A fractional CFO is a outsourced professional who can supply all of the business insight of a full-time chief financial officer at a fraction of the cost. It’s an incredible opportunity for a small business to gain enterprise-level insight on a part-time basis.
What Does a Fractional CFO Do?
A fractional CFO accelerates a small business by closely tracking finances, improving operations, and providing customized reporting and analysis. Getting high-level business insight is not for elite corporations. It’s at your fingertips.
- Define key metrics that will improve cash flow
- Alert you of products and services make you the most money
- Illustrate the most successful distribution channels
- Tell you which marketing campaigns have the greatest ROI
- Measure the accuracy of sales forecasts compared to prior result per quarter and year
- Explain what’s needed to improve weekly, monthly, quarterly, and yearly cash generation
- Analyze the cost of vendor services and the rise in associated costs
- Tell you where the business has grown the fastest and why
- Describe changes to pricing that will improve sales and profits
- Illustrate the greatest risks and what actions could be taken
- Alert you of what new technology would improve performance
Who Needs a Fractional CFO?
Many small business owners assume they can’t afford a CFO or such insight is limited to enterprise-level corporations. Nothing could be further from the truth. Actually, any business can benefit from added financial insight. Who is a good fit for a fractional CFO?
- A business owner who needs an additional team member who can put bookkeeping data into action
- An SMB that has no one doing financial reporting
- An operation that requires employees learn accounting software
- An owner who doesn’t have the know how to put checks and balances in place to safeguard against fraud
- A retail or ecommerce business who can utilize someone who knows how to streamline and automate operations
- A small business that requires customized analysis and financial reporting on a regular basis
Why Hire a Fractional CFO?
- Improve cash flow
- Receive accounting software training and integration
- Avoid tax and banking errors
- Improve vendor relations and contracts
- Grow your business
- Address bookkeeping gaps
- Get custom reports
Ways to Use a Fractional CFO
Improve Cash Flow
Cash flow relates to a company’s ability to remain agile and use assets to maximum benefit. A small business owner may get a summary once per month or quarter from a bookkeeping service. A CFO doesn’t just record the numbers – they transfer data into usable information. In addition to realizing your current cash flow situation, an outsourced CFO will help forecast cash flow. You’ll be advised upon your current cash flow situation in addition to having the knowledge to make informed business decisions moving forward.
Train and Integrate Accounting Software
Are you using the right accounting software? Is is properly setup and integrated? Do you have experience linking your software with third-party applications for even more business intelligence? Is your QuickBooks dashboard setup for peak performance? These are things a fractional CFO helps troubleshoot and address. Even better, a CFO can train your employees to better use accounting software for improved business insight and results. Furthermore, a CFO can produce custom reports utilizing QuickBooks and other accounting tools. A custom report is unique to your business and shows data as it directly relates to your goals without messy jumble and numerical confusion.
Fix Errors Related to Taxes, Banking, Etc.
You don’t want to fret about reporting to the IRS in a quarterly or yearly fashion or worry about a possible audit. Furthermore, a fractional CFO may have experience when it comes to mergers, selling intellectual property, or receiving outside funds from banks or investors. A CFO can draw attention to potential hazards so you can mitigate risk and error. Also, a fractional CFO can take care of banking for a small business.
Improve Vendor Contracts, Price Points, Etc.
A part-time CFO can analyze current vendor contracts and ensure you’re getting the best rates. Furthermore, a CFO is a great addition for an ecommerce or retail business that can benefit from real time analysis of price points. Remain agile and pivot pricing in your favor by keeping a close watch on your books. It requires meticulous analysis. Many small business owners don’t have the time to devote even if they have an accounting background or a familiarity with accounting software.
Facilitate Growth and Goals
Ultimately, a fractional CFO helps you attain your small business goals. However, there isn’t a catchall solution for small business owners. A CFO will create a customized plan for your based on your goals and wishes for growth. Think of it like customizing your QuickBooks dashboard for optimal use. That’s what a fractional CFO does related to your entire business plan and structure. They will provide the needed insight to operate your business for peak performance.
Address Bookkeeping Gaps
Ask your chief financial officer about bookkeeping gaps. Conducting an overview or doing a mini audit of your present bookkeeping system unveils information gaps related to the quality of reports being produced, incorrect information related to tax returns, and potential risk related to fraud or theft.
Business gurus and magazines rave about particular or newfound formulas and business metrics that will accelerate a business. The truth is every business is too unique to benefit much from such generalized recommendations. However, a CFO will tell you what business metrics matter the most to your business. Through time, those important metrics may change given your business goals. So, a CFO can serve as a business news filter, illuminating what business metrics matter the most to your business at any given time.
Foster an Ongoing Relationship
Ask your fractional CFO about what you can expect regarding ongoing contact and how they fit in with an existing bookkeeper and accountant. In some cases, your fractional CFO can perform your bookkeeping too. Regardless, you want a clear understanding of how the part-time CFO will integrate with your full-time team and other outsourced services, such as a tax accountant.