Fractional CFO is the industry term for an outsourced Chief Financial Officer (CFO); a high-level professional who replaces the need for an internal CFO. Not long ago there was no formalized concept of the Fractional CFO position. Some professionals operated in this capacity via relationship referrals or as an interim-CFO, but it wasn’t typically commonplace. There was also a time in the not-too-distant past when I.T. staff was primarily 100% in-house. Now, most entrepreneurs are wise to the fact that outsourcing all or part of that function of their business makes a lot of sense and may cost less in the end.
Why outsource these positions? For many entrepreneurs, and clients like you, there isn’t enough available capital to hire full-time CFOs or I.T. staff, nor the means of training and managing them if that’s not part of the business’ core functions. The best professional talent has also largely moved over to firms that consult with a wide variety of businesses with different needs to gain a more holistic set of skills in a more stimulating environment.
For your accounting and CFO needs, you may want to outsource specific accounting functions, the entire accounting department, the controllership position, or notably, the CFO. I’m focusing on the latter in this explanation, but clients should be aware of the fact that there is plenty of room to mix and match your business’s in-house and outsourced accounting and financial services. If you have a working idea of what you want or need in your business but aren’t sure if bookkeeping or Fractional CFO services are right for you, keep reading!
Bookkeeping is traditionally the function of entering and reconciling transactions in an accounting system. This typically includes importing bank statements, updating journal entries with transactions, and reconciling balance sheet accounts. An add-on option to bookkeeping is often a payroll service for your business if needed, for additional fees.
On the contrary, a Fractional CFO service provides you with services that include financial forecasting, cash flow management, financial reporting, budgeting, review, and explanation of key business indicator ratios (KPIs), and organization and coordination with third parties for audits and taxes. If you’ve desired better control over your finances, where your business is headed, or just find preparing everything for your taxes or audit to be better time you can spend moving the needle on your business, this is the right service for you in the coming year.
If you’re still on the fence about what options are right for you, contact us and we’d be happy to chat about the differences! We have the skill set to provide a variety of services to your business to help you meet legal requirements, manage your organization, and grow your business.