Strategic Financial Direction For All, or Just Some?

Fractional CFO Provide Cost-effective Access To A Key Leadership Resources

It goes without saying that business leaders and entrepreneurs have certain talents and skills necessary to manage a successful business. However, those at the reigns of a company are not always multifaceted business experts, requiring effective leaders to create senior management teams. Among those leaders who oversee a company’s most critical functions, the chief financial officer (CFO) is especially important. CFOs are proven leaders with extensive experience in the financial and strategic aspects of business. But while the CFO occupies a critical role in the leadership team, not all companies have the resources or budget to hire a full-time CFO. Fortunately, there are fractional CFOs – chief financial officers who serve on a contract basis in a part-time capacity and provide a company with strategic financial support. In this post, we’ll discuss the value of fractional CFOs and cover the key considerations when evaluating a fractional CFO for your organization.

Why Do Business Owners Neglect Hiring A CFO?

One reason companies fail to hire a CFO role is that they simply “don’t know what they don’t know.” Other reasons might be that they don’t believe they can afford a CFO. What business owners often don’t realize is that a good CFO brings great value, normally greater than their cost, to an organization.

Is there really a financial impact to not hiring a CFO?

The short answer is, “yes.” A CFO provides direction, leadership and expertise in financial matters. Organizations that lack a CFO may be mispricing their products or services, improperly managing inventories, not managing contractual risk or overlooking key revenue and cost savings opportunities. These are well known CFO responsibilities but what some do not realize is that good CFOs also act as a sounding board and source of alternative ideas for the leader of the company. They challenge decision making and explore alternative business strategies to ensure the business takes the best course forward.

Is There A Magic Number Or Key Metric That Signals The Need For A CFO?

The need for a CFO depends less on spreadsheet numbers and more on the company’s strategic plan and long-term goals. Corporations experiencing growth, facing financial challenges, considering expansion, or unsure of how to capitalize on success or where to direct momentum would be well-served by a CFO. An experienced CFO can provide big-picture perspectives and evaluate the needs and opportunities of a company within the context of the broader business environment.

Why Can’t An Accounting Firm Adviser Do The Job?

When companies examine their organizational charts, many draw comparisons between CFOs and an accounting firm advisors. While accounting firms can play an essential role, they do not serve the same purpose, nor equate CFO value. Their functions are not interchangeable because accountants are often in the business of looking back – they are focused on data from previous years while preparing audits or tax returns. A proactive approach and forward-thinking, strategic mentality are primary attributes of effective CFOs. While accounting firms play an important and necessary function, a fractional CFO is imbedded in the business, seeking to understand the day-to-day operations of the business and its strategic opportunities. They are truly a member of the company’s leadership team.

Benefits Of A Fractional CFO

While the role of a Fractional CFO varies from company to company, here are the common benefits of having a Fractional CFO:

• A long-term strategic viewpoint that keeps the business on track
  
•  A knowledgeable professional willing to ask the tough questions
  
•  Timely reporting of financial results leading to proactive responses
  
•  A focus on managing your critical cash-flow position
  
•  Credibility with lenders resulting in improved relationships
  
•  An experienced eye looking for cost savings and profit improvements
  
• The power of benchmarking your results against other businesses
  
•  A mentor with definitive answers for accounting staff
  
•  Access to a broad network of proven resources
  

The Bottom Line

Simply put, CFOs are good for business. Entrusting an experienced leader to manage the growth and fiscal health of a company can ensure its profitability and help weather financial storms.

O.k., I’m Sold…But How Do I Afford A CFO?

While the benefits of the CFO role are clear, budgetary realities prevent many organizations from bringing on someone full-time. The good news is that even companies that cannot afford a CFO’s salary can still enjoy the position’s benefits. Fractional CFOs offers cost-effective, scalable solution that provide companies with limited budgets access to strategic financial support. Contact Lauber Business Partners today to discuss fractional CFO options for your business and learn more about the potential benefits to your bottom line.