fractional cfo

5 Signs Your Company Needs a Fractional CFO

A recent study reveals that 82% of businesses will fail because of problems related to cash flow. Further, 48.9% of small businesses will survive beyond five years. 

It pays to know how your company is fairing financially, but not every business has enough money to pay a full-time Chief Financial Officer. That is why many small businesses often opt to hire a fractional CFO instead.

If you think fractional CFO services can help your business grow, you are right, and here is why.

CFO Responsibilities

This executive is not an accountant or a bookkeeper. This is someone who uses their deep financial know-how to analyze a company’s data. They will develop a winning financial strategy to help an organization meet and exceed its goals.

It’s a lot like a personal financial consultant.

Accountants and bookkeepers record transactions. They also prepare financial documents.

A CFO is a person who analyzes those numbers. They see the big picture. The CFO will tell a business where they are financially and where there are opportunities for improvement.

What Is a Fractional CFO?

They bring the same expertise and experience as a full-time Chief Financial Officer. The biggest difference is that you do not need to pay the full-time salary. They also do not require vacation time or benefits, for that matter.

You sometimes hear a fractional CFO, also called an interim CFO. This type of professional is ideal for an organization that wishes to attain the strategic financial guidance of a Chief Financial Officer without 40 hours of work a week to do it (40 hours at a minimum, that is).

If you are still wondering if fractional CFO services are for you, here are five signs that may sound familiar, and if so, yes, it’s time for an outsourced CFO.

1. The Answers Do Not Come Easy

Many of the big decisions you make for your business require you to have a thorough knowledge of your finances. Your current bookkeeper or accountant may not be equipped to offer you the detailed information you are looking for to help make strategic decisions. This is a problem.

Outsourced CFO services have a primary goal to ensure that your business can make high-level strategic decisions. It is how your organization can grow sustainably. Before you can strategize for the future, you need answers to important financial questions so that you can make sound business decisions.

2. You Feel the Business Is Hemorrhaging Financially, but From Where?

Your gut is telling you that the spending for the company is out of control. You have a glimpse here and there of the details, but you don’t know everything.

The challenge you are facing is that you want to know where you can cut from. With a fractional CFO, it is about strategic spending.

You need to spend money to operate the business and increase sales, but you want to spend revenue wisely. This means you need a fractional CFO that can take a financial analysis and use that to make projections. Many executives do not have time for such details to make checks and balances.

One of the most beneficial parts of the fractional CFO is that you have someone to analyze your cash flow carefully. Beyond eliminating wasteful spending, the outsourced CFO will understand benchmarks extensively.

Often, this individual has knowledge and vendor relationships that can optimize your spending. This helps your business to be competitive in the marketplace. 

3. You Are Raising Capital

Especially if you are raising a Series C or later, enlist the help of a fractional CFO. Also, you may not be sure how much money you need to raise for a calendar year, and you may need help with a strategy for the correct debt-to-equity ratio.

Fractional CFOs typically have experience in raising capital for companies like yours in a similar industry and lifecycle stage. With their experience, this professional has credibility and the relationships to help your organization thrive and achieve business goals.

The fractional CFO will know exactly what type of financing you will need and how much. During the due diligence phase necessary to get funding, the fractional CFO will answer tough questions and negotiate contracts. This individual may even attend meetings to offer financial insight and expertise. 

4. Your AP or AR Has Gaps

This can mean that something is not jiving. It could be a sign of:

  • Cash flow issues
  • Ineffective bills
  • Collections
  • Payment processes

The fractional CFO will pinpoint your issue. This person can also develop a solution to resolve it.

5. The Board of Directors Has Tough Questions

If you find yourself in a board meeting lacking answers to some tough financial questions, seek the help of professional fractional CFO services. A financial professional like this can help you:

  • Analyze an opportunity
  • Identify a problem
  • Validate a decision
  • Address a problem

The fractional CFO can take on the responsibility of getting you the information that you need so that you can prepare for any tough question that comes your way. It is the fractional CFO that can empower you. This person will give you high-level financial knowledge, and you can take in the information they give you while discerning your own answer.

Ask Propel CFO

If you need help answering tough financial questions and strategizing for growth, but you do not want to hire someone full-time, we have your back. Propel CFO offers fractional CFO services that will meet your needs.

Our experts offer a perfect solution that will help you maximize profits.

Stop guessing and stop hemorrhaging. Let’s get you the financial answers you deserve. Contact us now.