What Can a Fractional CFO Do For Your Small or Medium Sized Business

Does this sound familiar? You are the leader of a small or medium-sized business that has been in existence for a while. You have an accounting person – maybe even a couple. The department’s main focus is on the day-to-day accounting – accounts receivable, accounts payable, and maybe payroll. They also close the books at the end of the month and produce reports for the company’s leadership. Things are going okay. However, as the leader of the company, you would like “more” – more analysis, more strategy, more initiatives – just “more.” How do you get “more”? How much does “more” cost? Where do you start?

Option 1

You can hire a full-time Controller – possibly even a full-time CFO – or perhaps a combination of the two roles. The compensation range for such a full-time person will likely be in the $100,000 to $180,000 range, maybe even more. On top of the compensation, there are employer taxes, benefits, PTO. The costs just pile up. Additionally, if the job does not require 40 hours per week, you may find yourself paying a full-time wage for basically part-time work.

Option 2

You can hire a Fractional CFO that can manage the accounting team, can review the financials and provide insight and analysis, can implement budgets, cash flow models, and P&L forecasts. You could engage a Fractional CFO for 10-20 hours a week to accomplish this. If you need more time or less time in any given week or even month, all you need to do is alert your consultant. Your Fractional CFO is part of your team but not part of your payroll.

How do the Costs Compare?

As mentioned above, a full-time Controller or CFO or hybrid position can be expensive. Assuming you hire a mid-level Controller and the Controller’s salary is $80,000. Tack on annual costs for the employer’s portion of payroll taxes of approximately $6,000-$7,000 plus the costs of benefits, which could easily be $10,000 - $15,000, plus the amount associated with PTO where the employee would be paid but not working. All of these costs could easily be $100,000 to $115,000. And that is for a mid-level Controller. If you hired a senior-level Controller, the total costs could easily be in excess of $150,000. This analysis also assumes that you have enough work to keep the Controller busy for 40 hours a week. The costs for a full-time CFO will be even higher.

Now, let’s look at the costs of a Fractional CFO. Assuming you need 15 hours per week (3 hours per day) x $180 per hour = $2,700 per week. For 50 weeks, the cost would be approximately $135,000. There are no hidden costs. No tax, no benefits, no PTO – just the hourly rate multiplied by the number of hours worked.

Other Benefits of a Fractional CFO

When you engage a Fractional CFO, you are getting a seasoned executive with years of experience. Someone that has seen and been through a lot. You are able to tap into the CFO’s vast experience – their successes and their failures.

Following are the comments of CEO that engaged a Fractional CFO:

?I first met our Fractional CFO in 2021. At that time, our Company had been in operations for over 10 years and we had approximately 25 employees. We had totaled over $10 million in gross profit the previous year. From all appearances, we were doing well. I would not have believed that hiring a Fractional CFO for a few months would change the company forever.

Our Fractional CFO was brought in as a consultant in mid 2021, and within a few short months, his financial expertise and business-minded approach had helped the Company grow its gross profit by 9x. As a result of his dedication and hard work, the Company grew from 25 employees to an expected 100 employees by the end of 2022.

I am incredibly grateful for the work that our Fractional CFO has done for our Company. He has been a valuable asset and has helped us to achieve great things. Some additional details about our Fractional CFO's contributions to the Company:

• Implemented a comprehensive budget.?The Fractional CFO implemented a comprehensive budget for the first time in the Company's history. This budget helped the Company to track its financial performance and make informed decisions about its future.
• Reworked the sales commission structure.?The Fractional CFO reworked the sales commission structure to make it more competitive. This change helped the Company to attract and retain top sales talent.
• Developed a program for net terms.?The Fractional CFO developed a program for net terms, which allowed the Company to extend credit to its customers. This change helped the company to increase its sales.
• Implemented drastic improvements to the company's policies surrounding risk tolerance.?The Fractional CFO implemented drastic improvements to the Company's policies surrounding risk tolerance. This change helped the Company to reduce its risk and improve its financial performance.

Fractional CFO Summary

A Fractional CFO can help a small company in a number of ways, including:

• Providing financial expertise.?A Fractional CFO can provide your Company with the financial expertise it needs to make sound financial decisions. They can help you develop and implement financial plans, track your financial performance, and identify and mitigate financial risks.
• Managing your finances.?A Fractional CFO can take on the day-to-day management of your finances, freeing up your time to focus on other aspects of your business. They can handle tasks such as bookkeeping, accounts payable, and accounts receivable.
• Providing strategic guidance.?A Fractional CFO can provide your Company with strategic guidance on a variety of financial matters. They can help you develop your business plan, secure funding, and make investment decisions.
• Improving your financial reporting.?A Fractional CFO can help you improve your financial reporting so that you can better understand your Company's financial performance. They can also help you prepare financial statements that are compliant with accounting standards.
• Managing your tax affairs.?A Fractional CFO can help you manage your Company's tax affairs. They can prepare your tax returns, identify tax-saving opportunities, and help you comply with tax laws.
• Providing peace of mind.?Knowing that your Company's finances are in good hands can give you peace of mind. A Fractional CFO can provide you with the financial support you need to focus on growing your business.

Overall, a Fractional CFO can be a valuable asset to any small Company. They can provide you with the financial expertise, guidance, and support you need to make sound financial decisions and grow your business.

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