By Matt Cronin
Many business owners, entrepreneurs, and nonprofit Executive Directors end up spending a great deal of their valuable time performing functions in the areas of finance, administration, technology, and human resources. This leaves them less time to build, operate, and lead their organizations.
There is a simple solution that many businesses are utilizing these days – the Fractional CFO. The Fractional CFO is a key advisor and business partner to the CEO/Executive Director/Owner, providing a strategic, high-level perspective and financial supports. There are many different titles used to identify the title of the person who oversees the finances of an organization – CFO, Controller, Finance Director, Comptroller, etc. Often times, the title is chosen to be consistent with other titles within the organization. For instance, if there is an Executive Director, there may be a Finance Director. Not every organization needs a CFO. However, all organizations can benefit from the skills that a CFO brings to their business. Controllers tend to be focused on producing financial statements and managing the technical and/or transactional elements of the work – accounts payable, accounts receivable, general ledger entries, and payroll. A good CFO, fractional or full-time, is usually more strategic in nature.
So what are the characteristics of a strong CFO? A strong CFO will:
- spend time educating and informing the CEO in a timely manner.
- not only prepare financial statements, but also interpret and share the implications, trends, and meaning of the financial statements in plain English.
- be able to project future results and various “what if?” scenarios.
- keep the CEO engaged in financial matters.
- be transparent in their communications, focusing on both the big picture, and the details (to the extent that both are desired).
- build and manage strong relationships in a professional, friendly manner not only with the CEO, but also with other staff, vendors, customers, funders, etc.
- have an existing network to draw upon and leverage for the benefit of the organization.
- be willing to “roll up their sleeves” and do what it takes to get the job done. At times this means performing transactional work.
- be forward thinking and strategic.
- embed himself or herself as a part of the organization’s team.
- analyze return on investment of potential projects or initiatives.
- manage resource constraints.
- help create business process improvements.
- continue to improve and grow their skills.
So what types of organizations may benefit from a fractional CFO? The immediate response is an organization that wants or needs high-level, strategic financial supports at a fraction of the cost. Other reasons to utilize a fractional CFO include the following:
An organization has the need for financial skills that it does not possess on its staff. Many businesses have solid transactional financial employees, but could benefit from adding supports to deal with more complex issues and strategies. A fractional CFO is a great way to obtain those skills at a reasonable level of investment.
An organization whose budget cannot support a full-time CFO, but can afford a fractional CFO.
An organization that wants or needs someone to supervise and oversee existing or future financial staff. Often, the best supervisors have performed the functions of those that they supervise. It’s not always easy or practical for the organization’s leader to successfully supervise financial staff.
An organization that has a CEO, Owner, or Executive Director that spends more of their time on financial, administrative, real estate, or technology issues than they should. Leaders can sometimes get bogged down performing tasks that they don’t need to instead of leading.
A young and/or small organization that is growing or has changing needs. This can include a start-up business that needs the help of a fractional CFO to create new systems, processes, and structure that will ultimately be handed off to another individual for ongoing operations.
An organization preparing to be sold or acquire another business, an organization looking to launch a new product or initiative, or even a business that aspires to enhance its profitability – fractional CFO work need not be permanent. At times, it is the right solution to address these types of challenges on an interim or project basis.
To help build a bridge through an organization’s transition. This could include the departure of a long-term CFO or financial leader. A good fractional CFO will be able to identify the critical steps that need to be taken to keep the business moving along during the transition and will help the next CFO learn about the business as well.
In summary, we live in an evolving society. Businesses are evolving to be operated in a number of different ways. Many businesses can and do benefit from the use of a Fractional CFO. It’s a healthy exercise to periodically ensure that the financial and strategic needs of your business are being met. You might just find that your business could benefit from the use of a Fractional CFO.
Matt Cronin is Founder of Boardwalk Business Group. He can be reached at firstname.lastname@example.org or (877) 475-1357.