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Fractional CFOs: When and Why to Bring on Board
Managing your business finances becomes increasingly complex as the company grows. Tasks that were once easily shared between business owner and accountant turn into time-consuming projects that need dedication - ideally from someone with a precision focus on business financials.
Businesses outgrow their financial structure gradually, often not realising that long-standing methods are failing until problems start to arise - cash flow struggles to keep pace, larger-scale funding options feel out of reach, and fiscal reporting fails to explain the full picture.
At the £10 million turnover mark, many businesses reach the point where a Chief Financial Officer (CFO) becomes essential - at least for some of the time.
Clifton Private Finance works alongside a partner network of fractional CFOs to deliver the financial structures and strategic insight businesses need to scale. Contact us to discuss how our corporate finance services can strengthen your financial leadership.
What is a Fractional CFO?
The position of Chief Financial Officer (CFO) is considered secondary only to the Chief Executive Officer (CEO). Responsible for high-level financial decisions that shape the direction of the business, the CFO is vital to develop financial strategy, monitor all financials, and ensure cash flow stability.
Bringing a full-time, permanent CFO into your business is a significant step towards long-term growth, however, introducing a full C-suite structure is a major commitment.
A fractional CFO undertakes the duties of a full CFO but with a different contractual arrangement. This may be:
- Part-time - Many fractional CFOs work in the role for fewer than full-time hours each week.
- Contract-based - Fractional CFO positions may be for short-term intensive projects, or on a rolling contractual or consultancy basis.
- Remote - Often, fractional CFOs work out of the office.
- Shared - Fractional CFOs typically work with multiple businesses at once, providing their service simultaneously to several client companies.
Fractional CFOs have all the experience and specialist knowledge of permanent CFOs, with equal seniority. They bring this considerable expertise to your business at the fraction of the cost of a full-time CFO.
Why Your Business Needs a Fractional CFO
As businesses grow, a comprehensive financial strategy becomes essential - far beyond simply meeting compliance obligations.
Business finances move past simply ensuring tax and salaries are paid, and become about funding structures, market analysis, capital expenditure decisions, larger payroll considerations, cash flow complexities, and more.
With a greater presence on the industry stage, there will be an increased expectation from both investors and lenders for financial acumen and corresponding reporting.
A larger business requires expertise that understands and can plan for the long-term consequences of every financial decision - experienced oversight that comes from a fractional CFO.
Your fractional CFO will help steer your business in its expansion, taking it from its strong beginnings to an exciting middle stage that grows towards corporate level success.
The Work of a Fractional CFO
A fractional CFO will take the business finances forward in a more structured way than an accountant.
It is true that the best accountancy firms may have worked alongside the business for years, being significant partners in the business's expansion to date - however, an accountant should only ever be in an advisory position. One of the most radical changes in company structure that come with the addition of a CFO, is shifting the authority and power within the business.
This will include:
- Strategic forecasting and financial modelling
- Cash flow planning
- Financial risk management
- Creation of a structure of clear financial reporting, including the implementation of KPIs and performance dashboards
- Oversight of debt strategy and management
- Preparing for investment and presenting the business for funding rounds
- Building a core finance team
When to Bring a Fractional CFO on Board
Timing the move to hire a fractional CFO can be difficult - too early, and it can be an expensive cost to the business; too late and you may waste funds and lose opportunities.
For many businesses, the right time is tied to a specific trigger - a major turning point in the company that justifies a fractional CFO and that will flourish because of one.
These include:
- Approaching £10 million turnover - The ten million mark is a significant one, and while it does not demand a fractional CFO’s input by itself, it does mean your business is now the sort of size where experienced financial acumen and full-time oversight is extremely beneficial.
- Preparing for a funding round - Major investment requires strategic thinking and hours of dedication. While early funding is typically managed by the business owner, a company that has grown to ready itself for second or third rounds of funding is likely to be more successful with a dedicated finance officer.
- New product or service launches - Significant new projects will make or break many businesses. High level financial strategy and focus will greatly improve the chance of success and give the new venture the support it needs to propel your business forward.
- Overseas expansion - Moving from a regional model to an international one often requires a re-evaluation of many business practices. A fractional CFO, especially one with a relevant background, will move your business from a national player to global corporation with efficiency.
- Cash flow tightening despite good revenue - When the numbers aren’t returning the results you are expecting, a new expert viewpoint can make all the difference. A professional financial officer will see your financial structure with clear eyes, weeding out problems and fixing issues to make the most of your current strengths and help you move forward to the next stage of growth.
Remember always that a fractional CFO is a flexible decision. You are not yet shifting to a full-time CFO, but bringing in identical expertise as a transitional tactic.
Perhaps your fractional CFO is only valuable for a short while, accomplishing that funding round, or redeveloping your cash flow strategies before moving on - it’s a powerful strategy to get your business on track before you commit to a permanent hire.
Your Fractional CFO and Clifton Private Finance
Partner with Clifton Private Finance to access our network of highly experienced fractional CFOs and bespoke corporate finance solutions. We’ll align the right expertise and funding strategies to support your business’s growth.
From optimising cash flow and restructuring debt to preparing for funding rounds and overseas expansion, we deliver the strategic expertise and funding your business needs to achieve sustainable, long-term success.
