Many businesses need a chief financial officer to handle analysis, budgeting, and forecasting requirements. Keeping a full-time CFO around can be hard to justify at many startups and small businesses, though. Fractional CFO services fill this gap by providing a high level of skill without the commitment to a full-time position.
You may fairly wonder how fractional chief financial officer services would fit into your company. This article will look at this and several other questions about working with a fractional CFO.
What Makes a CFO Fractional?
Generally, the fractional model involves outsourcing the job to someone who works remotely. The CFO is fractional because they split their time across several companies. It is a form of outsourcing, but it involves a higher level of an executive role than many businesses might outsource. You have a fractional need for their services, and they make up the difference in their pay by sharing their advice and skills elsewhere.
Especially if you have decent financial chops, you might wonder if a fractional CFO is necessary. For example, the CEO of a lumber business might have a background in commodities trading. They may feel quite confident assembling a company performance forecast with high, low, and middle scenarios.
Does this company need fractional CFO services? A major argument for the company does need one is that the role has to be independent of the CEO. The company benefits from the increased trust in the CFO's projects. Likewise, the CEO benefits from hearing an independent viewpoint. Particularly in businesses where there may be few people with legitimate executive experience, it can help to have another voice coming from an executive viewpoint.
Fractional chief financial officer services become especially valuable when a small company starts planning big moves. Suppose your company has grown large enough that a suitor is proposing a merger or an acquisition. You need someone to study whether the deal represents good value for your business. Depending on the CFO's input you might reject the offer outright or propose a different valuation for your part of the proposed combined enterprise.
The head of a successful business, especially one that's growing, may find many things are pulling their attention in different directions. What may have been a manageable level of attention five years ago can become overloaded as your operation grows. Adding fractional CFO services to your organization will allow them to focus on that corner of the operation. You can then take on more of a strategic role, focusing on decision-making rather than analyzing and reporting.
For more information on fractional CFO services, contact a professional near you.