When is the right time to hire a fractional CFO?

After the pandemic hit, many enterprises had to make the tough decision of letting go of some of their employees. Therefore, a very relevant need for C-Level executives' guidance emerged to prosper and develop in a competitive market. As many economies around the world were victims of inflation and day-to-day routines were altered by stay-at-home jobs, many companies had to restructure their internal structure.

Regarding the startups, they also had to reevaluate their current situation, since hiring a permanent leader may not be the best fit for their financial state. In these cases, the addition of a fractional executive for a selected period might be a great alternative for those companies seeking guidance and direction regarding their financial position, at a lower cost.

As we know, Chief Financial Officers (CFO) are experts in the financial sector of a company and they have the responsibility of leading their organization in these matters, but do not necessarily have to be hired under a full-time agreement, they can also work as a fractional executive. A fractional CFO possesses leadership potential and can find pioneering solutions for your business as they have a strong set of skills, knowledge, and expertise. You may think that it is essential for this professional to know the whole environment of your business or industry, but they only need to comprehend the sales approach, business structures, and developments and will align their previous practices and leadership proficiency with your corporation.

Should I Hire a fractional CFO?

Evaluating if hiring a factional professional under this selected schedule could make you wonder about several aspects, like whether the fractional CFO contemplates your vision or not. The answer is yes, these C-level experts will not only comprehend the vision of your company but will persistently supervise it so that your startup can thrive to its best potential. 

In addition, an important factor to consider while deciding if a fractional CFO fits your business or not is the international atmosphere and the internal environment of the company. Most companies look to hire a CFO when they detect a flaw or a strategic need that their team cannot solve, or your company is looking to expand exponentially and needs a decision-maker to help increase profit and sustainability. 

For many companies hiring a fractional CFO has been a solution that allows them to receive the expertise and guidance of a high-level executive as they transit complex scenarios. This specialist will be responsible for taking care of the financial health of the organization, therefore, a fractional CFO might assume the tasks of developing financial planning of the business, managing cash flow, raising capital, and delivering financial results, among others.

In developing financial planning they can position the company in the best route to drive the business most innovatively and efficiently possible, this way, the budget will be distributed to the different departments and will be well invested and exact. Another important task that this executive can take over is elaborating an investment policy analysis to have a strategic guide in the implementation of the company’s investments and their economic viability. 

All of these insights will help assess and determine whether it is possible for the investments to have a positive long-term impact on the company and if not, prepare the financial sector of the company enough to take the punch and leave with little or no negative impact. Furthermore, this specialist can also optimize the financial strategy of the company by aiming to reduce costs and increase profit.

Lastly, presenting financial results involves the fractional CFO sharing the company’s financial balance sheet with the CEO in a report (made in different periods; mid-year or yearly). The advantages of such reports can be a card well played to seek and attract potential investors, besides presenting results to the company, which will increase trust and legitimacy.

Can a fractional CFO work with a CEO?

As we know, Chief Financial Officers (CFO) are experts in the financial sector of a company and they have the responsibility of leading their organization in these matters, while the CEO has other responsibilities within the company that has to do with the management of resources to allow a company to achieve its goals. 

Even though there are situations in which a CEO could take over financial duties, they could lack the financial experience required. In contrast, a fractional CFO could work perfectly taking care of the financial matters of a business, giving the CEO the freedom to focus on growing the overall strategy and vision of the company. 

A fractional CFO is an experienced CFO who guides a company for a short-term period, solving specific financial matters and giving actionable recommendations for a business to achieve its financial goals without the need of being fully employed. Because of this, this type of professional provides experience for a fraction of the cost and can adapt easily to an already working team. 

At last, a fractional CFO can not only work with a CEO but it is highly recommended to do so because it can improve the overall productivity of a team, offering guidance and accelerating the growth of a business. For example, if there’s a business with a CEO overtaken by a financial challenge, that doesn’t have a previous CFO nor the budget to hire one, then, the addition of a fractional executive for a short term period results is a great alternative for those companies seeking guidance and direction regarding their financial position, at a lower cost.

Without financial data, decision-making relies on intuition.

Decision–making is one of the most spoken and searched for abilities in an employee. It is not difficult to figure out that a CFO with the skills to use data to make decisions that will result in bigger profits and smaller risks is more than a great addition to a team. 

Data-Driven Decision Making allows a CFO to run more cost-efficient operations and identify patterns. Furthermore, it helps to focus more time and resources on analysis and results in stronger predictive capabilities for a business. Even though sometimes it’s okay to make an intuitive decision, nonetheless, the majority of business decisions should be backed by metrics or figures instead of making wild guesses.

Data-driven decision-making skills tend to lead to new business opportunities and allow to adapt in real-time to new trends or results, therefore a fractional CFO facing a new challenge for a new company can take advantage of data to diagnose, figure out an action plan, and adapt the strategy to achieve the company’s objectives.

A great CFO makes strategic decisions for your hyper-growth company

Fractional executives possess experience in several companies or industries, becoming strategic partners handling information, besides keeping record track of problem-solving to help your business scale and grow. Having a part-time executive in critical leadership spots for your business, and creating effective action plans may be what your company needs in that situation.

They can bring insight into certain ongoing strategies, the current standing of these procedures, and what their outcome will be. Another common element of working with these professionals is that fractional leaders tend to push their boundaries to create great plans and strategies for the startup, since their work is goal-oriented, they usually go beyond the expectations to achieve the established objectives.

Whether it’s converting accounting figures into business insights, relying on their experience and expertise, or acting as a voice of reason in a decision-making process for the entire team, an effective CFO can make a significant impact on your entire organization. 

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