The CFO'S Perspective

As outsourced CFOs we are brought in to assist in a variety of situations across many different types of organizations. Every instance is unique in terms of what kind of financial position they are in, where they are excelling and/or struggling operationally, and what they are looking to get help with across their financial functions. As a result, their expectations can get hazy for the consulting CFO coming into the role. When this unclear view of what a fractional CFO should be doing is combined with financial management activities that are (either unintentionally or purposefully) against best practices or downright unethical, an outsourced CFO can find themselves in a sticky situation.

So, whether you are a consulting CFO looking for advice or a business leader looking for an idea of what to expect from the engagement, we have put together a quick resource to offer some guidance on how external CFOs handle ethical questions and issues.

If you’re looking to hire a CFO, have you stopped to consider whether you actually need one? Too often companies, especially successful small to mid-sized companies, rightly understand that they need strong financial leadership to maintain their growth and incorrectly conclude that they need to hire a full-time CFO to get it.

Now, as a company comprised entirely of seasoned CFOs and Controllers, we certainly understand the importance of having this kind of strong financial leadership! However, our experience also allows us to understand that executive financial leadership is not one-size-fits-all.

Often, companies that think they need an in-house CFO are better served by utilizing a fractional CFO or Controller instead. This is especially true for businesses below $50M in revenue, because at that level either the primary responsibilities of an in-house CFO are not needed, or they are handled by the business owner/CEO. What this means for your company is you may not need a CFO …at least in the traditional sense of the role!

Our team is used to discussing what’s included in a CFO’s job description. But this type of conversation usually centers around the commonalities that unite all CFO roles, not the nuanced differences for a specific industry or type of organization. But when talking about what a CFO for a nonprofit does, there are some unique elements to the role that are important to understand.

Love is in the air, which got us thinking… what is the love language of a CFO?

For those of you not familiar with “love languages” the basic premise is that different people have different personalities, which means they give and receive love in different ways. And while this may sound like it’s only related to romance it certainly doesn’t have to be! Fundamentally, love languages are a way to discuss how people build connections, feel appreciation, and perceive their value. The conversation around love languages focuses on giving someone else what they need and what they will appreciate the most.

So, what do CFOs really want?

Our team weighed in during a planning meeting, and their answers were too good not to share:

A new breed of finance professionals is emerging, known as fractional CFOs."

In the ever-evolving world of finance and business, the role of the Chief Financial Officer (CFO) has undergone significant changes. Gone are the days when CFOs were primarily responsible for managing a company's finances in a traditional 9-to-5 role. Today, a new breed of finance professionals is emerging, known as fractional CFOs. These individuals are redefining the traditional CFO role by offering their expertise on a part-time or project basis to multiple companies. If you're considering a career as a fractional CFO, this article will provide insights into the role, the benefits, and what it takes to succeed in this dynamic field.

What Is a Fractional CFO?

A fractional CFO, also known as an interim CFO or part-time CFO, is a financial expert who works with multiple organizations on a contract or project basis. Rather than being a full-time employee of a single company, a fractional CFO offers their financial expertise to multiple clients. This arrangement allows businesses to access high-level financial management and strategic guidance without the cost and commitment of a full-time executive.

According to news reports, Tesla’s CFO, Zachary Kirkhorn, has unexpectedly stepped down after 13 years with the company. This came as a shock to many because he was widely viewed as a possible successor to Elon Musk for the CEO role. He announced that he will remain on until the end of the year to help with the transition, but that the company’s Head of Accounting would replace him within the week in an interim capacity.

What happened? And could this happen to you as well? Let’s dig in to understand more.

There is no doubt that hiring in accounting and finance right now is harder than ever before. And yet, despite today’s challenges, companies still need CFOs, which means that simply going without a CFO is not an option.

So, how do you overcome today’s hiring challenges to win the talent war? When you are hiring a CFO, it is going to be important that you focus on finding someone that meets all of your most critical needs first, before trying to check any boxes on your wants list. While this may seem like obvious advice for organizations that are keenly aware of the difference between their wants and needs for the role, many companies struggle to draw a distinction between the two. To complicate matters, what may be a need for one organization might be a want for another even if both are in the same industry or business stage. Even within a single organization what may have been considered a nice-to-have the last time the role was vacant could very well be a must-have this time around.

Let’s take a look at some of the criteria that organizations use to determine their needs and wants when hiring a CFO:

Hiring a fractional (part-time) CFO is becoming increasingly popular because this type of employment engagement offers significant cost benefits. Outsourcing their CFO role allows an organization to bring someone in for a fraction of the cost because they do not incur expenses related to benefits, bonuses, payroll taxes, etc. As Michael Newsome explains when talking about utilizing fractional service providers,

“Searching for ways to optimize human capital, while fighting the inefficiencies of talent markets, is an ever-present challenge for businesses in the middle market. The human capital corollary to the engineer’s triangle (fast, cheap, reliable – pick two) seems to be availability, relevant experience, and compensation expectation... An increasingly popular way for businesses to address this issue is using fractional service providers, which have proliferated significantly in their breadth and depth of service offerings in the middle market... A fractional solution can offer a way for a business to access additional capability at a lower total cost than bringing on a full-time hire.”

And while the cost savings are clear, many companies remain resistant to hiring a fractional CFO. Their biggest fear is that doing so requires that they sacrifice on quality in a role that requires the utmost proficiency. Leadership with these types of reservations will typically ask questions like, “Is a part-time CFO as good as a full-time CFO?” or “Can you really trust a fractional CFO to perform at a high level?”

Organizations that question whether a fractional CFO can truly get the job done well for less should consider how a fractional CFO can: