Growing a business requires strategic financial decisions, but some operations may not have the means (or need) to pay for a permanent CFO. This is where a fractional chief financial officer comes into play. Fractional (or part-time) CFO financial services are filling the gaps for small and medium-sized businesses looking for flexible alternatives to full-time executives.
A fractional CFO is a virtual chief financial officer who works for a company on a part-time or project basis. Most companies use fractional CFO services for a few hours per week or month, which is different than an interim chief financial officer. An interim CFO is hired to temporarily fill a full-time role compared to a fractional CFO contract for part-time financial support. This structure offers CFO executive expertise without a permanent employee price tag.
Just like a full-time chief financial advisor, a fractional CFO is responsible for providing strategic guidance and financial planning to drive business growth. Here is a high-level view of how small and medium-sized businesses can benefit from part-time chief financial officer services.
The average full-time CFO payscale range in Canada falls between $97,000-$329,000. This figure doesn't include the cost of recruiting a CFO or employee taxes and benefits. In a recent Deloitte survey, 70% of executives indicated cost as a primary reason for outsourcing.
Fractional CFO services don't have full-time employee expenses. As a result, companies can cut up to 50% in overhead costs or more depending on operational size and requirements. Additionally, a fractional chief of finance can identify cash flow opportunities to save more money.
Fractional CFOs provide a level of flexibility that is often unmatched by their full-time counterparts. Companies can customize and scale services from a part-time chief financial executive on an as-needed basis to achieve a particular goal or for ongoing processes.
Common Fractional CFO Projects:
Plugging a fractional CFO in a company can be done relatively swiftly to help get (and keep) financial processes on track. This keeps operations agile, which is invaluable during corporate transitions like a leveraged buyout (LBO).
Cash flow keeps the lights on, but it's also the culprit for nearly 82% of business failures. Fractional CFO advisors are often brought in when an existing team doesn't have the resources or experience to manage finances. In some cases, an existing CFO will hire a part-time CFO to navigate specific challenges.
An outsourced chief financial officer has years of experience in tackling a wide range of obstacles like cash flow issues, low gross margins, and high expenses. These insights make fractional CFOs highly adept at spotting shortages or excess funds to help companies overcome fiscal hurdles.
Rapid growth can be a risky endeavour without proper planning, which is why only 22% of new businesses have successfully scaled in the last ten years. One of the most valuable contributions of a fractional CFO director will be financial forecasts to serve as a blueprint for sustainable growth.
Bringing a part-time certified financial officer on board for budgets and forecasts can help companies determine when and how to leverage funding. Fractional CFOs also have experience in building relationships with potential investors to secure enough capital for future stages of growth.
Hiring a fractional financial operator can be the right choice for businesses that can't justify the expense of a full-time CFO but need help with reporting, budgeting, strategy, or compliance. Book a free consultation with one of our finance experts to find out if fractional part-time CFO services are the right fit for your operation.