Blog

The 5 most common fractional CFO services

fractional cfo services with spreadsheets

There are five primary reasons CEOs invest in fractional CFO services:  

  1. Specific projects or financial challenges
  2. The need to drive performance and growth
  3. Forward-looking strategic business planning
  4. Providing trusted advising and partnership with internal and external financial partners
  5. Preparing for and assisting with acquisition or exit goals  

Let’s take a few minutes to break down each of these fractional CFO services and discuss how they can benefit your business.

1. Particular Project or Financial Challenges

Business owners typically consider bringing on a part time fractional CFO because of a particular project, business goal, or financial challenge. In either case, it’s an activity that requires expertise that no one on their team currently possesses.  

Examples of projects or financial challenges a fractional CFO can help with include:

  • Raising capital for short-term or long-term needs
  • Assessing the causes and recommending action plans for increasing margins or cash flow, as well as decreasing expenses or implementing cost cuts
  • Helping evaluate current systems and processes and optimizing these for greater efficiency and cost savings

Keep Reading: How much does a fractional CFO cost?

2. Drive Performance and Growth

As companies scale, their plans, people and processes need to scale, too. 

What worked for them when they first started their company probably won’t work as their product mix, business verticals, and locations change and grow. This is where a fractional CFO can come into play.

Fractional CFOs can help growing companies by:

  • Evaluating their employee bench strength, recommending developmental opportunities, and recruiting new employees with skill sets necessary to support company growth
  • Developing dashboards with meaningful metrics
  • Utilizing metrics to educate the team on actions they personally need to take to improve financial performance
  • Evaluating and optimizing systems and processes to support scalable growth

3. Forward-Looking Strategic Business Planning

We often get asked, “What’s the difference between an accountant and a CFO?” The biggest difference is backward vs. forward looking.  

While accounting focuses on what happened in the past, CFOs focus on the future and what could and should happen. 

To do this, Fractional CFOs will:

  • Develop future-oriented financial business plans (quarterly, yearly, and 3-5 years) and forecasts
  • Create budgets and 13-week cash flow forecasts based on these forecasts
  • Help assess new product, service, customer targets, markets, etc. in terms of company capabilities and financial viability

Keep Reading: What’s the difference between a controller and a CFO?

4. Trusted Advising, Mentoring and Partnership

Every CEO needs a great CFO partner to be his or her trusted advisor and mentor on financial issues. Aside from this, the Chief Financial Officer will also take the lead with internal and external financial partners (i.e. banks, board of directors, etc.).  

Fractional CFOs fill this particular role by:

  • Becoming part of the CEO’s management team and sitting in on staff meetings
  • Acting as the Chief Financial Education Officer and ensuring all employees know how their actions affect the financial performance of the company
  • Preparing for and attending board of director meetings

5. Acquisition and Exit Goals

Some companies have goals to acquire or merge with other companies, sell their business outright or navigate a challenging bankruptcy.  

When it comes to these situations, a fractional CFO can help by:

  • Getting a company ready for sale based on determining how buyers will value the business (forecasts, valuation estimates, etc.)
  • Making introductions to strategic acquisition targets, business brokers or potential buyers
  • Reviewing term sheets and contracts
  • Overseeing due diligence

Keep Reading: What to do when the cost of a CFO is too high

Fractional CFO Services help companies overcome problems

Whether it’s a specific financial challenge or preparing your company for a future sale, an experienced fractional CFO can partner with you to achieve these goals. 

New Life CFO is the leading fractional CFO entrepreneurship firm in the Dallas Metroplex, representing over $400M under management. Let us earn your trust and help you grow. Schedule a consult today or call (214) 775-0803.

If you need improved financial results immediately, watch our three-part series on how to create financial stability now and improve profitability for the long term.