Managing a business’s finances can be a complex task, especially when founders are preoccupied with other crucial operations such as business expansion, market penetration, and investment scouting.
However, the introduction of Fractional CFOs can bring about a significant shift and organizational-wide change. These financial experts, with their unique approach, not only reduce the burden of financial management but also strategically steer your business trajectory to pave the way for potential growth and success. They offer a distinct advantage over traditional CFOs.
Fractional CFOs, unlike full-time employees, are hired on a contractual basis to handle all the responsibilities of traditional CFOs.
It’s important to note that fractional CFOs are not just a temporary fix like interim CFOs. They can be a strategic addition to your medium-term strategy, enhancing your business’s financial planning and execution, and empowering you with strategic insights.
If you’re seeking a comprehensive understanding of fractional CFOs and why you should hire them, this blog post is your guide. It equips you with the knowledge you need to make informed decisions for your business and suggests which financial agency provides wide-ranging fractional CFO services.
Tasks and Responsibilities of a Fractional CFO
Even though fractional CFOs are not full-time employees of a firm, they still must oversee financial management and other related activities. The relevant operations and duties expected from a fractional CFO are as follows:
1. Financial Management
Managing the business’s finances tops the list of the core duties of a fractional CFO. A fractional CFO must oversee daily operations, such as monitoring the working capital and cash flow of a business.
In addition to monitoring cash, CFOs are tasked with creating budgets, investment plans, and expenditure plans for future operations. Such operations are among the core skills for which CFOs are hired.
Moreover, after carrying out all the budgeting, income, and expenditure monitoring functions, CFOs must create meticulous reports that ought to be shared with the top management of the organization, such as the C-level executives, CFO, COO, and shareholders.
2. Troubleshooting
Fractional CFOs are primarily hired when there is a complex problem that needs sorting out. Small or medium-sized businesses, especially those facing liquidity issues or an immediate need to raise capital, can greatly benefit from their expertise.
These financial experts are adept at identifying and resolving such issues, making them an asset in times of financial distress. Under such circumstances, the fractional CFO is resourceful for organizations. With their expertise, not only do organizations perform better, but also embed within healthy financial infrastructures that are fool-proof and ensure that such deteriorating scenarios don’t occur anytime soon.
3. Creating Financial Goals
Businesses, especially those at the early stage, must hire a fractional CFO to create measurable financial goals and achieve them. After understanding the industrial dynamics, business outlook and potential, and current economic scenarios, fractional CFOs create a strategic plan aiding businesses with much-needed guidance to achieve long-tern business objectives.
This often involves setting clear and achievable financial targets, identifying potential risks, and outlining the steps needed to reach the desired milestones. The expertise of fractional CFOs simply helps make informed financial decisions and work toward sustainable growth and success.
4. Transactional and Tax Audits
New business owners find audits, whether tax or transactional, daunting. The issue escalates when regulatory bodies and the government are involved. What makes audits complex is that these are often detailed, and we know here missing a number can make devastating scenarios to eventuate. For instance, tax audits include:
- Gross Receipts
- Depreciation
- Tax liabilities
- Expenses
Businesses frequently require the assistance of a fractional CFO to generate their audit reports. Due to their extensive financial expertise and thorough understanding of audit standards, fractional CFOs are an ideal choice for small and medium-sized businesses (SMBs) seeking to create comprehensive audit reports.
Benefits of Fractional CFO
There are tons of benefits in hiring a fractional CFO from monetary perspectives and the flexibility they offer. Let’s have a look at some of the most common advantages of hiring a fractional CFO.
1. Cost-Saving
Fractional CFOs are not full-time employees of the company. Consequently, they are not required to receive many perks and financial gains. Businesses and companies don’t have to pay the mammoth salary to fractional CFOs as paid to other C-level executives or CFOs, which saves them tons of cash.
Besides the savings on monetary compensation, fractional CFOs can’t leverage perks like paid leaves, medical insurance, employee discounts, retirement packages, and so on, which proves to be cost-effective for businesses.
2. Fresh Solutions & Extensive Network
Fractional CFOs are outsiders with extensive financial expertise. They also have extensive experience working in various businesses and industries. With such a tremendous portfolio and honed skills, they assist businesses with out-of-the-box solutions.
In addition to this, fractional CFOs can leverage their network to help small businesses in various ways. They can provide introductions to potential investors, strategic partners, or other professionals who can offer valuable expertise or resources.
Lastly, they can connect small businesses with industry-specific contacts and valuable networking opportunities. Leveraging their network, fractional CFOs can help small businesses expand their reach, access new markets, and navigate challenges more effectively.
Conclusion
Now that we have covered the key roles, responsibilities, and benefits of hiring a fractional CFO, it is your time to invest in such a useful resource who can change the entire organizational infrastructure. A fractional CFO can be beneficial for your organization, especially if you operate a small or medium-sized business.
Their expertise would assist your business in mitigating major challenges and ensuring its substantial growth. If you are looking for one and have an immediate need for a fractional CFO, then opt for SMB Services’ fractional CFO services.
SMB Services is a renowned agency that provides a wide range of financial and accounting services. Their fractional CFO services include financial planning and analytics, risk management, budgeting and forecasting, cash-flow management, and more. So, opt for their services and streamline your business’s financial performance.
