CEO Insider

The hottest finance trend in business today may be what your business needs

Fractional Chief Financial Officers (CFO) are in high demand these days.  A fractional CFO is a highly qualified business finance professional that your company can hire on a part-time basis.

Small to medium-sized businesses are often at a disadvantage due to smaller budgets and not enough work to occupy a full-time CFO and have difficulty attracting top talent. However, a fractional CFO offers a solution.  When you hire a fractional CFO, you get the best of both worlds: top talent at a fraction of the cost.

Chief Executive Officers (CEOs) need to have financial guidance from a professional.  CFOs are often considered the right-hand person and confidante to the CEO. It is a valuable relationship for a CEO to invest in.

Fractional CFOs can be brought in on a contractual basis, limiting the need to make a long-term commitment.  You may need to hire them for a particular project, or you have the option of keeping them on retainer over the months and years.

Fractional CFOs offer flexibility for your business as it grows and your business needs change.

Hiring a fractional CFO is ideal for keeping costs low without sacrificing the valuable advice of high-level finance professionals.

When you are searching for a fractional CFO, remember to hire based on professional credentials and experience. Referrals are a great way to find a new hire.

Ways you know your business is ready to hire a fractional CFO:

  1. You have more financial questions than answers
    When you have questions or need a trusted advisor to strategize, it may be time to bring on a strategic partner. Hiring an expert in their field will help you problem solve and create realistic and profitable plans for your business.
  2. Your team and business are growing
    Not all growth is created equally, and when you are in high growth periods, you need to be cautious and ensure you have the capital and structure to navigate the growth period with ease. A CFO is there to guide you through fast growth while mitigating any financial risks that can threaten your business.
  3. You need to raise capital for the business
    Having a trusted advisor who knows how to project forecasts and check your blind spots is an asset to the team. The CFO can show you where you can save money and increase profit margins so that you keep more money in your pocket.
  4. Optimize growth strategies
    Your business may have hit a lull in growth, and bringing on a fractional CFO will help you create financial strategies that will boost growth while maintaining profit margins.
  5. You need to increase profit
    When your business isn’t as profitable as it should be and you need to create a cost-cutting strategy to save money, a fractional CFO can provide an objective review of expenses.
  6. You need to understand the financial health of your business
    Having a fractional CFO to advise you on the financial decisions you are making in your business is helpful.  They can meet with you monthly to review financial reports and track KPIs.  They can interpret the financial results to you.
  7. Financial scenario analysis
    When you are presented with more than one option in your business and need to choose the most profitable choice, a CFO can guide you through scenario analysis. They map out the competing choices and offer projected growth charts to see the opportunities for your business.
  8. Audit support
    If you are undergoing a government audit or any other type of audit and need help navigating it, a CFO can guide you with their expertise.

The bottom line is that there are various reasons your business may be ready to add a fractional CFO to your team.  There are benefits to having a finance expert on your team, and they can guide you through many financial issues while increasing profit in your company.

If you see a need in your business now, don’t wait until you have put your business in a financially risky position.  Professional accountants are well trained in helping you avoid financial pitfalls and increase the profit in your business.  The return on investment for this hire will likely be considerable.

Written by Melissa Houston.

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Melissa Houston
Melissa Houston is a Certified Professional Accountant (CPA) and a Financial Strategist for CEOs. Melissa helps successful business owners increase their profit margins, so they keep more money in their pocket and build their net worth. Melissa is the founder of The Business Society™ blog and is host of The Business Society™ podcast.

Melissa Houston is an opinion columnist for the CEOWORLD magazine. You can follow her on LinkedIn. For more information, visit the author’s website.