What is a fractional CFO and what do they do?

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A CFO is the Chief Financial Officer of a company or organization. Typically, they are responsible for managing a company’s finances, investments and accounting. A CFO is often tasked with analyzing financial data and making decisions based on that data.

Sometimes company’s opt for a fractional CFO instead of a full-time CFO if they feel like there may not be enough work for a full-timer.

What is a fractional CFO?

A fractional CFO is a part-time individual that manages a company’s finances, investments, and accounting. This individual will work closely with a company’s c-level team to ensure the company’s financial goals are met and risks are mitigated.

What does a fractional CFO do?

Fractional CFOs often act as a liaison between the company’s management team and the financial experts. They are responsible for analyzing financial data, making decisions, and implementing plans to ensure that the business’s financial goals are met.

In some cases, a CFO will also be tasked with developing financial policies and procedures for the company.

Differences between full-time and fractional-time CFOs

The most obvious difference between a full-time CFO and a fractional-time CFO is the amount of time they work. A full-time CFO would work an 8-hour day, Monday through Friday, for 5 days a week.

A fractional-time CFO would only be paid for the hours they work per day and not how many hours they are working each week. For example, if you were a partial-time CFO at a company that worked 40 hours per week then you would only be paid for 20 of those hours.

Another big difference is the salary associated with each role. A full-time CFO typically gets paid more than a fractional-time one due to the fact that they have more responsibilities and are expected to perform more in less time.

If your business plans to use a fractional-time CFO then it will likely save money on salary because there is no need to pay someone who only works part of each day.

Benefits of having a fractional CFO

If you have a fractional CFO, you can optimize your business’s financial performance by giving the CFO specific areas of responsibility.

For example, if your company invests in stocks and bonds, it makes sense to assign this responsibility to the CFO so that they understand the business well and make sound decisions on whether to invest or divest.

Additionally, if you have a CFO who only handles finances then it is easier for them to focus on these tasks without having to worry about other parts of the business.

It may be easier for them to find time for their work since there is no one else stepping in and taking their responsibilities away from them.

A fractional CFO also offers many benefits from a management perspective. If you have several different types of responsibilities within your organization, then having a single person in charge will help streamline your decision-making process.

And finally, with just one person managing all aspects of the business instead of several people with different roles, there will be less potential conflicts within the company which often leads to better business performance.

Should you hire a fractional CFO?

In some organizations, it makes sense to have separate divisions with different responsibilities. But if you have only one role in your company that handles all the finances, then a fractional CFO might not be necessary.

If you are looking to hire someone for your organization, then a fractional CFO is a good option. Fractional CFOs typically handle smaller parts of the job than their full-time counterparts and can take on certain tasks that either cannot or should not be taken care of by an individual.

Examples of this might include handling routine accounting duties or some marketing tasks.

When hiring multiple people to work together as a team, it is important that they have complementary skill sets and abilities so they can work together as effectively as possible.

The same applies when hiring a fractional CFO – it’s important that they are able to learn from and work with other members of the team because the success of their projects will depend on them understanding the needs and opinions of others.

Limitations of hiring a fractional CFO

Hiring a fractional CFO may not be the best idea for your company since it can complicate things. Having multiple CFOs can make it difficult to determine who is responsible for what, and it can increase the risk management burden on your company.

In addition, having two different people handling the same duties will likely result in inconsistent decision-making. It is also important to note that this approach can lead to employees being unhappy with their job responsibilities.

If you decide to go with this option then you should make sure that both of them understand their specific role, while also making sure they are able to work well together.

Final words

A fractional CFO takes care of a business’s finances, accounting, and investments. They work closely with the management team to ensure the company’s financial goals are met and risks are controlled.

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