What Exactly Is an Fractional CFO, and Why Is This Role Important For My Organization?
Why do so many businesses fail in the first few years? Financial mismanagement. Your company's finances sit at the heart of much of it's success or failure.
Businesses typically hire bookkeepers and/or accountants early on to manage basic required financial tasks (payroll, invoicing, taxes). At a certain point the company's growth demands more elaborate financial strategy and management, and that’s where a chief financial officer (CFO) comes in. However, full-time CFOs can be costly, and that’s why a fractional CFO is an elegant solution.
What Are Key Aspects of the Fractional CFO?
An online Chief Financial Officer is a CFO who works on a remote basis to deliver the same services and benefits as a traditional CFO.
At the core, a vCFO’s intrinsic value is the ability to offer reliable financial guidance to a business without the attached cost of full-time executive employment.
Many companies are not prepared for the expense of a fulltime executive position. The fractional nature of the Operational CFO allows for right-sizing the amount of support needed.
What makes our CFOs unique ?
Many traditional CFOs are purely financial experts and this is typically a significant need for businesses. But what if your CFO could also understand operational activities as well, in addition to the financial?
Our Fractional CFOs can do just that. Not only do they bring a solid financial background, both in terms of education and years of experience running the P&Ls, capital requirements, budgeting, cash flow, ROI and the like, but they've also sat in Operational roles that interface with all aspects of a business, from the ordering of raw materials, through production, all the way to quality assurance and product delivery.
When you have an operationally-minded leader, who can also assign risk and value to business decisions and connect to overall company strategy, that is a powerful contributor whom you want on your team.
Not only do our Fractional CFOs have this unique blend of complimentary skills, they have a diverse background across industries, and bring with them deep knowledge of processes and best practices which can be applied to your own business model, helping to move your company from "good" to "great".
Let's see how we can help you today!
How Does a Remote CFO Differ From an Accountant?
We already have an accountant (CPA), why do we need a CFO?
These two individuals execute vital, but different, roles within the firm and it's important to understand the difference.
Accountant: At their core, an accountant specializes as a Tax Professional and is key to ensuring you are properly filing, limiting risk or exposure, as well as getting the best value by understanding tax law and taking advantage of all available measures for limiting tax liability. There are certainly other activities some CPAs will do for you, however, their primary function is tax law and compliance.
CFO: A CFO on the other hand is committed to analyzing, understanding, and advising on decisions to support a sound long-term financial strategy which will ensure the company's ongoing success. This includes auditing and inspecting the firm’s financial records, tax filings (output from the accountant's activities), and financial reports.
A CFO focuses on developing and executing high-level financial strategy.
A Fractional CFO does this with broad knowledge and understanding of the business' operations so that financial and operational concerns are considered together and support each other towards reaching common goals. They deliver their value by ensuring every department of your firm (as well as interactions with 3rd parties, such as vendors and customers) are operating at peak performance. The focus will be on long-range operation al excellence, not solely on short team goals.
An effective Fractional CFO should have a wide range of industry, corporate, and professional business experiences.
Lastly, the Fractional CFO will help your company understand the ideal capital structure for your needs and attract funding for future business growth, whether through private investors or in with a bank. This is accomplished by developing sound financial forecasts and telling the "story" of your company in support of funding negotiations.