Fractional CFO services are how we help our mid-sized companies grow into major companies. Mid-sized companies have outgrown the accounting systems they put in when they were small, but can’t necessarily hire a senior finance person as CFO. On the other hand, you are growing your business, have outgrown your simple cash based accounting and tax based books. You’re getting ready to make real business decisions on KPIs, but don’t want to pay your finance person more than you make. As a CPA firm we can offer more services than a consultant offering contract CFO services.
For the monthly cost of a senior bookkeeper or junior accountant, we’re able to put together a full accounting and finance department for you, albeit on a fractional basis. We’ll set up your fully outsourced accounting department, or work with you in a hybrid model. Generally you handle your own invoicing, but we get your bill paying organized and we move you to a purchase order system from just putting down a credit card for everything. We’ll setup all the systems to track your KPIs, and then Bette meets with your senior leadership team on a regular basis – whether that team consists of 3-4 people, or you and your dog, we’ll help you grow to the next level.
Who Needs a Fractional CFO?
Service businesses with $750,000 in revenue or product businesses with $1,500,000 or more in sales have started to outgrow their early mom-and-pop systems. Owner-operated businesses without a management team can get buy with the simpler Profit First program, but more complex organizations may want to start putting real systems earlier. If you need to get financial information to decision makers in real time, then Fractional CFO services give you the tools to make the same data-driven decisions your bigger competitors need.
As your business grows, small changes can have a big impact. A 10% improvement at a $1,000,000 company is now $100,000, while you’d ignore such a small improvement when you were just starting out. Using us to contract CFO services from let’s you find those improvements without needing to add multiple 6-figure employees to acquire finance talent.
How is Fractional CFO Services different from Outsourced Accounting?
We consider Fractional CFO part of our FaaS (Finance as as Service) and AaaS (Accounting as a Service) program, our cloud based approach to outsourced accounting. Normally outsourced accounting focuses on legacy systems like accounts receivable and accountants payable, our Fractional CFO focuses on developing the metrics you need to run your business. While MBAs have made the term “KPI” or Key Performance Indicator popular, managerial accounting dates back to the 19th Century, and forms the basis of the modern KPI Method.
But fractional CFO services is about getting your KPIs – Key Performance Indicators – out of your financial and other business data to make better decisions. We all hit a point in our business growth where we can no longer keep track of it by looking at our bank account and doing the math in our head, and bringing a serious senior manager in on a part-time basis can be critical.
Outsourced accounting services is generally just focused on bookkeeping, compliance, and keeping track of your business. It’s a cost center to your business, but it’s more cost effective than having it screwed up during the year then redone by your accountant, so it saves you money. It also helps you spread your accounting costs out across the year instead of getting tacked on to your tax preparation bill. When you find a consultant advertising as a contract CFO, their proposal won’t include the costs of your accounting services, leading to sticker shock as you get control of your finances.
But if you want to have regularly updated charts showing your business growth over time, visuals to help you identify when costs are growing faster than revenue, or need someone to reality check your business based on industry benchmarks, you’ve hit the point of needing Fractional CFO Services.
What is the ROI – Return on Investment – of this program?
Every business is a different, but generally the ROI is a mixture of cost savings and revenue growth. You should recover 50%-70% of the costs of the program from simply reducing the expenses related to your existing accounting systems. The rest of the ROI is going to be from cost savings we’ll identify in your business and revenue growth from better decision makers. If your profits don’t increase by at least what you are paying us (a 200% return), we’re not doing our job.