Understanding the Value and Importance of Fractional CFO for Your Business

Staying financially savvy in a business is much more than tax compliance, but also about cost control, cash management, pricing strategies and other factors that work towards improved profitability and productivity. With annual revenue of $500K and above, you may consider hiring a fractional CFO to help develop long-term financial and operational goals and strategies and also maintain financial controls, preserve assets and gauge your economic progress, all of which are native to fractional CFO services.

You might ask yourself, is a fractional cfo worth it? Do you need a fractional CFO for your business? The chances are high that you do. You first need to understand their value and role in your location before deciding to have one. Here’s why you need to consider a fractional CFO for your business today!

Redefine your finances

To redefine your finances and find a better way to minimize costs without compromising the quality of your product or services, a fractional CFO is for you! You will still be able to make profits using the services of a professional with vast experience and knowledge that redefine your financial standings. They design and implement financial strategies that are tailored to suit your needs, desires and goals of the business. They know of techniques that have worked for other organizations they have dealt with and could use the same strategies to improve your financial standing. 

Planning and Growth

A fractional CFO provides intense guidance on budgeting and cash-flow. They give you ideas on how to capitalize on opportunities that may lead to improved finances and constant cash-flow. They also provide professional advice on how to strike a balance between saving and expenditure. A fractional CFO is usually growth-oriented, and when you hire their services, they act as your business partner to device growth strategies and implement every technique in the book. They also help with fund-raising to ensure the business has enough money for sustenance. 

Mentorship and Development

A fractional CFO does not only fix your financial problems but also ensure the internal finance staff are mentored in ways that will help the company in the long run. They train and develop the finance staff on how to manage the company’s finances. With their expertise, they can train and equip the finance staff with knowledge and skills of managing finances, taking advantage of opportunities for more sales and also how to be tax compliant. 

Cost-Efficient

A significant value that a fractional CFO adds to your business is that they are cost-efficient. Their rates are usually hourly or a flat rate, compared to hiring a full-time CFO; this is a cost-cutting strategy.  It is more beneficial compared to having a full-time CFO, who may need a salary as well as other perks like health insurance, retirement benefits and paid time off. For a company that is just starting, and is still struggling to have their feet down where finances are concerned, a full-time CFO may be far-fetched. A fractional CFO being a contractor means he has worked with other clients and therefore brings years of experience and expertise to the table, borrowing strategies that worked for other companies and tailoring it to match your needs. 

Detailed Reporting

Your financial growth could be dependent on something as little as having the right reports and recommendations for future use. Sometimes your business may lack clarity due to lack of the correct accounts. A fractional CFO adds value to your business by providing timely and detailed reports, coupled with recommendations and strategies to achieve your business financial goals. The information could be weekly, monthly or quarterly. These reports help in tracking your performance and also in crucial decision-making processes.

Managing Financial Crises

Most fractional CFOs get hired when the business is going down the drain in matters finances. It is not an uncommon sight for small companies to hire a fractional CFO to come in during a financial crisis and take them out of the trenches. Fractional CFOs understand this too well and have experience working with other companies who were in the same place. Their most significant value is they bring light into an otherwise dark financial situation, and provide cash management controls to ensure the business never goes through a financial crisis again. They provide strategies to avoid such collapse in future, and also how to combat it when it happens. 

Managing finances can be frustrating to say the least, especially when coupled with business development strategies. It can be overwhelming to small business owners who need substantial financial numbers and a road map to growth and profitability. Other times you may be having a board meeting that requires financial data and strategies; as well as ways of opening doors to new opportunities. A fractional CFO comes in handy at this moment to help you figure out your finances and how to be a step ahead of the competition.