance the most.  

A great CFO will save you more than it costs to hire them in operational insights and strategic initiatives that drive greater profitability and better more efficient processes. 

What’s unique about CFO Simplified? 

As business detectives, we know how to slice and dice financial information to get to the detail, examine the variances and the exceptions, and then follow those numbers back up the line to the production floor where they can have a real impact on your business. It is there that our CFOs can identify the changes that need to be made to drive more money to your bottom line. 

Our CFOs have experience across many industries, giving them insights into best practices not only in your particular vertical but in larger and smaller businesses that may benefit your company.  They bring their experience and success working in other organizations where they have seen and resolved similar weaknesses. 

Is a part-time CFO the right option for my company? 

Only you can know the answer to this question. 

When you evaluate your company, think about how your business has grown and changed over the past 6 months, 12 months, 3 years.  Have you changed and elevated your strategies to meet the fluctuations of the marketplace, are you asking hard questions, challenging the way you do business, and creating opportunities outside of your past offerings?

If the answer is a resounding, “maybe not,” it may be a good move to bring in fresh insights, experienced guidance, and an eagle-eyed look at the operational finance and accounting structures that tell the story of your business. 

Let’s talk about industry verticals for a moment: Some companies want to hire a CFO with deep experience in their unique vertical.  At CFO Simplified, we think that may not get what you expect. Learn why it’s an advantage to work with a CFO with diverse industry experience.