What are the Benefits of a Fractional CFO? 10 Reasons to Hire!
Are you curious about the benefits of a fractional CFO?
If you’re like most entrepreneurs, hiring is always a tricky subject. Maybe you’re working with a virtual assistant, a team of contractors, or even your first full-time employee. You’ve got enough work coming in to pay your bills…but you’re ready to take it to the next level.
To take your business to new heights and fully unleash your gifts to the world, you need to have a deep understanding of your business’s finances — and a fractional Chief Financial Officer (CFO) can help.
In this comprehensive guide, we’ll delve into 10 compelling reasons to hire a fractional CFO.
Why hire a fractional CFO?
Before we get to the benefits, you might be wondering why someone would hire a fractional CFO in the first place.
A fractional CFO, or chief financial officer, is a financial professional who provides high-level financial management and guidance to businesses on a contractual or part-time basis. Many business owners don’t need a full-time CFO or can’t afford one, so they hire a fractional CFO to get valuable financial support without the full-time commitment.
If you’ve reached a financial, time, or fulfillment plateau in your business and you’re earning over six figures in revenue per year, a fractional CFO might be exactly what you need to reach the next level.
10 crucial benefits of a fractional CFO
Does it ever feel like you make great money, but something is holding you back from the success, impact, and lifestyle you truly desire?
If so, you could likely benefit from hiring a fractional CFO. Having a strategic financial partner on your side can help you stay on track with bookkeeping, make more informed spending decisions, and so much more.
The main benefits of a fractional CFO are:
- Crystalline clarity around your business finances
- More informed decision-making
- Access to a trusted, experienced financial advisor
- Better cash flow management
- More time to focus on what you love
- Ability to make a bigger impact with your business
- Flexible and scalable partnership
- Support for strategic long-term planning
- Increased profitability and financial health
- Total peace of mind
Let’s take a closer look at each of these.
1. Crystalline clarity around your business finances
A fractional CFO ensures that your financial records are up-to-date and accurate, giving you a clear picture of your business’s financial status. This clarity is crucial to building a business that supports you emotionally and monetarily.
When you have a full understanding of your earning and spending you can:
- Trust that you’ll continue to be supported personally by your business
- Project your profits and calculate your estimated taxes correctly
- Know when it’s time to hire and how that new hire will impact your bottom line
- Identify new cost-saving and revenue-generating opportunities
- Understand exactly where revenue is coming from, instead of falling victim to the internalized fear that it’s all a fluke
When you have someone on your team to closely monitor your financial data, you can better manage the cash in your business. Every single month, you’ll be able to ensure that you have a surplus of funds to cover your operational needs — and to pay yourself the salary you desire and deserve.
2. More informed decision-making
Maintaining accurate financial statements is essential for making informed business decisions. But if you’re in charge of running your business and handling all the finances, it can be tough (and even impossible) to find the time to keep your records up to date.
That’s why hiring a fractional CFO to handle your financial records is so beneficial. They’ll keep things up to date — and more importantly, analyze your financial data and translate it into actionable insights.
That means as the CEO of your business, you’ll always have the information you need to invest in the right growth opportunities, mitigate potential risks, and drive your business toward long-term success.
3. Access to a trusted, experienced financial advisor
If you’re like most entrepreneurs, you probably started your business because you wanted to make a meaningful impact, control your time, and live the lifestyle of your dreams… not become a finance and accounting expert.
One of the key benefits of a fractional CFO is that instead of becoming an expert, you can put one on your team. You’ll be able to rely on their decades of experience instead of trying to figure out how to manage your business finances all by yourself.
Most fractional CFOs have a wide range of financial expertise, including budgeting, forecasting, cash flow management, and risk management. They’ve likely worked with countless clients and dealt with every tricky financial situation imaginable.
That’s why when you work with a fractional CFO, what once seemed like an insurmountable obstacle or impossible goal becomes so much easier. Whether you need to launch a new offer, cut expenses, or hire your first full-time employee, a fractional CFO can give you the guidance, expertise, and strategy to do it confidently.
Psst…we believe the best fractional CFOs have a deep understanding of your industry and unique business model. Prosperity First specializes in fractional CFO services for coaches, online marketing agencies, PR firms, and other self-employed service providers. Book a free clarity call here to learn more.
4. Better cash flow management
Effective cash flow management is critical for any business. A fractional CFO can help you optimize your cash flow, ensuring that your business has the funds needed for growth and expansion.
One of the main ways a fractional CFO improves cash flow management is by conducting a thorough analysis of your current situation. This involves evaluating accounts receivable, accounts payable, and other financial metrics that directly impact cash flow.
A good fractional CFO will identify inefficiencies or bottlenecks and then recommend changes to increase cash inflows, reduce cash outflows, or accelerate the cash conversion cycle.
They may also help you secure financing or business credit and implement a cost management strategy. All of this together will improve your business’s cash flow, giving you more money to invest in growth, pay yourself, or otherwise use as you desire.
5. More time to focus on what you love
When you’re busy trying to manage your business finances, especially as someone who isn’t an expert in money management, it can become more and more challenging to find the time to focus on what you’re truly passionate about.
When you hire a fractional CFO to take on those time-consuming financial tasks, you free up your time to focus on your “zone of genius” — AKA, the business tasks that light you up, give you joy, and generate revenue.
Here are just a few tasks that you can delegate to your fractional CFO:
- Accounts payable: Managing subcontractor payments and other bills
- Accounts receivable: Sending invoices, receiving payments, and handling debt collection
- Expense management: Making sure you stay on budget and alerting you to changes in your expenses
- Bookkeeping: Handling accounts reconciliation and ensuring your books are up to date each quarter
- Profit First: Implementing Profit First percentage allocations and making transfers
Ultimately, one of the best benefits of a fractional CFO is having someone to keep you on track with your business finances all year long — finally, you can stop the panic that comes with tax season each year!
6. Ability to make a bigger impact
If you’re struggling to stay on top of your budget, frustrated with a revenue plateau, or anxious about paying the bills (even though you make good money), it’s time for a change. When you finally delegate financial management to a fractional CFO, you’ll be amazed by how much of a bigger impact you’re able to make with your business.
Maybe that means mentoring your team, launching creative new offers, or taking more sales calls. Or maybe you’re finally able to take a vacation and find a renewed love for your work. Whatever it is, hiring a fractional CFO can be transformative for your business.
Check out Prosperity First’s testimonials to see how our fractional CFO services have helped more than 500 small businesses increase their collective profit by more than $1 billion.
7. Flexible and scalable partnership
When you hire a fractional CFO, your partnership can grow as your business grows. That’s because fractional CFOs offer the flexibility to scale their involvement according to your business’s needs, whether it’s quarterly financial reviews, monthly financial strategy sessions, or even weekly check-ins.
This adaptability ensures that you have the right support when you need it. Instead of wondering how you’ll handle new revenue and expenses over time, you can rest easy knowing that you’ll always have a trusted financial partner by your side.
8. Support for strategic long-term planning
One of the core benefits of hiring a fractional CFO is that they can assist with long-term financial planning, setting your business up for success in the years to come.
Here are a few ways a fractional CFO helps you prepare for the future:
- Strategic planning for your business, including finding the sweet spot between realistic AND exciting revenue targets
- Developing a budget that feels great and allows you to keep growing
- Identifying key performance indicators to measure your progress
- Estimating taxes and creating a plan to set aside enough income each month
- Giving you guidance around your pricing and offers, so that you can build a business that feels sustainable to you
- Making sure that you’re using the right business tax classification and aren’t overpaying each year
So many entrepreneurs play a guessing game when it comes to their finances. When times are busy, it’s easy to live in the moment — but you deserve a business that will support you for years to come. A fractional CFO can help you build that business with long-term financial planning.
9. Increased profitability and financial health
A fractional CFO is dedicated to improving your business’s financial health. In fact, their main responsibilities include helping you identify potential problem areas and implement effective strategies to enhance your profitability.
For example, they can spot areas where you’re leaving money on the table and help you develop a pricing strategy to increase your profit margin. Most of the time, you wouldn’t have spotted these opportunities yourself because (we’re saying it again), you’re not the expert in this area.
Plus, if you work with a fractional CFO that uses the Profit First approach, you’ll be in an even better position to increase profitability. They’ll help you set aside a percentage of income for profit every single month — instead of allowing it all to be eaten up by your expenses.
At Prosperity First, we help all of our clients implement Profit First. Learn more about Profit First bookkeeping services here.
10. Total peace of mind
You already know that managing your business finances is stressful and overwhelming. Hiring a fractional CFO will give you peace of mind knowing that your finances are in good hands.
With a trusted advisor by your side, you can focus on growing your business and achieving your goals, without worrying about the financial details. You can finally say goodbye to your anxiety about quarterly tax payments, your endless list of financial tasks, and yes, even your money mindset blocks.
Is a fractional CFO worth it?
The question of whether a fractional CFO is worth the investment ultimately depends on your business’s unique needs and circumstances. However, if you’re an entrepreneur earning six figures or more per year, we think the benefits far outweigh the costs.
The best fractional CFOs provide more than accounting services — they act as your strategic partner, offering invaluable guidance and support as you navigate the highs and lows of running a successful business.
By alleviating financial pain points, optimizing cash flow management, and helping you make informed, data-driven decisions, a fractional CFO can completely transform your revenue, impact, and life.
Choosing the right fractional CFO for your business
Considering all the benefits they bring to the table, we think it’s safe to say that, for many businesses, a fractional CFO is not only worth the investment but is essential for achieving long-term financial success.
If you’re ready to take the leap and invest in fractional CFO services, hooray! Let me introduce myself: I’m Shaneh Woods, and I’m the fractional CFO for ambitious, driven, and woo-curious entrepreneurs.
If you’re tired of traditional accountants who only see the numbers and not the soul behind them, then you’re in the right place. I want to help you take your business to the next level, bring the soul back to your strategy, and make it f*cking FUN every step of the way. To get started, you can book a FREE clarity call with me here. I can’t wait to meet you!
