According to Hunt Scanlon Media, the request for interim finance executives increased by 46 percent last year illustrating businesses shift in the need for on-demand talent. The role of a fractional chief financial officer has gained prominence as companies seek strategic financial guidance without committing to a full-time executive. Understanding the nuances of this position and its relevance to your company’s financial strategy is crucial for making informed hiring decisions.
Monarch Talent Solutions collaborated with Mason Brady, a seasoned fractional CFO and President of Brady CFO, to explore the intricacies of the fractional CFO role, its differences from a full-time CFO, how to assess whether your company needs one, and to consider alternative financial positions that might also be beneficial. Understanding these aspects is crucial for making informed hiring decisions and enhancing your company’s financial strategy.
What is a Fractional CFO?
A fractional CFO, interim CFO, or part-time CFO, provides financial expertise to companies that are experiencing business transformation, recent leadership exits, or do not require or cannot afford a full-time CFO. This role involves overseeing financial operations, developing financial strategies, rebuilding the finance team, and ensuring financial stability. In some instances, fractional CFOs will convert to a full-time CFO if both parties see fit.
Fractional CFOs work with multiple clients, offering the same level of expertise and strategic insight as full-time or permanent CFOs but on a contract basis. Mason highlights that these professionals are particularly valuable for companies with revenues between $5 million and $40 million.
Fractional CFOs bring a wealth of experience from various industries and focus on providing tailored financial solutions without the overhead costs of a full-time executive.
How are Fractional and Full-Time CFOs Different?
The primary difference between fractional and full-time CFOs lies in their time commitment and cost. A full-time CFO is dedicated entirely to one company, managing all aspects of its financial health and strategy.
A full-time CFO is typically required for companies with revenues exceeding $50 million. On the other hand, fractional CFOs work with multiple clients, enabling smaller companies to benefit from high-level financial expertise without the commitment of a full-time salary. In some cases, companies will hire a fractional CFO to keep projects moving while they search for a full-time executive.
Mason explains that fractional CFOs must juggle multiple business environments and tailor their strategies to each client’s unique needs, offering flexibility and a diverse range of experiences that can benefit smaller organizations.
At What Point Does a Company Need a Fractional CFO?
Mason suggests that determining whether your company needs a fractional CFO depends on several factors, including your revenue size, financial complexity, and growth objectives. These businesses often require advanced financial management but cannot justify the expense of a full-time CFO or are amid looking for a full-time CFO. Moreover, if your company is currently undergoing rapid growth, has recently experienced the departure of a CFO, is facing cash flow challenges, or is planning significant strategic initiatives, a fractional CFO can offer the essential guidance and stability to effectively navigate these changes.
Alternative Positions You May Need to Fill
While a fractional CFO can be incredibly beneficial, it is essential to consider other financial leadership roles that might better suit your company’s needs.
For instance, a controller focuses on managing the day-to-day accounting operations, ensuring accurate financial reporting and compliance.
A finance business partner, as Mason points out, serves as a strategic advisor to various departments, providing insights to improve profitability and operational efficiency.
Depending on the specific requirements of your company, these roles may provide more specialized support compared to a fractional CFO. In such cases, it is crucial to outline company finance goals to help determine if the position you are seeking to fill aligns with one of the above finance roles.
Next Steps to Finding A Fractional CFO
Identifying and recruiting the right fractional CFO for your company involves understanding the role’s intricacies, assessing your company’s financial needs, and considering alternative positions that may better align with your objectives.
If you are situated in the Houston region, partner with Monarch Talent Solutions to outline your company’s needs and evaluate the current market to best determine the right finance executive to grow your organization.
