USE OF FRACTIONAL CFOs SERVICES
1. Smaller companies who do not need a full time CFO – Service is ongoing with a small number of hours each month but increased hours at certain times during the year. Examples - Quarter End financial reporting, Yearend requirements, Line of Credit renewals, insurance renewal, annual financial forecasting, etc.
2. Interim CFO/ Controller – Could apply to companies of any size. Usually applicable when CFO or Controller position becomes vacant due to turnover or termination. Service may be full time until replacement is found.
3. Special Projects – Company is properly staffed but there is a temporary need for additional help with special project. For example, Software conversion /upgrade, development of new financial reporting/dashboards, assistance with preparation for annual Financial Audit or Review, “correct and catch up”
4. Mentoring staff – This service often coincides with all engagements. But at times it could be the primary intention of the engagement to help an individual currently on staff elevate their skills to handle the top financial position (Controller or CFO)
1. Lower cost to company when full time CFO is not necessary
2. Quickly address temporary need
3. Find CFO Advisor with required expertise for the company/situation (i.e., technology,
tax assistance, banking, construction, etc.)
1. If used full time, cost is greater than employed CFO
2. CFO Advisor may have multiple clients and unable to respond immediately.
3. May not be onsite and engaged with management team daily.
General descriptions of responsibilities. Depending on structure and size of company, responsibilities may fall under different positions. For example in larger companies Human Resources or I.T. may report to the CEO rather than CFO.
a. Accounts Payable
b. Accounts Receivable
d. Proper booking and classification of financial transactions
e. Journal entries, General Ledger, etc.
f. Cash Forecasting and financial forecasting
g. Financial Statements
a. Ultimately responsible for Controller responsibilities above. (may be “hands on” or
b. Bank relationships, line of credit, finance arrangements
c. Human Resources including employee benefits, 401k advisor, personnel policies, etc.
d. Information Technology
e. Insurance and Risk Management
f. Strategic Planning
g. Part of the Senior Management Team
h. RFP Assistance
WHY SMART BUSINESSES ARE
EMBRACING FRACTIONAL EXECUTIVES
By Won J. You
In today’s rapidly changing business environment, marked by technological
advancements and global market shifts, many companies seek innovative ways to
remain agile and cost-effective. One of the surprising answers to this call is the
emergence of the fractional executive. As companies big and small grapple with the
uncertainties of fluctuating economies and market conditions, the fractional executive
stands out as a unique way to gain critical expertise without the cost of a full-time
WHAT IS A FRACTIONAL EXECUTIVE?
While the concept of a fractional executive has been around for decades, the rise of the
gig economy and the push for more flexible work structures coming out of the pandemic
accelerated the demand for this type of leader. The fractional executive refers to
seasoned professionals who provide leadership and strategic guidance to companies
part-time or contractual. These roles emerged as an answer to several business needs,
particularly for companies not ready or not needing a full-time C-suite executive but still
requiring the insights and direction such a person can bring.
There are fractional executives available for nearly every position. According to Ben
Wolf, the author of “Fractional Leadership: Landing Executive Talent You Thought Was
Out of Reach,” the most common ones are chief marketing officers, chief sales officers,
chief operating officers, chief financial officers and chief technology officers.
The fractional executive is differentiated from an advisor or consultant because of the
nature of their engagement model. Whereas an advisor offers mentorship and executive
support, they only provide a few hours monthly. A consultant is usually brought on to
address a specific issue, often structured on a project, time or material basis. On the
other hand, the fractional executive has a higher level of commitment, usually four to 20
hours per week on an ongoing basis. Plus, the goals of this executive are tied to the
North Star metrics of the company, typically set to quarterly goals.
THE BENEFITS OF HIRING FRACTIONAL EXECUTIVES
There are many benefits to bringing on a fractional executive.
Expertise. As small and midsize companies grow, it’s typical to find that your
organizational needs may extend beyond your existing personnel and leadership team.
Perhaps your company is struggling to increase sales, you aren’t sure how to scale the
technology in a performant manner, or you need a design leader to help improve the
user experience of your existing products. Fractional leaders can help navigate these
complex challenges because they come with decades of experience in that same
problem space or industry. They can guide your organization hands-on, working in an
integrated way with the rest of your team.
Cost-effectiveness. One of the most immediate benefits is the cost savings. Unlike full-
time executives, whose compensation packages can be extensive and include salaries,
bonuses, benefits and other overhead, fractional executives are explicitly paid for the
hours they contribute or the projects they undertake. This financial model offers
businesses substantial savings while still accessing top-tier talent. You can hire an
industry veteran with the needed experience but may need help to afford a full-time
Flexibility. Every business goes through phases — from rapid growth spurts to
consolidation periods. Fractional executives provide the elasticity to have an
experienced hand on deck when needed, without the permanence of a full-time position.
This is particularly valuable for short-term projects or during transformative business
phases. Moreover, you can de-risk the possibility of hiring the wrong person as a full-time leader. There can be long-term costs associated with bringing on a bad executive, and a fractional executive provides the opportunity to limit your exposure by doing a trial
period or short-term engagement.
Improved decision-making. With their extensive backgrounds, fractional executives
can provide crucial guidance on critical strategic decisions. Moreover, because they
aren’t ingrained into the company culture or office politics, they can offer fresh
perspectives, helping businesses identify opportunities or pitfalls that might have been
Increased productivity. Fresh eyes can often see process inefficiencies. Fractional
executives can streamline operations, introduce best practices and boost overall
productivity. Moreover, businesses can delegate tasks more judiciously with their
guidance, optimizing team outputs.
Enhanced morale. Strong leadership can invigorate a team. A fractional executive can
provide direction, mentorship and a sense of stability, all contributing to a boost in team
morale and a more cohesive work environment.
ARE FRACTIONAL EXECUTIVES RIGHT FOR YOU?
While the advantages of hiring fractional executives might be clear, how do you know if
one might suit your company? First, consider what role would have the highest impact
and is the most urgent. Do you need this leader long-term or short-term? Here are a few
example scenarios for when it might be good to hire a fractional leader.
Startups. An early-stage startup may not have the resources for a full-time
executive like a chief financial officer. This may be particularly true if a startup is
still early in its product and wants to preserve its capitalization table for
fundraising. However, the startup may need financial strategies, and capital
raising is still a critical function. A fractional CFO can fill the gap, offering financial
acumen without long-term financial commitment.
Often, for a tech startup, the key employees tend to be the CEO, CTO and chief
product officer, but the company usually needs more time for a full-time CMO,
CFO and COO, for instance.
Small businesses. Small businesses aiming to make their mark can benefit
immensely from targeted marketing. A fractional marketing executive can help
carve out a niche, optimizing resources for maximum market impact.
Midsize businesses. As businesses grow, operational efficiencies become
paramount. A fractional COO can help iron out the kinks, ensuring the company
Large enterprises. Complex IT projects and strategies in sizable organizations
often need expert guidance. A fractional CIO can be the linchpin, ensuring that IT
strategies align with business goals.
Product-driven companies. In the highly competitive world of product
development, design is paramount. Companies striving for innovation can
engage a fractional chief design officer. This expert can guide the product’s visual
and functional aspects, ensuring it meets market demands and provides an
exceptional user-centric experience, setting the product apart in the crowded
THE FRACTIONAL STRATEGY
Considering a fractional executive is not just about cost-saving; it’s a strategic decision
that aligns with contemporary business needs. It’s about leveraging expertise,
enhancing flexibility and optimizing resources. For businesses navigating today’s
dynamic landscape, it’s a solution that promises adaptability, growth and sustainable
success. Before diving in, though, companies must research and find the right fit —
after all, with the plethora of options available, the right match can be a game-changer.