3 Signs Your Business Is In Desperate Need of a Fractional CFO

Do you have leaky cash flow problems, inaccurate forecasting, and a general lack of time or money to manage your organization’s financials? It may be time to hire a fractional CFO to save your business.

Vatsal Thakkar, CPA
May 21, 2024

Running a successful business requires founders and team members to wear many hats. But sometimes those hats don’t include financial expertise. If your team lacks the financial know-how to make informed decisions based on accurate financial data, it’s time to hire a fractional CFO. 

To learn more about what a fractional CFO is, read this post

This list could be called 100 signs your business desperately needs a fractional CFO, but we’re going to start with three. Because really, when you have a few million in revenue and no finance department, only a few things come to mind. 

  1. How to make more money.
  2. How to use the money you have in the most effective and efficient way possible.
  3. How to keep track of your money to achieve numbers one and two without burning a ton of cash or running into painful surprises down the road. 

Maybe you don’t have $250k to spend on a CFO, but you’re in desperate need of someone to handle the financials. 

That’s where a Fractional CFO enters the picture. You get the best of the CFO world without destroying your budget. Now, let’s dive into the three biggest signs that your business is in desperate need of a Fractional CFO. 

#1: Your Cash Flow Is A Mystery

If you aren’t sure where your money is going, you have a serious problem. You need to remedy that ASAP. You can easily do so by hiring a fractional CFO to help you regain control of your cash flow and ensure your business stays afloat. 

Cash flow is the lifeblood of your business. It keeps the lights on, employees paid, and operations running. Thanks to macroeconomics, we’re in a year of efficiency and profitability. This requires a complete understanding and optimization of your cash flow to ensure that you’re growing and saving as much money as possible. 

Keep reading to learn a few of the ways a fractional CFO can assist with cash flow problems. 

Cash flow forecasting and management. 

An experienced fractional CFO can help your business accurately anticipate the ebbs and flows of cash. They can identify trends and pinpoint gaps in cash flow before they happen. You want to be as proactive about your money as possible; that’s how you get ahead. 

Expense management and improvement. 

You need to know where you’re spending money, where you’re wasting money, and how effective those expenditures are. Then, your fractional CFO will provide a slew of recommendations to help cut costs, tell you where to lean in, and what will put your company in the best position to grow fastest while strengthening your bottom line.  

Efficient invoicing and payment collection practices. 

Getting paid on time is critical for maintaining healthy cash flow. A fractional CFO will assess your current receivables and payables processes, see what is and isn’t working, and then implement new processes to speed up cash coming in and slow down cash going out. 

Capital and contingency planning. 

You don’t want to be caught unaware when you’re running a business… ever. A fractional CFO can help you develop strategies tailored to your business and growth objectives. Also, they can help you access the funding you need to fuel growth and support operations while modeling different scenarios to mitigate risk. 

Cash flow isn’t just about the day-to-day expenses of keeping the lights on. It’s crucial for growth. You want to be able to seize an opportunity when it arises because you’re in a financial position to do so. 

Economic downturns and unexpected expenses happen. So, proactively managing your money means you can weather those storms and better survive the long game. 

#2: It Feels Like Your Driving With A Blindfold On 

No one wants to drive with a blindfold on, but that’s what you’re doing if you don’t have accurate forecasting and budgeting. If you feel stranded or blown off course often, it’s time to hire a fractional CFO to take the guesswork out of your roadmap. 

Running a business without accurate forecasting and budgets in place is similar to driving around in circles while trying to get across the country. You won’t get there. 

The way to get there is with accurate financial performance predictions and an exact outline of where your resources go every day, every month, every quarter, and every year. 

Do you want to see how a fractional CFO could help you with forecasting and budgeting so you don’t have to worry about it? Keep reading below to find out. 

Accurate forecasting and improved processes. 

A fractional CFO has a wealth of knowledge, so they’ll be focused on identifying weaknesses in your current forecasting processes, analyzing all of your financial data and performance up to this point, and improving the accuracy of your data to drive better decision-making within the company. 

Creating and implementing the most effective budgets. 

Budgets are essential to meeting your financial goals. Just like cash flow, if you don’t know where your money is going, you have a problem. A fractional CFO will help create a budget to track your expenses and align your spending with your business’ objectives. 

Financial monitoring and reporting. 

Creating a budget is one thing; monitoring it is another. You need accurate financial reports to understand how your business is performing. Then, you need to track your performance against your forecasts to keep your organization going in the right direction. With accurate reporting, you’ll immediately notice any deviations from the plan vs. finding out too late. 

Financial guidance and coaching. 

While a fractional CFO is invaluable for providing accurate forecasting and budgets, and optimizing cash flow, their wisdom and financial expertise will be invaluable to you as a business owner. They’ll help you understand your financial data and help you make financially sound decisions for the good of your company. 

Accurate financial reporting is indispensable, and it removes the blindfold as you grow your company. You need all of the facts to make informed decisions, set realistic goals, and measure your performance over time, and a fractional CFO can provide you with that roadmap. 

#3: You Just Don’t Have Time To Navigate Your Finances When You Should Be Focused On Growing Your Business As Quickly As Possible 

Running a business requires skill, balance, and nerves of steel. Managing your finances is a full-time job, and you don’t have that kind of time. So, how can you take some of the work off your overly-stuffed plate? You guessed it… by delegating it to the experts without breaking the bank. 

A fractional CFO can swoop in and save the day by giving you precious time back so you can focus on what really matters: building your teams, networking, and growing a business.

Let’s look at how a fractional CFO saves you time and money on all fronts. 

You don’t have to pay a full salary, yet you don’t have to sacrifice on quality. 

One of the greatest benefits of hiring a fractional CFO instead of a full-time CFO or VP of Finance is their expertise but without a yearly salary commitment. Yes, they still get paid, but by working on an as-needed basis, they still get paid what they’ve earned, and you get the financial support you so desperately need to grow. 

You can hand off the numbers and trust that your business will grow faster than when you did it all yourself. 

If you’re trying to manage, or even understand, your finances, forecasting processes, budgeting, cash flow problems, etc., on top of networking, building and launching products and services, marketing, closing deals, and more, balls will drop. It is known. 

Accurate financial reporting and optimized processes are mission-critical to your business exploding (rather than imploding). By handing that work off to someone, where it is their sole responsibility to manage the finances, you can guarantee that your numbers will improve and, quite possibly, your mood.

You can spend time hiring even more rockstars to manage growth instead of whiling away your time just to break even. 

Networking is essential for a CEO. You should be connecting with people who could be potential hires, who can get your name in front of other people, and who will buy what you’re offering. If you’re stuck behind a spreadsheet for one million hours a week, or worse, you’re neglecting that spreadsheet, you can’t do some of the most meaningful work to grow your business. 

Hiring a fractional CFO isn’t all about “balancing the books.” That’s only a portion of what they can do for you and the future of your business. Hiring a fractional CFO is about reclaiming your time, building a healthy business that can withstand any headwinds, and opening the doorway for more opportunities and growth. 

Are you ready to see what a fractional CFO can do for your business? Reach out to us right now, and we’ll tell you. 

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