What is a fractional CFO?

 

A fractional CFO is a part time CFO for small to mid-sized companies. It is a cost-effective way for small businesses to get the benefits of experienced financial leadership without the cost or commitment of hiring a full-time CFO. 

 

With the fractional arrangement you get the competitive advantage of professional finance and accounting without the commitment of a full-time hire. Thanks to cloud-based bookkeeping, fractional CFOs have recently become accessible to even the smallest companies.

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What makes NewCo different from other fractional CFO consultants?

 

We take a slightly different approach from many other fractional CFO consultants. We believe the real value for small businesses comes from having reliable forecasts for cash and sales and from decision-making tools that drive growth. To quote Peter Drucker, “If it’s not measured, it can’t be improved.”

 

When you work with us, you are gaining an experienced financial partner that specializes in using data to understand what drives your business toward profitability.

 

And unlike many consultants, we won’t just dump a bunch of information on you without a clear strategy. We take time to teach our clients how to use the information to make better business decisions.

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I already have an accountant/bookkeeper. How is this different?

 

Accounting is important, but it can only tell you what has already happened. It doesn’t attempt to project into the future, and it also never tries to answer the question, “why did that happen?”

 

With NewCo you’ll gain the kind of financial analysis (also called business intelligence) that gives you the information you need to make the best possible decisions for your business.

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Why would I hire fractional CFO Services?

 

Each business is unique and can benefit from many 

 

There are many reasons a small business would benefit from professional financial strategy.

 

• You are too busy to perform bookkeeping and accounting.

• The business has strong sales but there never seems to be extra cash left over (unprofitable).

• Forecasting has become too complex or too stressful.

• Growth is limited by cash tied up in inventory or receivables.

• You want to get new debt or refinance old debt.

• You are entering a new market or pursuing vertical integration.

• You are pivoting your business plan and results are yet uncertain.

• You are bringing on new equity partners.

• You are raising outside equity capital, or

• You just closed an investment round and need to manage cash smartly.

• You are thinking about merging or acquiring another business.

 

These are just a few of the many reasons to enlist the services of an experienced financial professional. We recommend having a discussion with an advisor, your board of directors, or ownership group to consider how that level of financial support can take your business to the next level.

 

What fractional CFO services do small businesses need?

 

A fractional CFO has the same function and role in a small business as they would for any large company. The only difference is the scale.

 

Our services include:

 

• Strategizing with management and providing financial leadership and expertise

• Forecasting cash, revenue, expenses and profit

• Identifying the key metrics that drive the business and coaching the leadership in fact-based decision-making.

• Routine bookkeeping and month-end accounting

• Annual budgeting

• Monthly budget vs. actual analysis

• Negotiating debt arrangements

• Maintaining relationships with banks, lenders, and investors

• Working with CPAs on annual tax filings

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How much do fractional CFO services cost?

 

This will vary for each business. At NewCo we design a package of services for each client based on their unique needs. Good fractional CFO consulting will pay for itself over time in increased efficiency, improved decision-making, added revenue, and restructured finances.

 

Some of the factors that affect your overall cost are:

 

• Your business size. Larger businesses require more work and drive a higher cost.

• The package of services. Many small businesses already have a bookkeeper or accountant. In that case, a fractional CFO will focus on strategy and forecasting, lowering your cost.

• The team behind your CFO. A CFO with a team to delegate work to will be less expensive than an individual.

• The complexity of your balance sheet. Inventory, deferred revenue, or multiple bank accounts add bookkeeping work and can increase the cost.

• The potential impact of financial strategy. Brokering a big debt deal, helping raise equity funding, studying your gross margins, or analyzing your cost of growth could make or break your business. Therefore, a part time CFO will put in more work and careful attention.