The CFO'S Perspective

When Should I Hire a Fractional CFO?

hire-a-fractional-cfoIf 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!

Making The Decision

To decide whether using a fractional CFO is going to be the best solution for your business you need to think about the following questions:

  • What kind of responsibilities need to be included in the role right now?
  • How may those responsibilities change in the future?
  • Can the organization afford the kind of leadership it is seeking?

In some cases, hiring a Controller will be a better option than going down the path of trying to find a CFO at all. In other cases, business needs will dictate the need for a CFO, but the company’s budget won’t allow for it. In this scenario, a fractional CFO is the perfect fit!

Understanding The Benefits of Hiring a Fractional CFO

Just like a full-time CFO, a fractional CFO will spend their time working on the business instead of in the business. However, a fractional CFO can do interim work, project work, or “part-time permanent” work depending on an organization’s unique needs, making them a key growth resource. But this kind of flexibility isn’t their only benefit.

Utilizing an outsourced CFO role also offers organizations significant cost savings in bypassing employment-related expenses like benefits costs, performance bonuses, payroll taxes. And because a fractional CFO can be brought on with minimal onboarding, they are often able to settle into the role more quickly than a full-time hire. The result is not only significant savings but also increased financial flexibility as what would have been a fixed cost is converted into a variable expense.

Using a fractional financial leader provides significant functional benefits as well, namely added experience. Since fractional CFOs often work with multiple clients at once, they have a greater depth of ongoing experience to draw on when advising and leading your organization. Furthermore, some highly experienced CFOs decide that they want to step away from the full-time demands of their impressive careers but like the work enough to want to keep doing it part-time, so they are drawn to fractional work. By going the fractional route an organization can benefit from the breadth of their experience.

A CFO on the outside can also offer objectivity in a way that an internal CFO often cannot. This helps to not only improve business outcomes, but also reduce stress on the business owner/CEO so they can lead more confidently.

As our team summarizes when laying out a roadmap to hiring a CFO,

“The most salient benefit of hiring a fractional CFO is cost savings over hiring, onboarding, and retaining an in-house CFO. A fractional CFO provides access to a senior executive skillset without the cost of investing in a full-time role. Additionally, fractional CFOs also provide the benefit of objectivity. Unlike someone who is interested in equity stake in the company, a fractional CFO can offer an independent opinion because they are not tied to the outcome. The result is unvarnished advice to the CEO based on skill and experience instead of advocacy for a particular strategy.”

A fractional CFO can also be brought in right away (sometimes in as little as 1 day) to get to work immediately!

Access “A Practical Guide to Fractional Service Providers” Now!

When you want to hire a fractional CFO, give us a call! We have a team of highly experienced CFOs ready to provide the financial leadership your organization needs. Find out more about our CFO services, and let us know if you have any questions!

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Topics: CFO, CFO Responsibilities

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