How Fractional CFOs Help Small Businesses

Apr 15, 2020 | Best of the Best, Read

Big or small, all businesses are at risk of fraud.

Although it’s comforting to believe that small businesses are less likely to experience fraud, research shows otherwise. Small businesses – or businesses with less than 100 employees – actually have the highest median loss due to fraud of $150,000. They’re also four times as likely to have check and payment tampering and twice as likely to experience billing and payroll fraud.

Fortunately, there are internal controls that can help detect fraud quicker and lower or eliminate fraud losses.

What is a Fractional CFO?

A Fractional CFO may sound like a complicated job title, but it’s not!

Rather than working for your company in a full-time capacity like a CFO, a Fractional CFO works on a part-time basis, or for a fraction of their time.

Fractional CFOs are accessible to even the smallest of businesses

For small companies that require professional financial advice but cannot commit to a full-time hire, a Fractional CFO provides a cost-effective solution. With the flexibility to hire one on either a project or a part-time basis, they are accessible to even the smallest of businesses.

How is a Fractional CFO Different from an Accountant?

Bookkeepers, accountants, and Fractional CFOs are all important when it comes to the financial future of your company. 

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In the early stages of your business, you may be able to get away with using just an accountant. They will keep your books in order and make sure your taxes are filed correctly.

As your business grows, you might realize that you don’t have enough time for day-to-day record maintenance and you’ll progress to hiring a bookkeeper as well.

Working together, a bookkeeper and an accountant provide you with accurate data needed to evaluate your company’s past performance and current financial position.

A Fractional CFO, on the other hand, provides larger financial strategies – from where your business currently stands to map the future of it.

What Services Can a Fractional CFO Provide?

Depending on the needs and size of a business, a Fractional CFO provides expert financial advice on business growth, financial analysis, budgeting and forecasting, fundraising, and overall financial strategy.

Other Fractional CFO services also include updates on financial systems and processes. In times of financial crisis, a Fractional CFO can also be called upon to help navigate a solution and implement better cash management controls for the future. 

Fractional CFO provides expert financial advice on the business growth, financial analysis, budgeting and forecasting, fundraising, and overall financial strategy

In larger organizations with boards or investors, Fractional CFOs are often responsible for managing key stakeholder relations as well.

Why Does My Business Need a Fractional CFO?

Businesses seeking financial insight and a market advantage commonly hire a Fractional CFO.

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Fractional CFOs can increase the efficiency of business operations. Their helpful knowledge can eliminate financial errors, replace technology platforms, and overhaul financial reporting systems. Many utilize cloud-based practices that provide up-to-date financial insights and extensive cost savings.

As your business grows, you will soon have multiple questions about the path it’s taking. You may wonder if you have enough money to afford future growth – if you realize you don’t, you’ll want to know what can be done about it.

A Fractional CFO becomes your go-to source for financial-related questions. As someone intimate with your business details, they can help you create a strategy to take your business to where you want it to go.

How Can I Find the Best Fractional CFO For My Business?

Like any other member of your company’s team, choosing the right Fractional CFO is key to building a successful working relationship. Here’s what you should look for when hiring one:

Experience: You need someone qualified, trustworthy, and professional. Fractional CFOs with proven work experience at other companies can implement financial processes quickly and with confidence.

What separates a good Fractional CFO from an exceptional one is not just the financial knowledge, but the ability to problem solve and think creatively

Personality: You need to feel comfortable approaching your Fractional CFO with complicated, serious financial matters.

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Before choosing one to work with, interview at least three of them. Select one who is able to explain finances in a way that is approachable, understands your business, and, last but not least, is also a great listener and problem solver.

What separates a good Fractional CFO from an exceptional one is not just the financial knowledge, but the ability to problem solve and think creatively.

Fractional CFO: A Crucial Part of Your Finance Team

Once your business becomes more complex or reaches a high level of growth, you’ll want to hire a Fractional CFO. By providing you with valuable financial insight, they can not only help propel your business forward but also ensure that your business is healthy and thriving in the long run.

Need help with figuring out your business’ future? Just let us know and we’ll be there to walk you through it!

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