It can be beneficial to have a fractional CFO come in to participate in board meetings and bring fresh experience. Such interaction can be a two-way process by providing more insight to the directors and then communicating the salient points taken down through the company hierarchy. Just like a full-time CFO, a fractional one provides such expertise and at the same time offers excellent flexibility and favorable cost advantages to serve the needs of smaller companies. Gary serves clients by offering them proactive tax advice, business advisory services and consulting work as a fractional CFO. Outsourcing a CFO or Controller role can be extremely beneficial for businesses. Understanding the duties of CFO and Controller can guide your decision, but your primary goal should be to find someone who aligns with your company and brings knowledge and experience to the table.

When revenue is scaling up at this fast-moving stage, there is likely a need to establish long-term stability on the finance team. With growing investor relations and capital markets needs, hiring a full-time CFO becomes necessary to handle the responsibility. In later-stage funding events, investor terms may state that a CFO must be hired upon completion of the round.

Benefits Of Hiring A Fractional CFO

At many companies, a CFO is a full-time, salaried employee, working solely on advising one business. These professionals are especially indispensable when your business is facing challenges. They can help you weather the lean times and guide you toward decisions that support your long-term growth. Businesses often turn to fractional CFOs when they’re dealing with cash flow issues, low-profit margins, or high expenses. Occasionally, businesses hire fractional CFOs to utilize their expertise for a specific project.

Keep in mind that you may set out thinking you need one type of engagement when, in reality, you need another. You may also need someone to help put the right structure, processes, and financial discipline in place to achieve goals that will boost the company’s appeal to potential buyers. Fractional CFOs can provide skills that complement whatever financial team you have in place.

What Makes A Good Fractional CFO?

A CFO (Chief Financial officer) is a senior executive who is responsible for managing and overseeing the financial wellbeing of a company. Their scope of responsibilities is tailored more to the specific goals of a small business, and they usually take on fewer tasks than a full-time CFO. To oversimplify, a CFO’s responsibility lies around the financial strategy and communication with key stakeholders – everything from the Board of Directors to investors or internal decision makers. These financial tasks normally include forecasting, planning and analysis. A CFO will manage everything from the budgeting process – pulling the data from the Controller – through to the forward looking strategy around the best use of resources. While many think of the CFO as someone who is solely focused on money, their job is much deeper than that.

As a startup founder, you’re probably tempted to take on the role of CFO to save money and retain control of the financial side of your business. You could technically do this successfully, but this approach can be risky and hinder your company’s growth and success. This type of service can also assist with developing a comprehensive startup budget that considers projected revenues, expenses, and financial goals. law firm bookkeeping They can also help the startup monitor its financial performance throughout the year and adjust the budget as needed. This can help the startup stay on track with its financial objectives and make informed decisions about resource allocation. When ready, you can easily hire an outsourced CFO directly or through a SaaS fractional CFO platform that connects your startup with the right virtual CFO for your needs.

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In larger engagements, the fractional CFO may also be very involved with strategic financial relationships (ie. vendors, suppliers, banks, auditors) and frequently sit in on leadership meetings. Some businesses will prefer to contract virtual CFO services, meaning that the meetings and interactions will occur exclusively online or via phone, rather than meeting with the CFO(s) in person. A fractional CFO works with companies to steer financial decisions in a direction that ensures good financial health. However, this is traditionally on a part-time basis only (and at a fraction of the cost of hiring a full-time employee).

A 409a Valuation is a compliance document that determines the fair market value (FMV) of stock and stock options. It needs to be prepared by a competent individual or firm and approved by the Board of Directors. Good CFOs can clearly and effectively explain complex financial concepts to non-financial stakeholders, such as founders and investors. This way, other decision-makers can understand the company’s financial situation, and everyone stays on the same page. Be sure to discuss these costs with the CFO upfront to avoid any surprises. Fractional CFOs can guide founders through best practices for startup accounting and bookkeeping as well as  helping you prepare for any potential risks.