Fractional Controller services is the affordable method we have to offer small and mid-sized businesses start to move into real financial systems. Fractional Controller is our smaller version of the Fractional CFO service, for companies that are not ready to build out a full data driven company, but need a more elaborate set of tools than simple Cash Management offered by our Starter or Profit First Packages.
Who Needs Fractional Controllers or CFOs
The main determining matter is, who makes decisions that have a financial impact. In a small owner-operated business, the owner may make every decision more substantial than ordering office supplies. In that scenario, our cash based programs for small businesses make more sense. Once you have line managers whose decisions have impacts, you need a real method to hold them accountable for spending to avoid expenses creeping up. Fractional Controller services focus on keep books on a weekly basis, while still managing cash flow as is necessary for a small business.
For the less than the monthly cost of bookkeeper, we’re able to put together an accounting department 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.
Each month, we’ll review the financial statements, and see if any red flags go off. If everything is going smoothly, these may be quick 15 minute calls. But if we find problems or areas of concern, we’ll take a deep dive together and make sure we catch things before they go too far.
How do Cash Allocations and Financial Work Together
Small businesses live and die by cash flow, not accrual profit reports. But line managers need to be able to operate within budgets that they know at the beginning of the month, not the end of the month. This may often involve a hybrid strategy where each month we set budgets for operations two months out, and learn to operate within those budgets. It may involve building sufficient cash reserves that budgets can be set on a monthly basis. Alternatively, it may involve setting up systems where we separate the forced spending and the needed spending, where the former hits every month (think rent and payroll), but the latter may have some timing flexibility (a website overhaul or equipment purchases.
As your business grows, small changes can have a big impact. A 10% improvement at a $500,000 company is now $50,000, which may allow you to hire an entire additional employee to grow your business. When your business was grossing $100,000, that improvement might have been ignored while you chase growth. As you grow your business into the over $1 Million range, these changes become more and more important.
How is Fractional Controller Services different from Outsourced Accounting?
We consider Fractional Controller part of our 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 Controller focuses on developing the metrics you need to run your business, which at the Fractional Controller stage is based upon cash based budgeting and expenditures.
Moving your bookkeeping to weekly with monthly reviews helps everyone stay on top of things, before problems can spiral out of control. You will find that this actually frees up time for you, because your weekly financial reviews will be quick and make sure your business stays on track, replacing the hours of spreadsheets and bank account checking you may be doing now.
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.