Financial tasks can be overwhelming for small or growing businesses. Procedures, reporting, and forecasting can often feel like a bad dream. A fractional chief financial officer (CFO), or Fractionalized CFO, can help you respond to these problems and more, ensuring you can execute your goals and position yourself for sustained financial success.
However, you might have questions about the difference between a controller and a CFO. You might also wonder what makes a CFO and a fractionalized CFO different. This blog discusses those differences and examines what duties fractionalized CFOs fulfill for businesses.
At Fully Accountable, our full-service team of accountants, CFOs, and data analysts can help you achieve sustainable growth. Continue reading to learn more about what a fractionalized CFO can do for your business and how to choose the right team for your financial framework or small business financial management struggles.
What Are the Differences Between a Fractional CFO and a Controller?
CFO Vs. Controller Responsibilities Explained
To examine the CFO vs. controller comparison, let’s take a closer look at the individual responsibilities involved in each role. A controller describes a professional who oversees the preparation and maintenance of financial reports such as balance and income sheets.
CFOs are the senior financial executives responsible for managing the financial strategy within an organization. The following comparison offers a more in-depth look at the differences between a controller and a CFO.
Controller
Controllers perform simple bookkeeping tasks such as compiling records and issuing reports. They maintain these statements’ accuracy and facilitate proper filing techniques. Controllers might also assist CPAs during tax season to streamline compliance.
CFO
The role of your CFO is to approach your company’s financial health from a broader, more strategic vantage point. They offer executive-level financial planning, high-level data analysis, and strategic initiatives.
Another key difference between controllers and CFOs is that CFOs manage the company’s relationships with executives and investors, procure capital, and manage and monitor equity and debt activities.
Both controllers and CFOs are imperative for your business’s financial health and performance. They perform key procedures and divide your company’s financial practices into specific roles and responsibilities.
What Does a Fractional CFO Do for a Company?
A fractional CFO, meaning a part-time CFO, can be a crucial addition to any company seeking help with its finances. The fractional CFO job description can be ambiguous, as the job can change from one company to another. However, as a financial professional, an experienced CFO can help maintain your company’s financial viability on a contractual basis. Fractional CFOs help solve a variety of issues due to their wide range of industry-specific financial expertise, which is a result of working closely with different companies in various industries.
Though the overarching responsibilities are relatively straightforward for CFOs, the specifics of what they do for these companies depend on the company’s individual needs. For example, a company might need to raise capital or implement a new accounting system altogether. They might also need to strategize for a specific project, like an audit.
Forward Facing Financial Visibility
Fractional CFOs streamline your business’s forward-facing financial visibility, helping prepare for growth and scaling businesses’ struggles. The financial forecast is one of the most critical responsibilities fractional CFOs perform. They issue short and long-term analyses and projections that help companies improve their financial forecasting and visibility, as well as help manage their cash position requirements.
Growth Management
CFOs are indispensable when looking for cost-effective financial growth solutions. Scaling businesses need all the services fractionalized CFOs provide. Additionally, because salary requirements and hiring processes are distracting when a company is in scale mode, you can use their services only when you need them. After they fulfill their obligations to your company, you can reevaluate your contract and only pay for what you need.
Goal Creation and Achievement
Successful businesses understand how to set strategic financial goals and reach them within their defined timeframes. Successful fractional CFOs help companies raise hundreds of millions of dollars in debt and equity funding.
Fractional CFOs help businesses with their goal creation and completion by:
- Organizing company books
- Producing financial forecasts
- Intuitive problem-solving skills
- Conducting board meetings
- Term sheet and contract analysis
- Networking and cultivating strategic business partnerships
Additionally, fractionalized CFOs can complete the following tasks for your business:
- Cash flow analysis
- Optimized gross margins
- Reorganized expense sheets
- Making operations more efficient and implementing new financial procedures as you scale
- Cutting costs
- Audit navigation and tax compliance
Why Hire a Fractional CFO?
There are quite a few indicators that should tell business owners it’s time to consider a fractionalized CFO.
Software Integration
To start, fractionalized CFOs can integrate essential software and digital accounting tools into your financial infrastructure to automate the correct tasks. CFOs have a team of controllers that operate the software, but their financial expertise helps determine which processes you need to automate and which need closer manual monitoring.
Improved Vendor Relations and Contract Negotiations
The expertise fractional CFOs possess also translates into improved vendor relations and contracts. Because fractional CFOs have unique industry expertise, they understand how to optimize vendor relations and contracts to make a more enjoyable experience for your customers. They also strengthen your reputation among vendors and improve your negotiating skills when drafting contracts.
Auditing Bookkeeping Gaps
Fractional CFOs audit your company’s books to ensure there are no misunderstandings or mishaps in reporting. They also ensure that record-keeping procedures comply with tax-filing requirements, making outsourced bookkeeping and audit compliance a worthwhile investment.
Real-Time Financial Reporting and Data Analysis
Fractional CFOs understand how to generate custom, real-time reports that contain all pertinent information to your company’s financial viability. Without these accurate reports, you can’t analyze data effectively. Once fractional CFOs issue these reports, they examine them with their extensive data analysis expertise and issue strategic initiatives.
How to Choose a Fractional CFO Services Provider
One of the most important questions to ask your fractional CFO is whether they have experience in your industry. Different industries call for specific financial strategies. Having a fractional CFO experienced in your industry places you in the best position to achieve your financial goals.
You should also examine whether your fractional CFO understands your business’s specific needs. If you are scaling your business, your fractional CFO should explain how they will smooth your transition and implement a financial infrastructure that accommodates your particular scaling needs.
Lastly, your CFO should be able to provide you with references and case studies from their previous clients. These clients should be in your industry and have financial needs similar to those of your business.
When Do I Need a Fractional CFO?
Small Companies or Companies in Growth Mode
Smaller companies that can’t afford full-time, in-house accounting teams should consider using a fractionalized CFO. Fractional CFO benefits scaling businesses by responding to the growing needs of small companies that would otherwise bog themselves down with complex hiring processes and salary requirements.
Specific Financial Projects
If you have a unique financial project, fractionalized CFOs define your goal and develop an effective strategy to reach that goal.
Team Turnover
If you lose your former CFO during a critical time, fractional CFOs can help bridge the gap during team turnover and keep your company functioning with little to no interruption. During the interim, fractional CFOs can seamlessly integrate into your business.
Fractional CFO Services From Fully Accountable
A fractionalized CFO wears many hats. However, at the end of the day, their main responsibilities include creating a comprehensive financial strategy, forecasting the financial health of your business, implementing financial procedures, and devising smart financial goals.
Whether you want the flexibility of a fractional CFO or the ability to scale your accounting team quickly, Fully Accountable can help. We provide outsourced CFO services, as well outsourced accounting services, and more. If you’re looking for help managing your finances, contact us today, and we’ll help you find a fractional CFO right for your company.
