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.
Here’s a helpful lowdown on fractional CFO services, including what to look for and what to think about when making a fractional CFO services agreement.
What Is a Fractional CFO?
Here’s the simplest definition of a fractional CFO: A fractional CFO brings senior level experience to startups, nonprofits, and small and medium size companies for a set number of hours or on an as-needed basis.
Whether you opt for a fixed fee rate that depends on the range of accounting services needed, or pay by the hour, fractional CFO services can be a scalable, cost-efficient solution for your company. This role tends to be most fitting for venture-backed companies that are seeking out CFO expertise at a doable price point while enabling the company to stay flexible in its early growth stage. Fractional CFOs have steep experience in this role, so they can seamlessly lead the finance team once they get to know your business. Depending on your budget and your needs, their responsibilities can include:
- Overseeing financial operations, and managing the finance and accounting team.
- Developing and managing the budgeting process, forecasts, and cash flow management.
- Mentoring and guiding company leadership as they consider and pursue strategic changes.
- Developing performance measurements that tie into the company’s strategic goals.
- Determining investment strategies and fundraising plans.
- Representing the company in investor presentations and board reports.
A company starts looking into fractional CFO companies when they know they need the specialized expertise of a CFO but are not prepared for the salary, benefits and commitment associated with a full-time, traditional CFO. Fractional CFOs dedicate a certain number of their working hours toward the company per month.
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.
How RoseRyan’s Fractional CFO Services Can Help Your Company
RoseRyan, a ZRG company, tailors all our services to each client, bringing companies and organizations fractional finance expertise when and how they need it. This means we will work closely with you to determine which type of arrangement would make the most sense at this time, based on your budget, stage of growth and situation. Our deeply experienced, versatile consultants seamlessly integrate with the team to bridge leadership, talent or capability gaps, and unlock the potential in the business.
Looking for fractional CFO services? First, we want to learn more about your company. Fill out our contact form, and we’ll be in touch to learn more about the challenges facing your finance team and your overall business—so we can tailor our solutions to you.
