What is a Fractional CFO & How CFO Services Work
Their full focus is on one company, the business under which they are employed. Today’s article is excerpted from an academic paper written by Maggie So, one of our Growth Consultants. In addition to her consulting experience, Maggie has served as fractional CFO for many companies. In this article for Journal of Business Strategy, she and her co-author break down the key benefits of making a fractional finance hire. It is easy to know if you need an interim CFO—your CFO left and you need a high-level “temp” to ensure nothing slips through the cracks while you search for a new permanent CFO. But it can be more difficult to decide if your company should hire a part-time versus a fractional CFO.
It needs to be prepared by a competent individual or firm and approved by the Board of Directors. Although there are differences between a controller and a CFO, they are not always well-defined. In some organizations, there may be overlap in the duties that both employees perform. During the no-commitment consultation, you’ll have the opportunity to ask more questions about how fractional CFO services work and meet one of our CFOs. 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.
What does a part-time CFO do?
Fractional CFO services are financial tasks such as financial planning, analysis, budgeting, and fundraising done by part-time professionals. This means you can take care of these critical tasks for your startup’s growth and only pay when you truly need them. Financial forecasts are estimates of a company’s future financial performance based on historical data and expected future economic and market conditions.
Attend finance events, connect with other financial professionals, and build your online presence. This type of schedule gives you the freedom to prioritize what matters most in your law firm bookkeeping life. By becoming a fractional Chief Financial Officer (CFO), you can use your expertise to help multiple companies grow while also having the time and energy to enjoy your own life.
Strategic financial planning and advice
When different CFO role elements are required on an intermittent basis, it’s time to bring in fractional talent. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content.
The Controller is responsible for ensuring the financials are telling the right story so the CFO can correctly guide you and take your business to the next level. In these days of economic challenges and changes, many companies struggle with uncertainty about the future, seeking tools and resources to best position their businesses for financial success. Generally Accepted Accounting Priciples (GAAP) Financial reporting is an important part of business that communicates the financial performance and results of a company.
What is a Fractional CFO and Does My Company Need One?
It’s important to realize that a fractional CFO is not a CPA, controller, or bookkeeper. These financial roles focus on organizing past and current finances, which a good CFO could do and should understand well – but that would be an inefficient use of their time. As a startup founder, you’re probably tempted to take on the role of CFO to save money and retain control of the financial side of your business. You could technically do this successfully, but this approach can be risky and hinder your company’s growth and success. When ready, you can easily hire an outsourced CFO directly or through a SaaS fractional CFO platform that connects your startup with the right virtual CFO for your needs.
This is a much broader responsibility than that of a Controller whose primary responsibilities are producing monthly financials, overseeing daily transactions, reconciling all accounts, and closing the books each month.
There are formulas companies can follow to determine how many full-time employees part-time staff equal to. That will give you the full-time equivalent, which you can use to calculate staff. For instance, if you have four employees who work 0.25 FTE, they are equivalent, in work hours, to one full-time person. A fractional CFO can help startups identify tax deductions and credits they may be eligible for and develop strategies to defer or reduce their tax liability. They can also help startups prepare for tax season, ensuring that your tax returns are accurate and filed on time. Fractional CFOs can help with any financial task you agree on, mainly related to financial planning and analysis.
It can be beneficial to have a fractional CFO come in to participate in board meetings and bring fresh experience. Such interaction can be a two-way process by providing more insight to the directors and then communicating the salient points taken down through the company hierarchy. Just like a full-time CFO, a fractional one provides such expertise and at the same time offers excellent flexibility and favorable cost advantages to serve the needs of smaller companies. In addition to providing fractional CFO services, BerganKDV provides an array of business, financial and technology solutions. When hiring for a CFO or Controller position, you must look for candidates with the necessary experience and skills to thrive in the designated position, leading to a functional accounting department structure. Candidates should have a proven track record of success, strong communication, leadership, and analytical skills.