CFOs are becoming the most sought-after financial executives across every industry. Their role has evolved beyond traditional financial management, earning the nickname of ‘Chief Future Officer’. Yet not every company is in the position to recruit a full-time CFO when the role is exactly what their company needs.

Enter fractional CFOs.

Recruiting a fractional CFO gives companies access to the skills and experience of a senior financial executive without the financial burden of a full-time c-suite position.

At FD Capital, we’re seeing a sharp rise in start-ups and scaling companies recruiting a fractional CFO to unlock their organisation’s potential. Today’s CFOs offer a unique insight that can change a company’s fortunes with a fractional CFO acting as a steppingstone for organisations in their growth stage.

What is a Fractional CFO?

A fractional CFO is a financial executive and c-suite professional who works part-time on a contractual basis for companies, typically start-ups and SMEs. Part-time CFOs are commonly referred to as a ‘fractional CFO’.

The average contract for a fractional CFO can vary from a few hours a week to four days a week. Fractional CFOs provide companies with the flexibility to mould the role to suit their needs.

Most start-ups and SMEs don’t have the workload for a full-time CFO. Recruiting a fractional CFO allows them to develop the role and provides the option of later transitioning the financial executive to a full-time position if the need arises.

Companies typically recruit fractional CFOs with a specific responsibility in mind. Others choose to experiment with a CFO by recruiting on a fractional basis to determine if a candidate is the right fit or a more cost-effective option.

Fractional CFOs typically work with a portfolio of clients, often specialising in an industry or having a skills focus, such as debt refinancing. The role of fractional CFO is one that companies can adapt to meet their business needs.

The Benefits of Recruiting a Fractional CFO

CFOs are no longer just number crunchers and financial translators. Their responsibilities have taken on a greater strategic focus as the second-in-command to the CEO. Today’s CFOs have experience in aspects as varied as supply chain logistics and employee retention.

Companies in every industry can benefit from recruiting a fractional CFO by structuring the role to suit their needs. Understanding the benefits of hiring a fractional CFO can help you determine whether it’s the right time to start recruiting.

The current economic situation, cost-of-living crisis, and global geo-political situation make the role of CFO more vital than ever before. Their fresh perspective on company finances and strategy can enable companies to navigate the uncertain months to come.

Here are seven of the most popular reasons why our clients recruit fractional CFOs:

1. Provide Financial Strategy

The main reason companies recruit a fractional CFO is to provide financial strategy and direction. The founders of start-ups and SMEs typically don’t have financial experience or connections within fundraising circles.

Recruiting a fractional CFO enables SMEs and start-ups to navigate complicated financial situations, whether it’s providing financing for growth projects or overseeing debt refinancing. Fractional CFOs will oversee each aspect of the company’s financial management, from investor engagement to cash flow.

Your fractional CFO will offer a fresh perspective on the company’s finances, including implementing new financial systems and strategies. Recruiting a fractional CFO can free up the time of the CEO and other employees, boosting the company’s overall productivity.

2. More Cost Effective Than a Full-Time CFO

The rise in fractional CFOs means it’s no longer exclusively multinational companies and FTSE 500 companies that can afford the expertise of a CFO. A fractional CFO is a more cost-effective option than a full-time CFO, enabling start-ups and SMEs to take their company to the next level.

Companies have experienced economic turmoil since the pandemic with the current cost-of-living crisis bringing further uncertainty. The flexibility of a fractional CFO means companies can recruit affordably – whether it’s an 8-hour contract or a 4-day contract.

Recruiting a fractional CFO enables companies to scale the role in line with their growth with the option of promotion to a full-time role.

3. No Long-Term Commitment

The relationship between a CEO and CFO is crucial in determining the success of the role. Recruiting a CFO on a fractional basis means there’s no long-term commitment, particularly if the contract is a fixed term. Fractional CFOs provide the company with the flexibility to determine whether the candidate is the right fit for the company culture.

Recruiting a fractional CFO enables companies to hire at various stages of their growth cycle, as well as during times of financial uncertainty. Fractional CFOs can be hired on a fixed-term contract to oversee financial restructuring and debt management.

4. Fundraising Opportunities and Credibility

Fundraising can make or break a start-up. Scaling companies often lack the financial credibility they need to earn the attention of investors. Recruiting a fractional CFO gives a company more credibility as financial institutions and investors are more likely to engage with companies that have a CFO on board.

A start-up or scaling business can recruit a fractional CFO to oversee fundraising opportunities. A fractional CFO can be the ideal second-in-command for a CEO who lacks fundraising experience. Many fractional CFOs specialise in working with private equity houses or applying for public grants.

5. Conduct Internal Audits

Companies can find themselves falling into a rhythm with things getting overlooked. One reason you should recruit a fractional CFO is to conduct internal audits. CFOs can identify areas for potential savings and integrate new financial systems for higher efficiency.

Fractional CFOs will start by accessing the company’s financial health through an internal audit. Regular auditing will ensure adequate cash flow and that KPIs are being met.

Start-ups typically have a skills gap that includes financial literacy, meaning they don’t have the experience to conduct an audit. Recruiting a fractional CFO enables companies to understand their internal systems, adapt their strategy, and become more productive and profitable as a result.

Unlock your company’s potential by recruiting a fractional CFO with FD Capital. Start the recruitment process by visiting today.