Leading a company in today’s economy comes with significant opportunities and challenges alike. According to Forbes magazine, fighting against inflation, customer retention, changing business models, and talent wars are some of the top challenges CEOs and companies are facing today.
As a business owner, overcoming today’s challenges while reaching your business and personal goals requires resources that are not necessarily available within your company. The good news is that with the support of a Fractional CFO, owners can better manage risk, plan strategically, prepare for future acquisitions, and improve overall business value.
So, what does a Fractional CFO do?
A Fractional CFO is a seasoned financial professional who provides financial expertise and support on a part-time basis to small and medium-sized businesses. This person is very much like their full-time counterpart except they work part-time and have other fractional or consulting work to do.
You may also hear the terms Part-time CFO, Outsourced CFO or Virtual CFO.
In a nutshell, a Fractional CFO provides support for management by helping define and develop goals, processes, and procedures, implement financial strategies, analyze and prepare financial statements, and manage cash flow. Oftentimes, they assume a leadership role in the company as well.
Here are some reasons why your company would want to enlist the services of a Fractional CFO.
- Achieve Consistent Business Growth
Even if the financial data reveals the company has been growing steadily, how do you take the business to the next level of growth? A Fractional CFO gives you the senior level advice and oversight that your business needs without the cost of a full-time person. Fractional CFOs provide key business advice through a financial lens and can help uncover reasons if your business has experienced a growth plateau. They can assess the strategic initiatives needed to propel your business while leveraging your industry expertise. This outside perspective gives balance and strength to you and your management team and is tremendous in building future growth and value.
- Manage Cash Flow
CEOs that I speak with are concerned about the constraints on their cash flow due to the rising cost of supplies, services, personnel, and the overall impact of inflation. The lack of healthy cash flow can have significant consequences if your organization does not have someone who can help you strategically plan to avoid a cash crunch. If your cash flow is getting tighter or you have a new contract which is bigger than you have handled before, it may be time to bring on a Fractional CFO. You need to know well ahead of time if cash will be tight and what your options are to infuse cash into your company.
With an eye on your financials and operational data, a Fractional CFO can create a cash flow forecast and predictable models to better manage your cash and negotiate your position with lenders or investors. Optimizing working capital is one of the ways in which a business can increase cash levels in a short period of time. A Fractional CFO can help analyze your cash flow statements to determine potential cash flow improvement and forecasting cash flow by reviewing cycles of accounts receivable, payable and inventory.
Remember, a big reason many businesses fail is due to lack of proper cash flow oversight.
- Prepare Accurate and Timely Reports
Chances are you have a very reliable bookkeeper or accountant to help you manage the books. A Fractional CFO can take a deeper dive into your financial reporting. Monitoring financial documentation is necessary for effective debt management and budget allocation and provides insights into key areas of spending. Tracking and monitoring your financial information with timely reporting can ensure your business is running effectively while knowing exactly where you spend and earn your money (Cost and Profit drivers). Preparing and monitoring financial reports on a regular basis can help you make more informed decisions while being prepared for future uncertainty.
- Expand Business Relationships
A strong foundation for any business is the relationships it develops with other professionals. These people may be investors, lenders, bankers, or other stakeholders. A Fractional CFO can provide the necessary expertise to help establish and maintain good relationships. Having a network of trusted experts will improve your odds of obtaining loans, attracting investors, or finding lenders willing to provide the funds for a potential business expansion.
- Keep Up with Change
If your business is going through changes or the industry you serve is constantly evolving, you need a financial champion to provide relevant and timely information to help you make strategic business decisions. A Fractional CFO can work closely with you and your team to identify and measure the key factors that are driving your business performance. He/she can properly advise you on expanding your business, offering new products or services, and how to operate against your competition. Fractional CFOs work with clients from across various business sectors and industries, providing a breath of experience and knowledge that would otherwise not be inaccessible.
- Guide and Resource for Tax Planning
Working with your tax preparer, a Fractional CFO can help you with tax planning and preparation. They can also help you identify tax-saving opportunities. Your part-time CFO has the expertise to identify tax deductions as well as offer guidance on overall spending.
- Support in M&A Deals
For companies who are selling, raising capital, or acquiring other businesses for growth, a Fractional CFO plays a vital role at every stage in the deal process. The beginning stages of a deal include extensive due diligence, where a CFO helps solidify the story that will be presented to stakeholders on expected outcomes. Whether on the buy-side or sell-side, the CFO considers financial questions about pricing expectations, value add, and risk. Once the company has found potential acquirers, the CFO is key at negotiating on your behalf, making sure your company achieves the best deal possible. Once a deal is complete, a Fractional CFO helps make important decisions about the financial and operational structure. During the negotiation phase, a CFO becomes one of the chief mediators. The ultimate goal is to maximize synergies and derive as much value from the deal as possible.
- Add Significant Value to Your Business
A Fractional CFO can be the lifeline to your business. As your business advisor and financial champion, I help business owners make informed, data-backed decisions, improve cash flow, raise capital, achieve growth, implement systems, improve company financial performance, and transition the business at the maximum price. Examining the company’s unique challenges and future goals, and utilizing financial data, we can build a roadmap for long-term success.
From serving as CFO previously, working in a wide range of industries and experience with companies of different sizes, the client gains the benefit of deep financial insight and expertise that ensures the company is operating at top performance, cash flow is healthy, expenses are effectively managed, and opportunities are seized.
To learn more about AETucker Consulting, please visit my website, aetuckerconsulting.com. If you want to have a complimentary and confidential conversation, I’m a phone call, email or calendar invite away!