The Benefits of Hiring a Fractional CFO for Your Small Business

A fractional CFO is an expert Chief Financial Officer who offers service in a part-time or contractual arrangement. This expert usually partners with companies to aid them in their financial challenges, strategy, and business implementations.

Given the services a fractional CFO can offer to your business, there are still small entrepreneurs who are hesitant to hire one due to the lack of knowledge about what these professionals can do. To shed some light, here are some of the benefits you can get from hiring a fractional CFO to help your small business.

What a Fractional CFO Can Offer to your Business

Like all other outsourced services offered, a fractional CFO can give you particular benefits an in-house CFO can not provide. This does not conclude that they are better than in-house CFO. However, they can have an edge compared to an in-house CFO in terms of expertise and costing. 

Here is the list of benefits that you can expect from a fractional CFO: 

Lesser Cost

Fractional CFO can provide services an in-house CFO can at a much lower cost. This strategy best suits small businesses as they do not have the luxury to hire a CFO on a full-time basis. Fractional CFO offers can help small businesses achieve their highest potential without hurting their pocket. 

The compensation you provide to an outsourced CFO will only depend on your company’s needs. You do not have to worry about bonuses and perks that are typically offered to an in-house CFO. As an entrepreneur, this is already a great deal and a huge cost saving in your end. 

Most fractional CFOs charge based on their client’s needs— typically, a fractional CFO charges their clients between $1,200-$2,000 a day. You can save up to 50% compared to hiring an in-house CFO that you need to compensate for more than $225,000 a year, plus benefits and bonuses.  

Instant Help

Searching and hiring an in-house CFO takes time. There are so many processes an in-house CFO candidate should go through before being hired. Opting for a fractional CFO can save you the time and effort, and in return, they can provide their service immediately. 

Whenever your existing CFO needs to leave immediately or has an emergency leave, a fractional CFO can save you and your company by filling in. You do not need to undergo another extensive search and hiring process to fill that void in your company. 

Flexibility

You can hire a fractional CFO and only let them handle specific tasks in your businesses. You can limit the functions they provide in your company, contrary to hiring an in-house CFO. An in-house CFO encompasses all the financial operations and insights of your business.

They are expected to nose around all the finances and operations of your business. If you want to have control over your CFO’s task or function, it is advised to hire a fractional CFO instead of an in-house CFO. 

More extensive Skill Sets and Experience

Extensive knowledge, skills, and experience is the most crucial factor that makes a CFO effective. A Fractional CFO is constantly improving their skills to acquire more clients, which will, in turn, give them more experience. 

As freelancers, fractional CFOs are always after CFO training, and seminars enhance their knowledge and gain certificates along the way. Other CFOs might also focus on the industry’s certain qualifications. 

With all the training and seminars these CFOs undergo, you can be assured that they can provide the same or even better service as an in-house CFO. 

Provides Outside Perspective

If you hire an in-house CFO, they may generate bias based on their relationship with your company. Desires and plans for your company may influence their opinion. Unlike when you hire a fractional CFO who does not have a personal connection to your company or your employee, they can provide independent and unbiased opinions. 

Their work will not be affected by your decisions, give a suggestion, and voice their opinions as outsiders.

Help You Raise Capital

Fractional CFOs can help you raise your capital from venture capitalists and angel investors. They can help you by preparing your financial report in a way that will attract investors. Due to their experience and expertise, they know what an investor is most attracted to and make sure that your financial report reflects that. 

If you are planning to hire a fractional CFO and want their help for capital raising, make sure that the CFO you hire has experience in fundraising, specifically in the industry you are in. Having a fractional CFO prepare your financial record will increase your chance of acquiring funding for your business. 

What Should You Expect From a Fractional CFO?

A CFO has a wide range of responsibilities in a company. Their functions are beneficial in small businesses as they are the ones who provide the owner with a thorough understanding of your business’ finances. With this, they can guide you on your decision making, especially regarding finances. 

 

A CFO can also help you reduce any financial risks at present and in the future. Equipped with their expertise, a CFO is a very important employee of a company as the owner who needs to oversee your business, handling your business’s financial side will be overwhelming. 

 

If you hire a fractional CFO, you can entrust all the financial aspects, including Accounting, HR, Legal, and treasury. You can add or take away tasks from your CFOs plate, depending on where you want them to focus. 

 

Takeaway

A CFOs service is very convenient, whether you are just starting up or operating for years. They allow entrepreneurs to focus on other things while they focus on the financial aspects of a business. However, choosing the right CFO will significantly impact how your business will grow, so it is best to be familiar with your options and how you can benefit from them.

 

Author’s bio:

Lauren Cordell is a full time writer by profession. She works with various sites and magazines dedicated to finance and business. In her free time, Lauren likes to stay at home and read her favorite novels.

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