What Is a Fractional CFO?

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What Is a Fractional CFO?

If you’re a small business or a business trying to scale, financial procedures, reporting, and forecasting can seem like a nightmare. Fractionalized CFOs 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. 

What Are the Differences Between a Fractional CFO and a Controller?

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?

Fractional CFOs help maintain your company’s financial viability on a contractual basis. Fractional CFOs have a wide range of industry-specific financial expertise because they work with different companies in various industries. 

Though the overarching responsibilities are relatively straightforward for CFOs, the specifics of what they do for these companies depends 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 shoulder. They issue short and long-term analyses and projections that help companies better understand their trajectory and cash position requirements. 

Growth Management 

CFOs are indispensable when scaling your business. 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 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 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 your financial procedures 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. 

Real-Time 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 similar financial needs as 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. Fractionalized CFOs respond 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 and keep your company functioning with little to no interruption. During the interim, fractional CFOs can seamlessly integrate into your business. 

Conclusion- What Is a Fractionalized CFO?

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. 

If you are a smaller company without the resources to hire an in-house accounting team or you are in growth mode, a fractional CFO ensures that all of your financial needs are met. If you need something specific from a fractional CFO, such as data analysis and reporting for an upcoming board meeting, fractionalized CFOs can step in without a hiccup and ensure that you execute in the conference and produce a positive outcome. If any of these situations sounds like something your business needs to address, the fractionalized CFOs at Fully Accountable are here to help. 

Contact us today to learn more about what the full-service team at Fully Accountable can provide your business.  

Heidi Cake

Heidi Cake

Author at Fully Accountable | 1-877-330-9401 | www.fullyaccountable.com

Heidi Cake is our Data Director. She studied at Indiana Wesleyan University with a degree in BS Strategic Communications and BS Leadership Studies and specializes in analyzing anything in her path and creating aesthetic appeal to visual documents. Heidi spent the first few years after college working in the non-profit sector on teams where she was handed anything that needed to be communicated creatively. She realized her most loved being able to communicate complex, abstract ideas which made her return to her love of numbers and data. Heidi brings an equally creative and analytical mind to the task of analyzing and communicating client data and statistics.