As businesses scale or significantly change, they often face new financial challenges that require specialized expertise. While hiring a full-time Chief Financial Officer (CFO) might seem logical, many companies find that a fractional CFO can provide the same level of expertise with added flexibility and cost-effectiveness. To explore this trend, we spoke with Robert Weis, a seasoned expert in fractional support.
Over 36 years ago, Weis identified a unique need in the market: venture capital-backed companies with accelerated growth expectations required immediate financial guidance, but not necessarily on a full-time basis. This led to the creation of CFOs 2Go™, a partnership providing part-time and interim CFO services tailored to the specialized needs of companies across more 20 industries and stages including high-growth. Today, this concept has expanded into the 2Go Advisory Group, which offers fractional C-suite services across a wide range of functions including CEOs, COOs, CHROs, and CIOs
Weis shared his thinking about the value of fractional support and why fractional CFOs have become the go-to solution for companies experiencing breakdown or anticipating a breakdown due to a change in business operations including from growth.
What exactly is a Fractional CFO?
A fractional CFO is a financial expert who works with a company on a part-time or interim basis, offering financial leadership tailored to the business’s specific needs. This arrangement allows companies to access high-level financial expertise and guidance on demand and without the commitment of a full-time hire.
What are the benefits of engaging with a Fractional CFO?
The primary value of a fractional CFO lies in their ability to provide strategic business advisory services from a financial perspective. Fractional CFOs typically focus on high-level tasks and delegate routine accounting work, sometimes to other fractional finance and accounting professionals, ensuring clients receive real value from the engagement. This strategic approach is particularly beneficial for companies experiencing rapid growth or navigating complex financial challenges.
There are several benefits to working with a fractional CFO at different points in a company’s lifecycle:
- Affordability
Hiring a full-time CFO can be expensive, and for many small to medium-sized businesses, this is not a feasible option. Weis highlights cost flexibility as a key advantage of the model. “With fractional CFOs, the job description can be narrowed and the hours to fulfill reduced to meet affordability goals of different clients. There is even the opportunity to take the billing rate down a little occasionally and take some of the compensation deferred or in stock.,” he says.This more adaptable compensation model can be particularly relevant for pre-funded companies or underfunded turnarounds.
- Flexibility and Scalability
“Not all companies need a full-time person who will come in and work 50- hours a week,” notes Weis. “We can offer somebody that can work an agreed-upon number of hours per day, per week, or per month – whatever they need.”Companies can adjust the level of service based on their current needs, and the fractional CFO can scale their involvement to match the company’s growth and evolving financial requirements. The model also offers a lower level of risk when a company is growing quickly or trying to change direction than hiring a full-time CFO.
- Access to Specialized Expertise
Fractional CFOs, like other fractional finance and accounting experts, bring a wealth of experience from working with various industries and in different financial situations. At CFOs2Go™, Weis oversees 35 partners organized around more than 20 different practice groups for industry sectors or challenges, from Agriculture, Food & Beverage and Consumer Products, to International, Mergers & Acquisition and Crisis Management.This diversity allows CFOs2Go™ to provide specialized expertise that might not be available in-house to a company. Whether navigating a financial turnaround, preparing for an IPO, or implementing a new financial system, a fractional CFO can offer targeted skills and insights that drive business success.
- Affordability
When should companies consider hiring a fractional CFO?
Knowing when to engage a fractional CFO can make a real difference to your company’s growth trajectory and strategic direction. Some key situations where the expertise of a fractional CFO can help include:
- During Rapid Growth
If your company is experiencing rapid growth, a fractional CFO can help manage the financial complexities of expansion. They can assist in scaling operations, securing financing, and ensuring that financial systems and controls are robust enough to support growth. - During Significant Change
While fractional CFO services have their roots in early-stage companies, much of the current fractional CFO services are in more established companies that are experiencing changes in their business operations as new products or services, geographic locations, systems, financings or ownership structures.For example, in a recent engagement, Weis worked with an established specialty manufacturing company that had grown quickly during a management change. The suddenness of the change revealed some weak internal controls that had resulted in an embezzlement. “We had a fractional CFO go in and implement the necessary improvements”, he says.
However, the engagement wasn’t just about providing short-term support. The fractional CFO also took on the role of mentor to the company’s CFO, who had a controller skillset, so he could develop the relevant skills of the CFO over time This investment in the current “CFO” tends to produce a very loyal employee.
- Financial Turnarounds
In times of financial distress, a fractional CFO can provide the know-how to stabilize the business. They can develop and implement turnaround strategies, negotiate with creditors, and optimize cash flow to help the company regain its financial footing.
- During Rapid Growth
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- Temporary Gaps in Leadership or Competency
Sometimes, companies face temporary gaps in their financial leadership due to sudden departures or leaves of absence. At other times, some needed temporary experience may not be available in-house. “Sometimes, specific elements of a CFO’s job description become important or even critical that require outside supplementary help to the current CFO- for example, tax, bank, exchange compliance audits or succession, mergers & acquisition or corporate development They need someone with the expertise and experience to come in and deal with the problem so the business can move on.”A fractional CFO can fill these gaps, ensuring continuity in financial management and providing the stability needed during transitional periods.
- Temporary Gaps in Leadership or Competency
The goal is to transition from fractional to full-time financial leadership as the company grows and the fractional CFO can play a role in helping clients develop a robust internal financial department.
How does the process of engaging a Fractional CFO work?
At CFOs2Go™, onboarding prospects typically starts with a conversation with Weis, who then determines the appropriate expert or practice group to refer them to. Next comes an assessment where CFOs2Go™ puts a limited number of hours into understanding the client company. “We interview certain people and review their systems and records,” says Weis. “It’s not meant to be definitive; it’s meant to be directional.”
For instance, in one scenario, Weis encountered a company where the CFO, an intern-turned-executive with minimal accounting education, struggled to meet financial reporting standards. The assessment showed that mentoring the existing CFO and augmenting the team with additional expertise would provide the best outcome.
After the initial assessment, the fractional CFO works with the company’s existing team to implement strategies and solutions. They often work alongside other financial professionals, including outsourced financial and accounting teams like Scrubbed’s. By leveraging the strengths of various financial experts, fractional CFOs can focus on providing high-value strategic work while ensuring day-to-day financial operations are effectively managed.
What is the Future for Fractional CFOs?
Fractional CFOs represent a forward-thinking approach to how companies manage their financial operations. Looking ahead, Weis envisions a growing demand for the flexible, high-level financial expertise of fractional CFOs, driven by the increasing complexity of the business environment. ” “We try to match the need to the expertise, he says, and I think that’s only going to become more important to businesses as the marketplace demands become more challenging.”
How does the process of engaging a Fractional CFO work?
At CFOs2Go™, onboarding prospects typically starts with a conversation with Weis, who then determines the appropriate expert or practice group to refer them to. Next comes an assessment where CFOs2Go™ puts a limited number of hours into understanding the client company. “We interview certain people and review their systems and records,” says Weis. “It’s not meant to be definitive; it’s meant to be directional.”
For instance, in one scenario, Weis encountered a company where the CFO, an intern-turned-executive with minimal accounting education, struggled to meet financial reporting standards. The assessment showed that mentoring the existing CFO and augmenting the team with additional expertise would provide the best outcome.
After the initial assessment, the fractional CFO works with the company’s existing team to implement strategies and solutions. They often work alongside other financial professionals, including outsourced financial and accounting teams like Scrubbed’s. By leveraging the strengths of various financial experts, fractional CFOs can focus on providing high-value strategic work while ensuring day-to-day financial operations are effectively managed.
How Scrubbed can help
At Scrubbed, we offer global expertise tailored to your unique needs. Our comprehensive solutions, from accounting to advisory, are designed to drive your success. Learn more about how Scrubbed teams work alongside fractional CFOs to unlock potential, transform challenges into opportunities and pave the way for a prosperous future.
To discuss your firm’s unique challenges and pain points, and find out how Scrubbed can collaborate with you to unlock your business’s full potential, contact us to schedule a meeting.
About CFOs2Go™
CFOs2Go™ is a division of 2Go Advisory Group™, a San Francisco Bay Area-based pioneer in fractional C-suite services, utilizes its consulting partners and recruiting to customize solutions across executive functions.
Business owners and executives value our expertise which spans dozens of industry sectors and practice disciplines. With over 35 years at the forefront of fractional executive services, our flagship CFOs2Go® has evolved to include COOs2Go™, CHROs2Go™, CIOs2Go™, CROs2Go™ and Talent2Go™. Our multidisciplinary approach helps you navigate change, enhance executive leadership, execute business strategy, and operate in both the U.S. and internationally.
The firm utilizes technology and a network of C-Level consultants to provide local representation in virtually every metropolitan community in the U.S
