FRACTIONAL CFO: The New Profile Sought After by Startups
Ensuring effective financial management is crucial for the growth and stability of a small to medium-sized enterprise (SME). However, this task can quickly become a headache, requiring time, specific skills, and significant financial resources.
When gathering all these resources internally is challenging, the solution may be to hire a Fractional CFO.
What are the advantages of this solution? When is it wise to hire a Fractional CFO? And how do you choose the right professional?
What is a Fractional CFO?
A Fractional CFO (Chief Financial Officer) works part-time for several companies to oversee and manage various financial aspects. They take on responsibilities similar to those of an in-house CFO, such as cash flow management, financial strategy development, tax planning, and administrative and HR management.
Why Outsource Your Financial Management?
Hiring a Fractional CFO offers several benefits:
Cost Control:
A full-time CFO can be prohibitively expensive for many SMEs. A Fractional CFO offers a more economical solution by being paid only for the services rendered, whether hourly or daily. This flexibility allows you to control expenses and adjust costs according to your company’s actual needs.
Expertise and Improved Management:
A Fractional CFO brings valuable expertise, helping to structure and optimize financial management. They can implement financial tools, create forecasts, generate reports, and manage cash flow efficiently. Their involvement leads to better financial visibility and informed decision-making.
Flexibility and Adaptability:
The tasks of a Fractional CFO are periodic and tailored to the specific needs of the company, offering great flexibility. They can also provide an external, unbiased perspective without conflicts of interest, beneficial for an objective assessment of financial strategies.
When to Work with a Fractional CFO?
SMEs face numerous financial challenges daily. A Fractional CFO can step in during various situations:
Development and monitoring of financial dashboards.
Cash flow management and oversight.
Researching and securing funding.
Payroll and contract management.
Margin optimization and tax management.
Budget preparation and financial reporting.
How to Choose Your Fractional CFO?
To choose the right Fractional CFO, it is essential to clearly define your needs. Here are some criteria to consider:
Specific Needs:
Precisely assess your company’s needs. Why do you need a Fractional CFO? What specific tasks do you want to delegate to them? Sometimes, tasks can be handled internally without the need for outsourcing.
Budget:
A Fractional CFO generally charges between €650 and €1250 per day excluding tax. Ensure that this expense aligns with your budget and financial goals.
Technical and Human Skills:
A good Fractional CFO must master technical aspects of accounting, finance, tax, and administrative management. They should also have human qualities such as empathy, good interpersonal skills, the ability to listen, and curiosity to stay updated with regulatory changes.
To find the right candidate, use your professional network or specialized platforms like LinkedIn, or seek out specialized agencies like Fractional.
Conclusion
A Fractional CFO can be a valuable asset for your company, offering expertise, flexibility, and cost optimization, while providing essential strategic insights.
