Growing middle-market businesses today face a number of financial challenges, from improving cash flow and profit margins to managing inflation and high interest rates. Many are turning to fractional CFOs to help them navigate these challenges.
A fractional CFO is an experienced finance professional who provides strategic financial guidance on an outsourced basis. This is ideal for businesses that aren’t big enough to employ a full-time CFO but need a higher level of financial expertise than a controller can provide.
Here are 12 key benefits high-growth middle-market businesses typically gain by hiring a fractional CFO:
1. Cost-effectiveness
Fractional CFOs are usually hired on a project or part-time basis, allowing you to access high-level CFO guidance without the expense of a full-time CFO. This is especially beneficial for companies that don’t need full-time CFO oversight and/or can’t afford the compensation package required to attract a full-time CFO.
2. Reduced overhead
Since fractional CFOs aren’t full-time employees, there’s no need to provide them with employee benefits, office space or other costs associated with FTEs. This can add up to significant cost savings for your company over the long term.
3. High-level expertise
Typically, fractional CFOs are experienced finance professionals who have a diverse background working with companies across a wide range of industries. Their experience can bring fresh perspectives and new strategies to the finance function, as well as a better understanding of market trends and opportunities. Also, since fractional CFOs are often hired for a specific project, you can tailor your company’s needs to the CFO’s area of expertise.
4. Scalability
As your business grows, so do its financial needs. With a fractional CFO, services can scale up or down along with your business’ growth and needs. For example, the number of hours worked can vary depending on which tasks need to be accomplished. A fractional CFO can also work on a project basis and be renewed once a project is complete if the services are still needed.
5. Specialized industry knowledge
A fractional CFO may possess specialized knowledge that your existing finance team doesn’t have. This includes knowledge in M&A, regulatory compliance, fundraising, internal controls, and more.
6. Strategic guidance and insights
Financial decisions must be made based on the most current and accurate data available. A fractional CFO can provide strategic guidance and insights that lead to improved decision-making in the areas of budgeting, investing, debt management, and more.
7. Objective, unbiased advice
Fractional CFOs are “outsiders” who aren’t influenced by internal company politics or interpersonal relationships and power dynamics. This enables them to offer more objective advice, which in turn can lead to better and more informed decisions for the company.
8. Faster onboarding
It can take months and cost thousands of dollars to recruit and hire a full-time CFO and get him or her up to speed on your business. However, a fractional CFO can usually be hired and onboarded much quicker, which lessens the potential finance leadership gap and minimizes lost opportunities. Many fractional CFOs also work remotely, eliminating delays related to relocation and commuting.
9. Improved cash flow
More companies fail due to a lack of cash flow than a lack of sales or profits. A fractional CFO will implement best practices that shorten the cash flow cycle by improving the collection of accounts receivable. This includes utilizing the latest financial technology tools offered by financial institutions.
10. Increased productivity
A lack of high-level financial leadership can lead to inefficiencies and low productivity among finance department staff. With a fractional CFO in place, your finance department employees are freed up to focus on core activities that can enhance your bottom line.
11. Strengthened financial compliance
Depending on your industry, your company may be subject to strict financial compliance rules and regulations. A fractional CFO will make sure that you always remain in compliance with these rules, which will reduce the risk of fines or other financial penalties.
12. Enhanced internal controls
Fraud and embezzlement are growing concerns for many middle-market businesses. The best way to guard against them is by establishing solid internal controls designed to uncover fraud schemes or prevent them from happening in the first place.
Fractional CFO Services from Consero
Consero offers fractional CFO Advisory Services to middle-market companies in need of strategic CFO support. These services work in tandem with our other financial solutions to help you manage all aspects of your finance function.
With Consero’s Strategic CFO Advisory Services, you pay only for the time and resources you need, when you need them. Our services can meet your needs at any stage, whether you need assistance on a single project, long-term support or big-picture strategic guidance. Our CFO team brings strategic thinking and experience to your engagement from many different companies across multiple industries.
To learn more about Strategic CFO Advisory Services from Consero, visit us online or call us at 866-588-0495.