Fractional CFOs are becoming more and more popular to help businesses reap the benefits of an experienced finance professional in a cost-effective way. Here, we explain what fractional CFOs are and how they work in practice.

What is a fractional CFO?

A fractional CFO works for a number of clients part-time, instead of a full-time role in one business.

They allow businesses that don’t need a full time CFO to still get strategic financial support and advice. The fractional CFO will work with the business owners to ensure the financial strategy of the business aligns with their goals for the business. That could be ensuring long-term financial stability and profitability, developing and supporting growth plans or even readying the business for sale.

A fractional CFO can help in a variety of areas including cashflow management, providing insights on financial and non-financial management information, budgeting and cost control and helping develop finance teams.

What’s the difference between an accountant and a CFO?

In simple terms, accountants tend to deal with processing information, compliance requirements and historical reporting, whilst a CFO will look forward and forecast where the business is headed.

CFOs will take the medium to long term business goals and develop plans with various stakeholders to ensure these can be met. They will identify potential cash flow issues and offer suggestions to resolve these. They will review the business performance, including management accounts, and bring the drivers behind this to life so that changes can be made where necessary.

When do you need a fractional CFO? 

When a business needs a fractional CFO depends on a number of factors including the size and complexity of the business, the type of business, the sector it operates in and probably most significantly, the future plans and objectives that the owners have for the business.

A fractional CFO is a great solution for a business that does not need a full-time in-house resource but still needs strategic level support. They can act as a sounding board for business owners and allow them to think strategically rather than being in the day to day operations.

As well as providing ongoing support, fractional CFOs can help as part of specific projects. For example, in the lead up to a specific transaction such as a fundraising, exit, or acquisition; or they can help post-transaction to support the integration of businesses or embed new ownership structures.

Why outsource?

Outsourcing the fractional CFO role means the business gets an impartial viewpoint with no hidden agenda. The fractional CFO is not involved in the day to day of the business and can look objectively at how things are working and articulate where improvements could be made.

Fractional CFOs have a number of clients so can bring experience from other businesses and sectors that may be beneficial to your business. They can draw on a wealth of commercial business experience to highlight risk areas or bring ideas to the discussion from other sources.

How we can help

Johnston Carmichael is in a great position to provide this CFO support to a range of businesses across a variety of sectors. Our experts have significant experience in providing these insights to businesses over a number of years. We understand your business and our trusted advisers have access to specialists across the firm depending on the needs of your business.

Our offering is designed to be flexible and provide scalability during the different stages of a business’s lifecycle. As a result, taking this approach over hiring in-house support can be a cost-effective method of obtaining experienced input to your business.

Our fractional CFO support can be provided as a standalone service, or in conjunction with our wider Outsourced Finance Services (“OFS”) service. Our OFS team can take on some or all of your finance function tasks and report into the fractional CFO. Similarly, our OFS specialists can liaise closely with a fractional CFO you may have appointed separately, ensuring you have the peace of mind that your finance function is joined up and taken care of.

To find out more about fractional CFO support, get in touch with me, or our Outsourced Finance Services team.