The Role of Fractional CFOs in Small Businesses

“A fractional CFO is a part-time or contract CFO who provides high-level financial expertise to small and medium-sized businesses that don’t need or can’t afford a full-time CFO.”

The Fractional CFO: How to Hire a Part-Time CFO for Your Business, by David Worrell

If you are a small business owner, you may have heard of the term “fractional CFO” and wondered what it means and how it can benefit your business. In this article, we will explain what a fractional CFO is, what they do, and why you may want to consider hiring one for your business.

What is a fractional CFO?

A fractional CFO is a chief financial officer (CFO) who works for your business on a part-time or contract basis, rather than as a full-time employee. A fractional CFO can provide the same level of financial expertise and guidance as a full-time CFO, but at a fraction of the cost and time commitment.

A fractional CFO can help you with various aspects of your business finances, such as:

• Financial planning and analysis
• Budgeting and forecasting
• Cash flow management
• Financial reporting and compliance
• Tax strategy and preparation
• Risk management and mitigation
• Capital raising and investor relations
• Mergers and acquisitions
• Exit planning and valuation

A fractional CFO can also act as a strategic partner and advisor to you and your management team, helping you make informed decisions based on data and insights, rather than intuition or guesswork.

Why do small businesses need a fractional CFO?

As a small business owner, you may think that you don’t need a CFO at all, let alone a fractional one. After all, you have an accountant or a bookkeeper who handles your day-to-day financial transactions and records, right?

While having an accountant or a bookkeeper is essential for any business, they are not the same as a CFO. An accountant or a bookkeeper focuses on the past and present of your business finances, while a CFO focuses on the future and the big picture.

An accountant or a bookkeeper can tell you how much money you made or spent last month, but they can’t tell you how much money you will make or spend next month, or next year. They can tell you how much cash you have in the bank, but they can’t tell you how much cash you will need to grow your business, or how to optimize your cash flow. They can tell you how much tax you owe, but they can’t tell you how to minimize your tax liability, or how to take advantage of tax incentives.

A fractional CFO can fill these gaps and provide you with the financial intelligence and direction that your business needs to succeed in today’s competitive and dynamic market. A fractional CFO can help you:

• Increase your profitability and efficiency by identifying opportunities for cost reduction, revenue enhancement, and process improvement.
• Improve your cash flow and liquidity by optimizing your working capital, managing your debt, and securing financing options.
• Enhance your financial visibility and transparency by creating accurate and timely financial reports and dashboards that track your key performance indicators (KPIs) and metrics.
• Reduce your financial risk and exposure by ensuring compliance with accounting standards, tax laws, and regulatory requirements, as well as implementing internal controls and safeguards.
• Accelerate your growth and scalability by developing strategic plans, budgets, and forecasts that align with your vision and goals, as well as evaluating potential mergers, acquisitions, partnerships, or exits.

How to hire a fractional CFO?

If you are convinced that your business could benefit from a fractional CFO, the next question is: how do you find one?

There are several ways to hire a fractional CFO for your business, such as:

• Referrals: You can ask your network of peers, mentors, advisors, or professional associations for recommendations of reputable and experienced fractional CFOs who have worked with similar businesses in your industry or niche.
• Online platforms: You can use online platforms that connect businesses with freelance or contract CFOs who offer their services on-demand or on a project basis. Some examples of these platforms are Toptal, Paro, ScaleFactor, Pilot, Bench.co, among others.
• Agencies: You can work with agencies that specialize in providing fractional CFO services to small businesses. These agencies typically have a pool of qualified and vetted fractional CFOs who can match your specific needs and preferences. Some examples of these agencies are The CFO Center, The Strategic CFO, PreferredCFO.com among others.

Regardless of which method you choose to hire a fractional CFO for your business, there are some factors that you should consider before making a final decision:

• Experience: You should look for a fractional CFO who has relevant experience in your industry or niche, as well as in the size and stage of your business. A fractional CFO who understands the nuances and challenges of your market and sector will be able to provide more tailored and effective solutions for your business.
• Skills: You should look for a fractional CFO who has the skills and competencies that your business needs, such as financial modeling, analysis, reporting, forecasting, tax planning, risk management, capital raising, etc. A fractional CFO who has the technical and analytical skills to handle your financial operations and strategy will be able to deliver more value and results for your business.
• Fit: You should look for a fractional CFO who has a good fit with your business culture, vision, and goals, as well as with your personality and communication style. A fractional CFO who shares your values and vision will be able to build trust and rapport with you and your team, as well as align their actions and recommendations with your objectives and expectations.

Quick summary

A fractional CFO is a part-time or contract CFO who provides high-level financial expertise to small businesses that don’t need or can’t afford a full-time CFO. A fractional CFO can help small businesses increase their profitability, improve their cash flow, enhance their financial visibility, reduce their financial risk, and accelerate their growth. A fractional CFO can be hired through referrals, online platforms, or agencies, depending on the needs and preferences of the business owner. A fractional CFO should have relevant experience, skills, and fit with the business they are working with.

If you are a small business owner who wants to take your business to the next level, hiring a fractional CFO may be one of the best investments you can make. A fractional CFO can provide you with the financial intelligence and direction that you need to make smart decisions and achieve your goals.

If you are interested in hiring a fractional CFO for your business, you can contact us today for a free consultation. 

At Vintti, we do not provide part-time or hourly basis employees, but we have two great options for you if you are looking for a CFO for your business. If you are looking for a fractional CFO who can work with you on a project or on-demand basis, we recommend BradyCFO, a trusted partner of ours who has a network of experienced and qualified fractional CFOs who can help you with your financial needs.

If you are looking for an in-house employee who can work with you full-time, we offer you the opportunity to hire top-notch CFOs from Latin America at 40% lower cost than comparable US talent. We take care of the recruitment, payroll, taxes, and benefits, so you can focus on your core business.

We guarantee you that you will get the best service and quality from our team. Contact us today and let us help you find the perfect CFO for your business.

Kevin Mitchell, CPA

Senior Manager and CPA with over 20 years of experience in accounting and financial services, specializing in risk management and regulatory compliance. Skilled in managing audits and leading teams to deliver exceptional services. Proud father of two.

🔗 Kevin Mitchell | LinkedIn