What Benefits Does a Fractional CFO Offer?

 In Accounting

Are you wondering what a Fractional CFO is, and if one could help your eCommerce business?

Well, look no further!

A Fractional CFO is your outsourced eCommerce financial executive, and they know the in’s and out’s of eCommerce accounting, but function on a much higher level than basic bookkeeping.

Our Fractional CFOs cost a fraction of the traditional in-house CFO’s, and provide all the same insights and guidance, with a specialized niche in eCommerce. Meaning, your Fractional CFO will speak digital.

Our CFO’s also come backed by a team of experienced eCommerce accountants and digital finance experts, meaning they don’t just help guide you to financial fluency, they will implement those strategies and protocols and have the back-office work done for you by their team of experts.

A Fractional CFO also provides oversight and recommendations on your business’s cash flow, financial forecasts, and benchmarking. They also create strategies to help guide you to financial fluency while steering you in the right direction. 

There’s lots more to it, so we’ve compiled these 11 advantages of hiring a Fractional CFO. 

1. Understanding Financial Performance

A Fractional CFO can tell you all about financial ratios and other parameters through which you can gauge your business’s performance. Having plenty of innovative and smart business ideas is one thing, but that needs to translate into impressive numbers to be really useful. After all, the purpose of an innovative and smart strategy is to improve your financial performance. 

You cannot manage something unless you can quantify it. Thus, to understand the effects that your latest marketing strategy, for instance, is having on your business, you will need to keep track of different financial ratios and parameters to see how well it is working out for you. Numbers and parameters take the guesswork out of management and tell you exactly how your business is faring. 

A Fractional CFO can tell you all about the parameters and financial ratios that really matter. Even if you do not have a financial background, you need not worry. Your Fractional CFO can tell you all about it in simple layman terms. 

2. Financial Advice

Based on the parameters and metrics calculated, your Fractional CFO can give you tips and tricks on how to improve the numbers. So you can go from good to great with the advice from your Fractional CFO. You will find that your Fractional CFO is a dependable partner that you can rely on for sound financial advice. 

If you are facing problems that SMEs commonly face, like slow cash flow, you can get plenty of useful hints from your Fractional CFO. 

3. Independent Review

Even if you have an in-house staff for tracking the numbers, facts, and figures that really matter, you still need an independent review. The trouble with an in-house staff is that they might present a rosy picture to please you and justify their performance. This is not an uncommon scenario. As with everything else, you need an independent expert opinion to find out what is really going on beneath the surface. 

A Fractional CFO is your best choice for such a situation because there is no financial pressure for presenting a rose-tinted view of your organization’s performance. You can rely on your Fractional CFO for a truthful statement about your financial performance since there is no financial incentive for the CFO to act otherwise. The report from your Fractional CFO can help you to validate the accuracy of the financial statements your in-house staff is preparing for you. you can also gauge the actual performance of your management and staff with accurate reports from the Fractional CFO. 

Financial reports from your Fractional CFO could also point towards any possible wrongdoing that staff may possibly indulge in. An independent report can help to uncover fraud or embezzlement that would otherwise not come to light without the intervention of an independent 3rd party.

4. Cost Savings

Hiring full-time staff is not easy for most small and medium-sized businesses. To hire qualified and experienced staff, you will first need a strong HR function. Small businesses and startups may not have the funds for running a robust HR function. That’s a cause of concern because without strong HR you cannot hire suitable candidates. Even after hiring staff, you need to pay high salaries, increments, and bonuses to retain them. You will also have to pay their taxes and provide benefits under the law as an employer. 

To sum it all up, to hire a full-time in-house staff, you need to have an HR function (and bear all of its numerous expenses), pay benefits, high salaries, and taxes. There is still the risk of hiring the wrong candidates which can create myriad problems. Qualified and experienced financial professionals demand a market-competitive salary to remain in your organization. There is the added risk of worker compensation claims. This threat is not to be ignored since such lawsuits are becoming all too common. 

You can do away with all of these problems and headaches by outsourcing your finance function. You will be able to save a lot of expenses and hassle since you don’t have to pay taxes and benefits that employers are required to provide. 

5. Service Par Excellence

Your Fractional CFO may have lots of experience in several industries and sectors. Providing services for businesses from all industries and sectors results in a high level of proficiency and unique expertise across several niches. Thus, your Fractional CFO should have a solid understanding of your industry and its requirements. With such diverse experience and financial prowess, you can, and should, expect stellar services.

6. Small & Medium-Sized Enterprises Best Friend

As described previously, keeping a full-time in-house staff may prove to be very expensive. While larger organizations may be insulated from these problems to some extent, small and medium enterprises will be hard hit. 

Small businesses are hampered by restricted cash flow. In-house staff can further stifle cash flow and bring down your already low-profit margin. Certain businesses like startups may not have enough funds in the first place to hire a full-time in-house staff. The cost of sustaining an in-house function may be prohibitively expensive. This could prevent your business from expanding or paying back debts. During tough financial circumstances, the associated high costs could have a stronger detrimental effect on your floundering business. They could even cause your business to collapse altogether. 

You can mitigate these risks through outsourcing. Lower associated costs will increase the bottom line, leave you with more funds for expansion, and make it easier to pay back debts among other numerous benefits. 

Even bigger organizations can benefit from a Fractional CFO. The Fractional CFO report can help to validate internally generated reports. 

7. No Finance Fluency, No Problem!

If you are a novice when it comes to financial fluency, you are not alone, and it is not a problem anymore. There’s an expert for that.  A Fractional CFO will help you to navigate financial complexities and assist you in both understanding and improving the financial well-being of your enterprise. 

As a founder of a startup or small business, you do not need a financial education for good financial performance. Your Fractional CFO can tell you all about the tips and tricks that will lead to enhanced financial performance. Instead of worrying about financial matters, you can focus on your core business activities. By outsourcing accounting and financial services, you will find that you have plenty of time and energy to focus on your key business processes. There is no need to get sidetracked into intricate financial matters when your Fractional CFO and a team of digital finance experts can do it all for you. 

Remember that one of the biggest problems that any entrepreneur faces is not having enough time. It can be even more problematic than a lack of funds. For new businesses and high-tech startups in particular there is always so much to do and so little time. You have only a limited amount of time in which you can consolidate your business. There may be innumerable technical matters to remediate especially if you founded a high-tech startup, software house, or other similar business. In such cases, there is simply no time for you to spare. You will thus have to outsource finance matters to the right service so that you have enough time at your disposal to solve core problems. 

8. Accurate Financial Statements

Accurate financial statements are necessary for so many reasons. One of the most important is legal compliance. Unless you maintain accurate financial statements and reports, you will not know how much tax you owe. You might end up paying too little or too much. Pay too much and your business will suffer an unnecessary financial setback. 

Pay too little and you run the risk of getting unwanted attention from the taxman. Paying less tax than what you truly owe means running the gauntlet of an IRS scrutiny. IRS agents could pay you a visit and ransack your financial records to find out what you owe. It is never nice to be treated like a tax evader especially if it was an honest mistake. Your rivals could even spread malicious gossip claiming that you were trying to cheat your way out of taxes. Even for a genuine mistake, the IRS could slap hefty fines for any amount that you owe. It is far better to avoid the embarrassment and losses that could possibly arise from a lack of financial expertise. 

Accurate financial records are also necessary if you plan on selling your business or raising extra capital. Investors will want to know your exact financial standing. For that, you need accurate statements. Updated and accurate financial records can help to bolster investor confidence. 

You also need accurate records for getting money from lenders. The importance of this cannot be overemphasized. The chief problem of SMEs is low cash flow which can stymie expansion. To help your growing business to expand you may need a loan at some point in time. But to get a loan from banks or other financial institutions, you must present accurate and updated financial statements. It is highly unlikely that any reputable lender will give you a loan if you are unable to procure reliable financial statements. Thus, a Fractional CFO can become a key player in helping you to obtain new capital!

9. Improved Revenue

Hints, tips, and tricks from your Fractional CFO often work in your favor for improved revenue and cash flow. By examining your records and financial statements, your Fractional CFO can, for instance, point out excessively high costs and give the advice to bring down the same to get you out of your cash crunch. Reducing COGs and lowering customer acquisition costs are just a few ways they can make a direct and positive impact on your bottom line.

10. Financial Strategy

No matter how lacking you may be in financial fluency, your Fractionalized CFO can help you to formulate a sound financial strategy. Your Fractional CFO will explain and implement the best ways of dealing with payables and receivables, and then have them done for you so that you can free up some much needed time and cash for the business. 

Even for a fast-growing business, it is all too easy to get mired in dire financial straits. In their zeal, ambitious entrepreneurs often try to expand too fast which can land them in financial hot water. If you have a healthy fast-growing business, you can explain the circumstances and business conditions to your Fractional CFO, and they will then layout an optimal financial plan that can help you to expand without stretching your finances too thin.

A Fractional CFO is even more important if you have too little cash and your business is in danger of going under. You may not be doing too bad from a business point of view. It’s just that the wrong circumstances have dried up your profit margin and all of a sudden, there’s no cash flow. For instance, you may have too many receivables, excessive debt, or slow-moving inventory. Very often, business owners are hardly aware of the issues that have led to a grim financial situation. Your Fractional CFO can point out all of these issues and also provide recommendations on how best to deal with them, before implementing them for you. Remember, not all Fractional CFO’s come with a team of digital financial experts backing them to help implement these strategies, but ours do. It’s key to have a team of eCommerce accountants to complement your Fractional CFO’s work, especially in the technology industry.

11. Tax Savings

Business owners cringe at the thought of the wild rush that almost inevitably ensues when the tax deadline approaches. Instead of rummaging through mountains of documents as the deadline approaches, it is far better to have a Fractional CFO, and a team of digital finance experts, who can handle the matter with finesse. Not only will it save you from high-stress levels, but it will also leave you free to focus on key business matters. 

A Fractional CFO can point out the different ways through which you can maximize tax credits, exemptions, and savings. 

Conclusion

There are many more benefits to gain from a Fractional CFO in addition to those mentioned above. So what are you waiting for?

Book a free call with one of our digital financial advisors now, or to get a quick and customized quote

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