Knowledge and Insights

In today’s hybrid environment, outsourcing is commonplace, and remote work has never been more accepted. Combining those shifts with the need for more financial strategy and leadership, your business could be in a prime position to benefit from a fractional chief financial officer (CFO).

A full-time CFO does substantially more than just maintain books and records and pay the bills for an organization. Often, a full-time CFO is charged with managing the accounting and bookkeeping functions, leading the budgeting efforts, raising capital, financial reporting, and being future-focused on business planning and forecasting projects.

A fractional or outsourced CFO should bring the same financial expertise to your company. That’s especially true when organizations are in growth mode, and a higher level of financial strategy, financial expertise, and sophistication is required to manage such growth.

HOW DOES A FRACTIONAL CFO WORK?

An outsourced or fractional chief financial officer is usually retained by an organization on a part-time or contract basis to meet certain short-term needs and long-term goals and ideally becomes an integral member of your team for years to come. Often, a fractional CFO works for multiple companies.

However, it’s important not to confuse a fractional CFO with interim CFO services, whose primary role is temporarily stepping in for someone on leave or bridging the gap until a full-time replacement is found.

HIRING A FRACTIONAL CFO

Hiring a fractional CFO is like hiring other types of executives, but finding someone you trust who also understands the daily financial challenges business owners face makes all the difference. Although an effective fractional CFO typically results in significant savings over hiring a full-time CFO, it still comes with a cost. Fractional CFO services generally cost between $3,000 and $8,000 per month, depending on the level of service required.

EVALUATING A FRACTIONAL CFO

If you’re convinced that a fractional CFO might be a good fit for your organization, here are other factors to consider as you evaluate candidates for the role:

• Education – In addition to a bachelor’s degree, a fractional CFO often obtains an advanced business and/or financial degree, along with the CPA credential and other financial designations.
• Experience – A fractional CFO should have at least 8 years of experience in financial management serving in that capacity and be familiar with leading practices and cutting-edge technologies that drive efficiencies across the organization.
• Expertise – A fractional CFO with a proven track record working in your industry and target market can hit the ground running. Aside from industry expertise and the ability to overcome financial challenges, they should also take the time to get to know your organization and its inner workings to be able to bring efficiency to your financial operations as your fractional CFO.
• Strong Communication – A good fractional CFO can boil the complex down into its simplest form and easily communicate with all levels of the organization. Additionally, you’ll want someone who is proactive and responsive, as well as accessible, so you are able to rely on them and get the advice you need when you need it.
• Professional Network – In certain situations, it’s not always what you know but rather who you know that counts. An experienced fractional CFO has developed a vast network of contacts who serve as mentors and referral partners that could ultimately benefit your organization’s cash flow over time.
• Professional References – Reach out to prior employers and professional references to obtain independent perspectives on the candidate’s experience, strategic planning capabilities, and work ethic in an effort to confirm their ability to meet your outsourced CFO needs.
• Strategic Vision – An experienced fractional CFO should be able to look beyond the numbers and help provide strategic direction for your organization, offering insights to help you achieve your goals and aid in growth.

FRACTIONAL CFO COMPANIES

Instead of hiring a sole practitioner to serve as your fractional CFO, consider hiring a CPA firm that specializes in fractional CFOs, accounting, and advisory services so that your needs are addressed by a qualified team and not just one individual who may not have the capacity to respond timely under certain circumstances.

Retaining a fractional CFO firm (as opposed to one professional) often affords you the option of bundling other services into a predetermined project fee, such as strategic planning, financial reporting, general financial strategy, tax compliance, and other business advisory services, so you can focus on what’s important – growing your business.

FRACTIONAL CFO BENEFITS

Fractional CFOs interact with a lot of business owners and possess unique and timely opportunities to bring fresh perspectives to your organization that you might not otherwise receive. Due to the nature and volume of their assignments, fractional CFOs also tend to be well-versed on the latest accounting rules, industry regulations, equity funding, trends, and technologies that can immediately enhance your risk management profile and your cash flow.

FRACTIONAL CFO SERVICES CUSTOMIZED TO YOUR NEEDS

Mercadien’s Outsourced CFO Advisory Team is here to help you and your organization. You deserve an affordable fractional CFO that you can trust, gives you peace of mind, and understands your organization and industry. We understand what it’s like not having a good solution for your full-time CFO function and the impact it has on your organization, which is why we serve as fractional CFOs and business advisors to dozens of organizations like yours.

If you have any questions regarding our Fractional CFO business or would like more information on the outsourced and fractional CFO services we provide, contact us today. And in the meantime, read our article on the Benefits of an Outsourced CFO.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.