CFO Services for SMBs: When to Hire a Fractional CFO
Running a small business often means wearing multiple hats. You manage operations, oversee finances, and handle customer relationships – all on your own. But doing all these tasks efficiently becomes next to impossible as your business starts to grow.
Financial management in particular becomes quite overwhelming for small and medium businesses (SMBs) during growth period. And this is where fractional CFO services come into play.
For small and medium businesses who can practically not hire a full-time financial professional, hiring a fractional CFO can be a way to access top-notch expertise.
In this blog, we’ll tell you all about fractional CFO services, the benefits of hiring a fractional CFO and knowing when to look for a virtual CFO for small business like yourself.
What is a Fractional CFO?
Also known as an interim CFO, a fractional CFO is a financial management expert who can be hired by small and medium businesses on part-time or contractual basis. Unlike a traditional CFO, who must be paid a hefty monthly salary, fractional CFOs only get paid for their time and required services.
Fractional CFOs often work for more than one business, offering strategic planning, financial advisory, and forecasting services. For SMBs that cannot afford the full-time cost of top-tier finance experts, hiring fractional CFOs has become a popular practice to improve their financial management and planning.
Another term often used for fractional CFOs is virtual CFO for small businesses. This means that a finance expert will work with you remotely but offer the same guidance and expertise that an on-site part-time CFO would.
Common Problems Fractional CFOs Help Solve
Many SMBs often face similar financial challenges that may seem small at first but can turn into a business’s worst nightmare if not dealt with on time. Fractional CFOs step in to assist small businesses with multiple problems such as:
1. Cash Flow Problems
As per a report, 60 percent of small businesses face cash flow issues regularly, and your SMB might be one of them! A fractional CFO can help your business identify the cash leaks, create realistic budgets, and offer insightful cash flow forecasting to avoid future troubles.
2. Lack of Financial Planning
Small businesses often struggle in decision making due to the lack of a long-term financial plan. A fractional CFO service will thoroughly assess your business goals, current financial health, and devise a long-term financial plan. This is to ensure that your SMB has a solid plan that aligns with all your future goals whether it’s expanding into new markets or acquiring new businesses.
3. Inefficient Reporting
The Bane of every small business’s existence: inefficient reporting. Unclear, outdated, and inaccurate financial reports often hinder growth for small and medium businesses. Fortunately, a fractional CFO knows how to fix this issue without causing you stress or money. A virtual CFO for small businesses introduces you to financial reporting tools that make your life easier and simpler.
4. Preparing for Growth and Investment
If you’re entering a new market, preparing for funding, or growing your team, having a fractional CFO is crucial. A fractional CFO will help your small business efficiently plan all the business decisions and offer insights that are needed to attract investors and grow confidently.
When to Hire a Fractional CFO
Small businesses often do not realize when they need a fractional CFO service and remain hesitant about engaging one. Here are some scenarios in which hiring a fractional CFO would make sense:
1. Your Business is Growing Fast
Rapid growth is good, it’s exciting. But it’s also the time when your small business will face unexpected challenges and will need an expert to help you navigate through the process. Hiring a fractional CFO is essential if your company is growing.
2. You’re Making Big Financial Decisions
If you’re opening at a new location, planning a merger with another company, or simply launching a new product; all these decisions are big and come with financial risks. A fractional CFO with their expertise will offer you advisory services and insights to reduce the uncertainty.
3. Your Books Need Help
If your books are unorganized, unclear, and useless to you right now, it’s time to seek help of a fractional CFO service. A part-time CFO will help you clean your books, improve accuracy, and help you take control of the numbers.
4. You Require Forecasting
Planning for the future is difficult without accurate financial data and expert insights. A fractional CFO can create detailed financial modeling reports and forecasts based on it. This will allow you to take the next step without feeling unsure.
5. You Want to Attract Investors and Funding
Investors do not just spend their money on any business. They want a confident business owner who knows their finances and has a clear record of books to show the good numbers. A fractional CFO can help you prepare pitches, clean up your records, and offer forecasts that will please potential investors.
Benefits of Hiring a Fractional CFO
While there are numerous benefits of hiring fractional CFOs, small businesses particularly benefit from the following:
– It’s a cost-effective model for SMBs looking for expert guidance without breaking the bank
– Fractional CFOs are available on part-time, project-based, or even task-specific basis. The flexibility of this model is unmatched.
– Day-to-day bookkeeping isn’t enough anymore. Fractional CFOs offer strategic guidance that goes beyond mere number crunching and financial reporting.
– SMBs who hire fractional CFOs can get rid of operational inefficiencies. Fractional CFO services have expertise in identifying gaps, improving processes, and positively affecting the financial health of a business.
Your Financial Success Awaits You
At Arthur Lawrence, we understand how difficult it is to run a small and medium business without expert guidance. That’s why we recommend Monily, our trusted subsidiary for fractional CFO services.
With Monily, you can gain control of your finances, improve your budgeting, and benefit from top-notch financial planning offered by experienced CFOs. To learn more about Monily and its virtual CFO service, book a consultation now.