February 13, 2023

Why Hire a Fractional CFO?

Many businesses hire a Chief Financial Officer, or CFO, before their revenue reaches a level that can truly support a full-time senior financial executive. As a result, the CEO will often assign departments and tasks to the CFO to justify the full time expense the role demands, and the CFO may not have the management skills to deliver results in those business areas. Small companies cannot compete with larger firms for the best talent, so hiring a CFO with limited skills and experience makes it even harder to get great results from the CFO position.

What does a Fractional CFO do?

Most fractional CFOs bring both large and small company experience to the table. They understand which processes and tools you should implement at different business stages. They often only need 4-6 hours a week to deliver direction and monitor the financial health of the business. They partner with accountants and controllers to deliver the data CEOs and Boards of Directors need, without the expense of a full-time equivalent, or FTE, employee. A select group of these CFOs are very successful at building and presenting your business case to venture partners, private equity companies and investors. Many have raised $10s of millions of dollars.

Here are some of the deliverables for fractional CFOs:

  • Fundraising to support growth
  • Setting up Regular financial reporting practices and systems
  • Making sure financials accurately reflect the state of the business
  • Compliance to local and national laws on reporting
  • Completing or managing tax returns
  • Working with creditors, investors and board members
  • Cash flow modeling

Typically a fractional CFO can deliver all this in one day or less per week, making the full-time CFO obsolete.  Fractional CFOs are not inexpensive on an hourly basis, but the value received far outweighs the full-time choice. Check out this case study of a company that split the full-time CFO role into two fractional roles and got better performance at a lower cost.