What Does a Fractional CFO Do?

Fractional CFO Do

A fractional CFO (Chief Financial Officer) is a highly-qualified expert that provides a wide variety of financial services. They can be extremely useful for startup businesses, but can also prove invaluable to those that are well-established as well.  

The main selling point is that, since the CFO is fractional (outsourced), they are not a full-time employee on the company payroll or even an employee at all. Outsourced CFO services are not unlike that of a high-end freelancer that performs work for the company upon request and only as needed. A contract can begin or end whenever the company desires, depending on when work is necessary.

This can be ideal for new companies because this experienced professional is not on the payroll, does not need to be trained or onboarded, and requires no benefits or other necessities for hired staff. This saves the company a lot of time and money that can be put to better use in building growth and increasing productivity. 

But the question remains – what services can a fractional CPO provide for a business?  

Optimize Financial Aspects

As finance is the CPO’s major aptitude, there are many ways that they can help with company bookkeeping and accounting. 

They can evaluate and improve a current accounting system or even propose new and improved systems to streamline work and increase operational efficiencies, such as implementing online check writing or other efficient ways to keep track of payments and spending. A CPO has the knowledge and experience to evaluate cash flow and provide an analysis of the company’s financial strengths and weaknesses.

Some additional responsibilities include suggesting specific cost cuts, evaluating financial reports and contracts, improving cash management, managing financial reporting, and even talking to financial institutions, clients, and business contacts on the company’s behalf.

They can even develop feasible long-term plans to promote the future of the company, setting goals and providing steps to chart success with a specific end goal in mind.  

Plus, one significant advantage of having an outside party come in is that it provides an objective viewpoint of the financial situation, allowing the CPO to offer invaluable input on better ways to improve fiscal procedures that run the gambit from taxes to keeping records. 

Offer Scalability

One of the greatest features of fractional CFOs is their inherent flexibility. In other words, a company can make as great or little use of them as they choose. Depending on the business budget and needs, the company can assign specific responsibilities to the CFO, then, as the startup grows, enlist their help in additional ways. 

Similarly, if the company decides to take on a great amount of the burden themselves, they can cut down the part the CFO plays or even stop using them entirely. They will remain available in the interim, ready to offer their services again as needed.

The CFO’s job is to do what they can to improve the business, and sometimes that means helping a growing business stabilize enough that their services are no longer required.

This is a normal part of the job, so companies can rest assured that the outsourced expert will not be offended if the contract ends.  

Train Employees

As an expert in their field, CFOs are great at developing a financial department. This includes being able to provide on-the-job training for a company that wants to establish its own financial team or for one that wants to help its team reach the next level. 

This can involve assessing current employees and designing a plan of action to improve their knowledge and skills for their specific roles as well as hiring new personnel that seems like experienced fits for a new or evolving team. 

Using their extensive experience handling these job duties, CFOs are ideally suited to provide the guidance, techniques, and knowledge that employees need to perform at optimal levels.

They can also promote a more positive work environment, making changes and implementing suggestions to improve morale and encourage increased productivity for team collaboration and individual performance.  

Manage Specific Projects

As well as broader, overall advice, fractional CFOs can take a more direct role in specific projects. This can involve raising the capital to fund the project, hiring or managing the team responsible for carrying out the job, organizing the steps and goals necessary to complete the task, and dividing up job responsibilities. 

Once the project officially begins, the CFO will manage the process, adjusting the course as needed to increase productivity and efficiency. Having an expert involved can save a lot of time and money while reducing the risk of costly errors, ensuring smooth workflow, and increasing the quality of the end result. 

Provide Exceptional Leadership

Even though the fractional CPO is not a payroll member of a company, they can still perform leadership roles within it, even sitting on the board and participating in staff meetings. 

As such, they can provide a solid presence, ensure that financial staff understand their job roles, and establish a long-term strategic plan for handling audits, tax reporting, budgeting, and other important financial responsibilities.  

The Bottom Line

The sheer amount of time and money that a company can save by employing an outsourced CFO cannot be understated. With the flexibility to use them as needed rather than keeping a full-time employee on staff (especially during downtime), they can fit nearly into the company’s plans, serving as an objective observer and expert advisor. 

From training existing staff to filling the major role themselves, there is a multitude of benefits to employing a fractional CFO. From leading projects to redesigning processes and procedures to optimal performance, this professional can ensure that a business excels while encouraging future growth. 

While a fractional CFO can be as involved in the company as desired, they can also serve in an outside capacity, providing an overall analysis of how the startup is performing and the effectiveness of its input and output. 

Even if they are only needed from time to time, the knowledge that such a trained and experienced individual is standing by as needed can be great for a company’s peace of mind.