, ,

Why should you hire a Fractional CFO? 

Tokyo cityscape aerial view

Business owners who are operating midsize businesses without a CFO might not think they need this crucial role. Or, in many cases, the idea of bringing in a C-Suite stakeholder who would require either a hefty salary or equity is unappealing.  At Momentum CFO we’d like to take a moment to outline some of the benefits of choosing to work with an outsourced CFO.  

We know that growing a company is a complex balance of many factors: Many entrepreneurial CEOs and founders shoulder multiple roles of not only CEO, but also COO and CFO.  As companies grow, however, bringing in a fractional CFO with years of experience can make the difference in how quickly and efficiently your business can scale. 

For businesses that are in growth mode, a solid financial strategy is essential to prepare for the next phase of business growth while continuing to be profitable in the present. A fractional CFO is part of the C-Suite decision-making team and can help guide your business to profitability and long-term stability. 

Ways a fractional CFO can help you include: 

Expertise:

A fractional CFO will be highly skilled with years of professional experience. Their expertise will bring an invaluable new perspective to your business. They can review company performance and provide a detailed analysis and plan to address any existing financial issues. 

Strategic planning: 

Fractional CFOs can analyze your business’s financial picture and provide high-level strategic guidance that will optimize revenue growth.

Exit strategy: 

If your business is planning for an exit, a fractional CFO can help you package your business’s finances attractively and prepare all the necessary documents to get the best possible sale price.

Transparency in reporting: 

Many business owners don’t have the clarity they need to grow their business because they either don’t receive or can’t interpret their financial reports on a regular basis. Fractional CFOs help interpret the company’s information and work with their management team to create a strategy that succeeds. 

Meaningful insight: 

Are you using the insights you receive from your financial reports to affect the day-to-day decisions you make as a business owner? Momentum CFO believes that all reports should be timely, accurate, and provide meaningful information on which to base decisions. Some business owners receive extensive reporting, and their financial understanding is deep enough to know what the reports say about profitability, productivity, and cash flow. However, even with this level of understanding, often the CEO does not change strategies based on the numbers in their reports. 

A fractional CFO will look at the reporting and not only interpret the data into practical insights, but also suggest strategic changes that the business can implement to improve operations and increase profitability.

Benefits of working with a fractional CFO include: 

Reduction of overhead costs. Costs associated with hiring full-time high-level employees can be high. With outsourcing, companies only pay for the actual services being rendered. Business owners are able to eliminate costly benefits packages, payroll costs, paid time off, retirement, vacation, sick days, and workers’ compensation. When you hire a fractional CFO, you can save up to 40% of the monthly costs associated with hiring a highly skilled employee.

Having the best numbers in play. When you choose to outsource, you can access a higher caliber of employees with more years of experience than you would otherwise be able to afford. When it comes to outsourced accounting, having accurate numbers not only gives you insight into where your company stands in the present but allows you to forecast where your organization is headed.

Save time so you can focus on running your business. When you bring on a fractional CFO, you get leadership focused on a specific deliverable.  This frees up time for your business’ stakeholders to manage other pressing issues around business operations. By delegating responsibilities, you are able to direct your focus toward the growth of your business.

Detecting and preventing fraud. Hiring an outside team of accounting professionals can help to detect discrepancies in your books. Outside CFOs and Controllers can also implement the proper protective procedures to protect your business from potential threats in the future. This can help save your business thousands of dollars. The majority of fraud in accounting comes from lax controls in middle management. 

From the visionary role of the CEO to the operational granularity of the COO to the technical insights of a CTO to the strategic financial acumen of a CFO, the C-suite is important to growth-oriented mid-sized companies. Momentum CFO’s clients have seen, hands-on, the difference that CFO insights make in a company’s ability to pivot, manage growth and prepare for exit. A fractional CFO is the ideal stepping stone for many mid-sized businesses who need the insights a CFO can provide but are not ready to commit to a full-time C-Suite stakeholder.