At every growing business, there comes a point where the finances become too complex for a CEO to feasibly manage. While hiring a full-time CFO may be the norm in large, established firms, many innovative and growing companies are now leaning on fractional CFOs to drive growth at an earlier stage. These experienced financial executives provide services on a contract or project basis.
An experienced fractional CFO can offer strategic guidance to help the company’s continued growth by building out financial operations, leading teams and creating balance between short-term demands and long-term goals while building capacity for future success.
Benefits of a fractional CFO vs. a full-time CFO
Fractional CFOs offer businesses the flexibility to find the right expertise for their specific growth stage and goals without the cost and commitment of hiring a full-time executive.
With a full-time CFO, you are hiring one individual that may be a good fit for your business now but might not be later when new business challenges rise. Fractional CFOs can be brought in based on their ability to solve specific business problems and establish strategic plans. In this way, fractional CFO services are the ideal solution for a company looking to test how these financial experts can grow your business.
Fractional CFOs also allow companies to gain years of financial expertise at a fraction of the cost of a full-time CFO. According to salary.com, full-time CFOs make ~$392.6K per year on average. This does not include the additional costs of hiring, onboarding and providing benefits for a full-time employee.
However, when you use a freelance CFO, you pay only for the value added to your company. Most fractional CFOs get paid on a contract or project basis without HR costs. Thus, even businesses with smaller budgets can benefit from top-tier financial expertise.
Why and when a growing business needs a fractional CFO
Full-time CFOs oversee the entire direction and growth of a company’s financial operations, from supervising teams to forecasting financial growth to strategic business planning for the long-term. However, many small businesses don’t need the full suite of CFO services yet. Instead, they need an experienced financial expert to tackle a few business-specific challenges. That’s where a fractional CFO comes in.
Some business challenges a fractional CFO can solve for a company include:
- Fundraising: Guidance around seeking venture funding or raising debt to finance growth, developing pitch decks, financial modeling, completing due diligence
- Market expansion: Doing competitive research to decide which markets to strategically expand into in order to maximize return on investment
- Financial growth strategy: Deciding which projects to undertake, scoping whether to acquire another business, developing a long-term plan to sell the business, etc.
- Going public: Creating an IPO strategy and a business plan for potential investors
- Cash flow management: Creating a sustainable plan when a company’s growth outstrips its capacity to produce
- Finance department management: Overseeing, mentoring and strategically hiring finance and accounting personnel. Developing a team that is well-equipped to offer insights and handle the finances of a growing business
- Company transitions: Filling in as an interim CFO
An experienced fractional CFO should be able to guide rapidly expanding companies through any of these situations. When considering a CFO, make sure the candidate can share clear examples of times they have solved for your exact business problem and achieved favorable results. For example, if you’re looking for a leader to determine how to strategically enter a new market in another country, ask your candidates for examples of international market expansions they’ve successfully led.
You should also assess whether the candidate is a good cultural fit for your company. While fractional CFOs won’t be as present as a full-time executive, they will be a leader within your finance team and will thus need to gain your employees’ trust. As a general rule, collaborative CFOs who take the time to source ideas from their internal team and thoroughly explain the decisions they’re making are likely to be a stronger cultural fit and be met with less resistance from the internal team.
Fractional CFOs have benefited businesses like yours
Paro precisely matches clients with the right services and subject matter expertise to achieve specific goals. In the case of inRange Solutions, a fast-growing telecommunications program management firm, Paro enabled upgrades of all the company’s financial functions by providing right-sized CFO expertise.
As inRange was rapidly expanding, the company needed a more robust financial system, stronger insights and strategic leadership to support its acceleration. The company’s CEO was stretched thin, spending much of his day managing financial operations in addition to his other responsibilities.
Paro matched the client with Craig, a fractional CFO with over 20 years of experience leading and managing early-stage and middle market companies like inRange. Craig immediately identified financial opportunities and implemented operational policies, a suite of analytical tools, and financial management solutions that freed up strategic time for other executives and led to massive productivity gains.
Thanks to Craig’s leadership, inRange saved nearly half a million in savings in a single year and is now well positioned for doubling revenue growth. The newly integrated and automated models, forecasts and financial systems Craig developed have given the executives critical insights to better assess opportunities to raise money and make investments. He has also become an essential advisor on long-term business strategy, and a valuable mentor to the leadership team as the business continues its growth trajectory.
Where to find an expert fractional CFO
At Paro, we leverage our proprietary AI technology to build flexible, focused teams of remote experts that help companies solve problems and drive growth. Our laser focus on finance allows us to quickly identify experts across the U.S. with the right mix of skills, credentials, and experience to achieve each company’s specific goals. Complete our form to request a consultation and gain the fractional CFO leadership you need.