It’s no secret that keeping track of finances is a full-time job. And if your company isn’t yet ready to hire a dedicated CFO, you’re likely searching for ways to get the job done efficiently and effectively. That’s where fractional CFOs come in: they can help with everything from tax planning to financial reporting and advising by working alongside your team on a project or ongoing basis.
But how do you find the right partner? And how much does a fractional CFO cost?
In the blog below, we’ll answer both of these questions. But first, let’s dive a little deeper into what a fractional CFO really does and the various benefits of hiring a fractional CFO, so you can determine if this is the right option for your company.
What is a fractional CFO?
A fractional CFO is a qualified financial professional who provides high-level strategic and financial advice to small and medium-sized businesses on a part-time or project basis. Unlike a full-time CFO, a fractional CFO does not have the responsibility of day-to-day financial management, but instead focuses on long-term planning and growth.
Fractional CFOs are typically hired when a company is experiencing rapid growth or undergoing significant change, such as during a merger or acquisition. They can also be helpful in situations where a company is seeking to raise capital or improve profitability. In many cases, fractional CFOs work with businesses that do not have the internal resources to support a full-time financial executive. By bringing in outside expertise on an as-needed basis, fractional CFOs can provide valuable insights without the added cost of a full-time employee.
What are the benefits of hiring a fractional CFO?
There are many benefits to fractional accounting, which is why it has become such a popular option for businesses in recent years.
Perhaps the most significant benefit is that it allows businesses to harness the insights and expertise of a CFO without having to pay for a full-time employee. This can be key to saving costs, particularly for small businesses that may not have the budget for a full-time CFO.
In addition to cost savings, hiring a fractional CFO can also save time. For example, one of the primary job functions of a fractional CFO is fractional accounting. Because experts are ready from day one, companies can save a lot of time by not having to build up an accounting team internally, which can often be time-consuming and expensive. Fractional accounting can also help businesses avoid taking on too much debt or equity. By carefully targeting key areas for growth, businesses can achieve sustainable growth without putting themselves at risk.
Finally, fractional accounting comes with all the top accounting tools necessary to do an accurate and efficient job. This can save businesses a lot of time and money in the long run.
How do you find the right fractional CFO?
Step 1: Before you can find the right partner, it’s important to first understand what you are looking for in a partner.
You should consider factors such as:
- Industry expertise
- Track record
- Ability to build a professional relationship
Is your prospect familiar with your industry or type of business? Do they have a network of contacts that could be helpful to you? Once you have a clear understanding of what you are looking for, the next step is to begin your search.
Step 2: Search for prospects
There are several ways to find potential partners, such as networking events, online directories, and recommendations from friends or colleagues. Once you have identified a few prospects, the next step is to confirm their credentials and track record of success.
Step 3: Background research
This can be done by conducting research online, asking for references, or even reaching out to their previous clients.
Have they been involved in successful businesses before? Are they respected by their peers? Once you have confirmed that your prospects are qualified and have a track record of success, the next step is to pick a partner.
Step 4: Pick a partner
This partner should be someone that you feel comfortable working with and who shares your vision for the future. If you take the time to carefully select your partner, you will be well on your way to building a successful business relationship.
How much does a fractional CFO cost?
CFOs can provide a wide range of services, from financial planning and analysis to tax preparation and compliance. Because of the wide range of services a fractional CFO can provide, the cost to employ them varies. Typically, CFOs are responsible for financial planning, budgeting, and analysis. They may also provide advice on investment opportunities and help to negotiate loans and lines of credit. CFOs who provide financial planning and analysis services may charge a higher rate than CFOs who only prepare tax returns.
The cost of a fractional CFO will vary depending on the type and size of business, as well as the number of hours worked. For smaller businesses, CFOs may charge an hourly rate of $75 per hour. For larger corporations, CFOs may charge an hourly rate of $250 per hour.
The average fractional CFO works approximately 20 hours per week, but the number of hours required can vary depending on the specific needs of the business. The cost of a CFO is also impacted by the services provided.
When selecting a CFO, it is important to consider the cost of the CFO in relation to the size and type of business. A CFO who charges a high hourly rate may not be the best choice for a small business. However, a CFO who charges a lower hourly rate may not be able to provide the same level of service to a large corporation.
A fractional CFO can help you solve your biggest financial challenges at a low cost. Whether you need help getting your organization back on track after a setback, trying to establish best practices, or looking to protect your organization from future hurdles, Rooled has a solution for you.