How does a Fractional CFO Fit Into Your Business?
Fractional CFO, or an on-demand CFO, or virtual CFO all refer to the same role. It is someone that provides strategy and guidance related to the financial operations of a company.
A CFO is more than an accountant. An accountant focuses more on a company’s tax strategy and focuses on what has already occurred. A CFO is looking to the future. A CFO will implement and develop plans that will optimize the business’ financial performance.
A fractional CFO is someone who you would retain if you need that role to support your growth, but don’t quite need someone on your staff quite yet.
The benefits of having a virtual CFO on your team cannot be overstated. Many of our clients have appreciated having someone with the expertise to turn financial data into actionable insights. As we have recently learned through the pandemic, having that kind of support for your financial operations can help you to react quickly to change and navigate government programs.
However, a CFO provides valuable insights that affect other areas of your business. Let’s look at just three and how a CFO fits into the larger picture.
Inventory Control and Procurement
As we mentioned above, a CFO will take financial data and give it meaning. One area that CFOs can bring a lot of value is by taking the sales figures of inventory and analyzing any trends that develop.
What does that mean? A savvy CFO will notice which products are moving and at what rate. This can inform where a company chooses to expand and add more inventory. Non-performing products can be discounted and moved.
One example comes to mind. Food and beverage companies have experienced a lot of change during COVID-19. While the restaurant industry suffered greatly, consumer trends shifted for companies that provide food and beverage products.
More people returned to home cooking and had the time to experiment and build their confidence in their cooking. Additionally, because of the uncertainty of the times, many people turned to comfort food.
Revenue information is more than a bottom line. It tells a story of what is happening across the industry and allows companies to make data-backed, informed decisions for their business.
The strategic role of a CFO will come into play as she tracks these KPIs that guide your company into strong procurement decisions.
Human Resources
Numbers and people may not seem to have a lot of overlap; however, a smart CFO is going to look at employees. One of the largest expenses of any business relates to human resources. From payroll and benefits to the cost of turnover, employee engagement can have a real impact on a company’s finances.
A smart CFO will be looking at whether roles are being filled or created that promote productivity. Is your organizational chart optimized to ensure that work is distributed in a way that makes sense?
Especially during times of change, whether that is expanding or reducing staff, a strategic plan is necessary. Without a plan, someone to manage the plan and it is implemented, the change will be disorganized, disruptive, and ultimately bad for your business.
A CFO is uniquely positioned to determine how to distribute work, how to allocate resources within that budget and how to align employee engagement with the company’s business and financial goals.
Marketing
The great thing about marketing is that it is driven by measurable data, which is music to a CFO’s ears.
Today’s marketing strategies are dedicated to the long game. It’s about building relationships and building trust with your customers.
A CFO thinks about the long-term impact of any advice. Additionally, she will know the business from a bird’s eye view and be able to know what kind of resources can be dedicated to marketing.
Many companies consider their CFOs and CMOs as a power couple that works together to drive expansion. A CFO will know the business on a granular level, while a CMO is looking at sharing the company’s big picture message. Combining their perspectives is the perfect breeding ground for growth.
The Missing Piece - A Fractional CFO
You may have a good sense of your hiring, marketing, and inventory. However, is there a piece that is missing?
If you want to take your company to the next level, you need to have a fractional CFO that will look at your expenses and income and tailor a plan to get there.
If you want to learn more about our CFO services, I would encourage you to book a call. We can discuss your business goals and how our expertise can help you.
