Fractional CFO consulting services

If hiring a full-time chief financial officer (CFO) feels premature or financially unfeasible, fractional CFO consulting might be precisely what your business needs.

As your business grows, you will likely reach a pivotal moment where financial decisions feel increasingly complex and consequential.

Managing finances and administration can be time-consuming, distracting, and burdensome. When handled by a non-expert, the job often adds little value to the business.

As a leader, you are likely facing challenges with cash flow management or perhaps preparing for a funding round.

You already see the potential for enhanced strategic financial guidance beyond what your current accounting team or bookkeeper provides.

Now is a great time to consider a higher level of financial support that can help you achieve your goals, and the answer is CFO consulting.

Is your business ready for a CFO consultant?

Before diving into the hiring process, consider whether your business would benefit from fractional CFO consultancy.

Do you believe that your current business model has untapped potential, but you lack concrete data to back up that belief?

Do you have concerns that maintaining control and oversight may distract you from focusing on your core leadership skills and strengths?

You could be well ready for a fractional CFO if you are:

• Experiencing rapid growth that's straining your current financial systems.

• Planning to raise capital or seek investment.

• Implementing new financial systems or processes.

• Finding that financial decisions are increasingly impacting strategic direction.

More to fractional CFO consulting

When you hire a fractional CFO, you're not just bringing someone in to review financial statements.

You are engaging a strategic partner who will integrate with the leadership team and promote financial excellence throughout your organisation.

How great does that sound? A business built on solid foundations.

Your fractional CFO should function as a true member of your executive team; they should:

• Attend leadership meetings.

• Contribute to strategic decisions.

• Represent your financial interests in significant business discussions.

Unlike freelancers who come in for specific projects, your fractional CFO will develop deep knowledge of your business, industry, and growth trajectory.

That’s the point of a fractional partnership.

A fractional CFO will understand you and your team, your challenges, opportunities, and long-term objectives, enabling them to provide ongoing strategic guidance and support rather than one-off recommendations.

A good fractional CFO will use the numbers as a platform to add value to your business and help it thrive.

What to expect from your fractional CFO

Strengthen the financial foundation

Your fractional CFO consultant should immediately begin strengthening the business’s financial foundation by:

• Implementing proper financial controls.

• Establishing regular reporting cadences.

• Ensuring accurate and timely financial information for informed decision-making.

• Creating comprehensive budgets and forecasts that help you manage your business, not just satisfy stakeholder requirements.

• Improving and proactively managing cash flow.

Understand and identify

Your fractional CFO should help you:

• Understand your cash cycles.

• Identify potential shortfalls before they become critical.

• Develop strategies to optimise working capital.

Relationships and fundraising

If you're planning to raise capital, your fractional CFO becomes invaluable as they will:

• Prepare investor-ready financial statements, develop compelling financial models, and manage the due diligence process.

• Establish banking relationships and credit facilities that support your growth plans.

Having an experienced CFO supporting your fundraising efforts significantly increases your chances of success and helps ensure you achieve favourable terms.

Find the right fractional CFO

Experience with SMEs matters more than you think.

A fractional CFO with deep experience working with SMEs brings understanding of key metrics, common challenges, and best practices that can accelerate your progress.

Technical skills and experience are obviously necessary, but don't underestimate the value of communication and leadership abilities.

Your fractional CFO will need to

• Work effectively with your existing team.

• Communicate complex financial concepts to non-financial stakeholders.

• Interface with investors or board members.

Look for someone who can adapt their communication style to your company culture while maintaining professional credibility.

CFO consulting rates

Most fractional CFO arrangements work on either a retainer or an hourly basis.

Rates will depend on the scope of work and level of involvement required.

Work done might translate to one to three days per month for more minor engagements or several days per week for companies requiring more intensive support.

Hourly arrangements can offer more flexibility.

Scope for fractional CFO consulting

Define the scope clearly from the beginning, and make sure you can answer questions such as:

• Will your fractional CFO attend all leadership meetings, or only those focused on financial matters?

• Do you need them available for ad-hoc questions throughout the week, or is scheduled availability sufficient?

Clear expectations prevent misunderstandings and ensure you get maximum value from the relationship.

Red flags in fractional CFO consulting

Be cautious of fractional CFOs who promise unrealistic results or timelines. Building robust financial systems and processes takes time, and anyone suggesting otherwise likely lacks an understanding of the complexity involved.

Similarly, avoid candidates who seem to have a one-size-fits-all approach rather than a genuine interest in understanding your specific business.

Be cautious of poor communication or responsiveness during the selection process. If they're difficult to reach or unclear in their communications before you hire them, this pattern will likely continue.

Your fractional CFO should be accessible and communicative, even if they're not available full-time.

Be cautious of someone claiming to be a fractional CFO who has never been explicitly employed in a CFO or Finance Director role.

You are investing in experience; ensure that your CFO has years of senior leadership experience under their belt, and preferably in similar environments to your business.

Get started with fractional CFO consulting

Begin by clearly defining what you hope to achieve with fractional CFO support.

Are you primarily focused on fundraising, improving financial controls, or strategic planning?

Your objectives will help determine the type of candidate you need and how to structure the engagement.

Develop a realistic budget for the engagement.

Remember that while fractional CFO services represent a significant investment, they typically cost 60-70% less than hiring a full-time CFO while providing similar expertise and value.

Transition period

Plan for a transition period during which your fractional CFO becomes familiar with your business.

Even experienced professionals need time to understand your specific situation, challenges, and objectives.

Factor this learning curve into your expectations and timeline.

Tips to make the most of your investment

The more prepared you are, the faster your fractional CFO can start delivering value. A skilled fractional CFO will take the time to listen and learn about your business before making recommendations.

By providing detailed information about your challenges, goals, and limitations, you enable them to customise their approach to suit your specific needs.

1. Maximise the value of your fractional CFO investment by preparing for their arrival. Start by gathering your financial records, identifying your most pressing challenges, and considering your strategic objectives.

2. Ensure that they have appropriate access to your systems and information. A fractional CFO cannot be effective if they are frequently requesting access to data or systems. Treat your fractional CFO as a member of your executive team and provide access accordingly, while still maintaining necessary security protocols.

3. Communicate openly about your concerns and objectives. Although your fractional CFO brings experience from other companies and situations, remember that every business is unique.

Final thoughts on CFO consulting services

Hiring the right fractional CFO can significantly enhance your business’s financial management and strategic decision-making.

By carefully considering the hiring process and establishing clear expectations, you can maximise the value of this important investment in your company’s future.

Take the time to find the right candidate, structure the engagement effectively, and prepare your organisation for success.

The strategic financial guidance you receive will be invaluable as you navigate the next phase of your company's growth.