Fractional CFO: What's a Fractional CFO and Who Needs One? | Honest Buck Accounting

As a savvy business owner, you know that having a CFO managing your finances can help you improve your profit margins. The problem is that based on the size of your revenues, hiring an in-house CFO won’t provide enough benefit to cover their salary. That’s where a fractional CFO comes in.

What’s a Fractional CFO?

A fractional CFO is a CFO that works for a fraction of the time of a full-time CFO. Fractional CFOs can range from a semi-retired accountant working part-time to a full-service accounting firm providing CFO services to multiple businesses. The advantage to going with a firm is that while you only pay for a fraction of a full-time employee, you can usually still reach your fractional CFO during all business hours instead of waiting until the next day they come in.

What Does a Fractional CFO Do?

A fractional CFO does everything an in-house CFO does. This might including the following.

  • Budgeting

  • Forecasting

  • Bookkeeping

  • Financial reporting

  • Cash flow management

  • Cost accounting

  • Compliance

  • Oversight of other accounting functions (payroll, accounts payable, accounts receivable)

  • Other special projects

The main difference between a fractional CFO and a full-time CFO is the amount of time they spend working for you.

How Does a Fractional CFO Help Your Business?

A fractional CFO helps you stay on track to meet your current and future needs. For example, when business owners or managers handle accounting as one of many tasks, they often put it off until tax time or they need financial statements for a loan. This leads to a last minute scramble where you may have to put aside other projects, work longer than desired hours, and hope that you can find all of the supporting records you need.

Business owners also sometimes have a hard time taking a strategic look at the future when they’re caught up in day-to-day operations. This might include planning for future growth or making sure you have cash reserves to weather a possible downturn.

Your fractional CFO’s job is to fill in the blanks for you. If you’re scrambling on near-term projects, they’ll remind you when mid or long-term goals need attention. If you’re more of a planner with a long-term focus, they’ll help you with the day-to-day details. The end goal is to allow you to not have to worry about accounting and finance while also making sure you get the information you need to make smart business decisions.

When Should You Consider Using a Fractional CFO?

You should consider using a fractional CFO if one or more of the following situations apply to you.

  • You don’t have the time or expertise to handle your business’s accounting needs.

  • You want to hire someone but don’t have the budget for a full-time position.

  • You don’t have enough accounting work for a full-time CFO.

  • You prefer to use outsourced services for your accounting needs rather than hiring support employees.

  • You need expert help for an important special project such as applying for a loan, selling equity, preparing for an audit, upgrading your accounting systems, or evaluating major business decisions.

Are There Any Disadvantages to a Fractional CFO?

The main difference with a fractional CFO is that they won’t be in your office living your culture every day. This could put a fractional CFO at a slight disadvantage when you’re asking for advice on how things align with your mission and values and not just your numbers. However, your CFO can still gain a strong understanding of who you are with regular meetings, phone calls, and emails. Further, there can also be an advantage to having someone who can provide an objective, outside-looking-in perspective on your plans.

How Does a Fractional CFO Work?

A fractional CFO works similarly to an in-house CFO or other senior employee who works independently while you run your business. A fractional CFO completes routine tasks on the agreed upon timeline while remaining available for any special needs. You can request financial reports on a monthly or other basis as well as any special reports you need to make business decisions. You’ll also have online access to your bookkeeping and accounting software, financial reports, and other files. Meetings can be on a set schedule or by appointment.

What is the Pricing Structure for a Fractional CFO?

Fractional CFO rates vary based on the services provided. For example, routine bookkeeping services may be bundled into a lower-rate bookkeeping plan, while high-level strategic planning will be billed at the rate of a senior CPA.

Many fractional CFOs offer a package of services for a fixed monthly rate. Special projects or additional work are billed at flat or hourly rates.

Do You Need a Fractional CFO?

If you don’t have the time or budget to handle your accounting in-house but want to make sure you’re meeting your financial goals and aren’t leaving profits on the table, you’ll probably want to consider a fractional CFO. No matter how big or how small your needs are, you can tailor fractional CFO services to exactly what you need.

Honest Buck offers a full range of fractional CFO, accounting, bookkeeping, and tax services. Contact us now to schedule a consultation and find out how we can help you meet your goals and make more money.

Rachelle CalinaComment