What to Look for in Fractional CFOs

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When a company is ready for finance leadership and strategic guidance but not yet ready for a full-time CFO, a fractional CFO can be the answer. Fractional CFOs help startups, nonprofits, and small and medium size businesses build off their early success, to make smart financial moves, improve financial health, and prepare the company for an even brighter future.

The Benefits of a Fractional CFO for Startups and Nonprofits

A fractional CFO fills a critical need at a critical time in a young company’s growth journey. Here are some of the other benefits of fractional CFO services:

A fractional CFO is a cost-effective solution. Wary of hiring a full-time CFO yet know your company is missing the level of expertise and insights that only a CFO can provide? A fractional CFO does not come with the overhead associated with a full-time senior executive.

Fractional CFOs bring strategic guidance and expertise. For companies that have yet to benefit from CFO expertise, fractional CFOs introduce a new layer of guidance and experience that will lead to actionable insights and better informed decision-making. Their strategic advice ensures that the company’s choices factor in the company’s financial position, and current and future market conditions.

Fractional CFOs offer scalability and flexibility. Hiring a fractional CFO is a step toward scaling the finance organization, an ideal solution for companies anticipating growth.

When to Look Into Fractional CFO Companies

Is it time for your company to make a strategic change? Has the board expressed interest in CFO-level expertise? Are the majority of leadership’s decisions based on instincts—or real data and insights? Is the finance organization running smoothly or constantly falling behind (i.e., do you have a monthly close process)? A fractional CFO can lead the finance team with systems and processes appropriate for the company’s size and growth stage. And the fractional CFO can help the company pursue and make the right strategic moves.

Consider some of the many reasons to add a startup fractional CFO to your organization:

You need the long view. A CFO’s mindset is strategic at all times. Close attention is paid to historic trends and current data points to inform what moves to make, whether they are considering potential growth or exit strategies. A fractional CFO can become an important mentor to leadership.

Your finance team is in need of leadership—as soon as possible. A fractional CFO can lead all fundraising efforts and explain the company’s potential to prospective investors like no one else can. This role can also be responsible for interacting with current investors and the board, as priorities are set and strategic initiatives are explored.

You need the unique expertise of a CFO. CFOs see connections between the numbers and the company’s narrative—they are uniquely qualified to not only explain what has happened but what it means for all stakeholders and the company moving forward.

When considering your options for fractional CFO companies, be sure to inquire about fractional CFO pricing (would a fixed fee plan be most appropriate for your company for now?), the job description and scope of responsibilities, along with the monthly cost. The best fractional CFO companies are transparent about their services, will adapt their services to your needs and budget limitations, and be up-front about what you can expect from them.

What Is the Cost of a Fractional CFO?

The cost involved in using fractional CFO services depends on the number of hours the CFO will be working for the company per month, and the scope of responsibilities involved for the rest of the fractional finance and accounting team.

You could inquire about a fractional CFO monthly cost that will work for your budget at this time; in any fractional CFO services agreement, you will want to have an understanding of the scope of responsibilities and how often the agreement should be revisited.

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