What is a Fractional CFO and How Do They Differ From a Traditional CFO?

By Kyle Carney

The owner or CEO of a company is responsible for hiring talented people with a range of skills and experiences that can contribute to the company’s success. In many cases, outsourcing–also called using fractional services– can provide organizations with top talent in many specialties. 

Fractional services can help organizations become more efficient, innovative, and profitable. Fractional CFOs provide essential financial assistance and guidance to companies during periods of growth and can help a business stay competitive in any market. 

This article will explore a fractional CFO’s role within an organization.

What Does a Fractional CFO Do?

Organizations may bring in a fractional CFO to manage financial challenges that exceed the expertise or ability of the in-house team to solve. A fractional CFO may partner with an existing CFO to address challenges or fill in for companies that do not have an in-house CFO.

Some of the specific financial challenges a fractional CFO may help with include the following:

• Low gross margins
• High expenses
• Outdated or insufficient systems
• Cutting costs
• Cash flow problems
• Audits

Fractional CFOs can also help organizations optimize and implement forward-facing financial visibility. They can often invest time and energy in the future while other financial professionals focus on day-to-day operations and accurate bookkeeping. They may develop economic forecasts, prepare budgets, and analyze potential markets, services, products, and customer segments.

Fractional CFOs help companies reach financial goals by navigating mergers and acquisitions, preparing for sales, and raising capital. They can assist with a variety of other tasks that lead to progress and growth, including:

• Producing financial forecasts
• Sitting in on board meetings
• Developing strategic relationships
• Analyzing term sheets and contracts
• Overseeing due diligence

A fractional CFO’s assistance may be especially helpful for small to medium-sized companies during periods of growth. A fractional CFO can help growing organizations in several ways, including:

• Implementing systems that encourage sustainable growth
• Improving visibility and analytical capability to create actionable information out of massive amounts of data
• Identify sources of revenue loss, cost overruns, and operational friction as the business grows
• Hire new employees and develop existing ones 

Most fractional CFOs have extensive experience helping organizations achieve financial goals and manage complex business deals. Many have helped companies raise millions of dollars of equity funding and managed numerous mergers and acquisitions. The expertise and experience a fractional CFO provides are valuable assets to companies of any size.

The Benefits of Hiring a Fractional CFO

Organizations of all types and sizes may benefit from outsourcing a CFO. Small businesses may find hiring a fractional CFO helpful as their company grows and changes over time.

Here are some of the potential benefits of hiring a fractional CFO.

Cost savings

Hiring and retaining an in-house CFO can cost hundreds of thousands of dollars a year. Many organizations simply cannot afford to do this. Hiring a fractional CFO may save companies a lot of money–as much as $100,000 in some cases. 

Financial leadership

Hiring a fractional CFO means you’ll have skill and experience when you need it most. A fractional CFO offers objective advice and leadership to help your business improve its bottom line and maintain growth.

Better profit margins

Expert guidance from a skilled CFO can lead to a healthier bottom line. A fractional CFO will work with senior leadership to develop a budget, identify areas of excessive spending, and analyze monthly data to identify the sources of profits. 

Find a Fractional CFO in Denver

Find a Fractional CFO Denver by reaching out to the Canopy Advisory Group today. Contact our team to learn more about our services.