A fractional chief financial officer is an outsourced financial professional providing high-level financial management and strategic guidance to a company on a part-time or project basis.
Unlike a full-time CFO who is a permanent executive within a company, a fractional CFO is brought in as an external consultant to address specific financial needs or challenges.
Hiring a fractional CFO can bring many benefits to an organisation, including smaller businesses or startups that may not have the resources to hire a full-time permanent executive, providing strategic financial expertise and guidance on complex financial challenges without committing to the costs associated with full-time personnel.
Bob Dickson, a fractional CFO, discusses 11 reasons why hiring an outsourced or part-time CFO is beneficial to the organisation:
Fractional CFOs are typically hired on a part-time or project basis, which can be more cost-effective than hiring a full-time CFO with a complete compensation package. This is particularly valuable for companies that don't require constant CFO oversight or cannot afford a full-time executive.
Fractional CFOs are experienced financial professionals who often have a diverse background working with various companies across industries. Their expertise can bring fresh perspectives, best practices and innovative strategies to a company's financial management.
Fractional CFOs can be engaged for specific tasks or projects, such as financial analysis, fundraising, budgeting, strategic planning or improving financial processes. This flexibility allows companies to tailor their financial management needs to the CFO's expertise.
Fractional CFOs can provide valuable strategic insight to help guide the company's financial decisions and long-term planning. Their expertise can contribute to better-informed decisions regarding growth, investments, risk management and cost control.
As a company grows, its financial needs can become more complex. Fractional CFOs can scale their involvement with the company's growth, ensuring that financial strategies and processes evolve accordingly.
If a company is in between full-time CFOs, a fractional CFO can step in to provide continuity and leadership during the transition period. This is particularly useful in maintaining financial stability during important times.
Fractional CFOs can bring specialized knowledge in areas like mergers and acquisitions, fundraising, internal controls or regulatory compliance, which might not be present in the company's existing team.
Since fractional CFOs are not full-time employees, the company doesn't need to provide benefits, office space or other associated costs. This can result in significant cost savings.
An external fractional CFO can offer unbiased advice without being influenced by internal politics or personal relationships. This objectivity can lead to more informed and effective decision-making.
Focus on core competencies
By outsourcing the CFO function, a company's leadership and internal financial team can focus on their core competencies, leaving the financial management to a seasoned professional.
Quick access to talent
Finding a suitable full-time CFO can take time, but a fractional CFO can be onboarded relatively quickly, ensuring the company doesn't experience a leadership gap. Many fractional CFOs work remotely, so their expertise can be taken advantage of immediately, without the concerns of relocation or commuting.