While not every business has the resources to hire a full-time CFO, many leaders still require access to expertise in bookkeeping, managing cash flow, and strategic financial planning. In this case, working with a CFO consultant (or “fractional CFO”) could be a better fit for your needs.
This partnership provides in-depth financial expertise tailored to your company's goals and budget. But simply working with an outsourced CFO isn’t enough. To get the full value from the relationship, your firm also needs to take the right approach and ask the right questions.
Read on to learn the steps your company should take to maximize the value of its relationship with a CFO consultant.
G-Squared Partners is a proven strategic financial advisor serving businesses of all sizes across a variety of industries. We deliver a comprehensive suite of outsourced CFO, accounting, and bookkeeping services. Schedule a consultation today to learn more about how we can strengthen your company’s financial foundation.
The first step toward maximizing the services of a CFO consultant is to understand what they do and why businesses need fractional CFOs.
These examples, while far from exhaustive, provide a helpful overview of the most common ways that companies work with an outsourced CFO:
Financial Statement Preparation: without accurate financial statements, it’s impossible to understand how your business is performing. Working with a fractional CFO puts your financial statements in the hands of accounting and bookkeeping experts who deliver precise reports in a timely manner.
Support Securing New Financing: banks and investors often require organizations to demonstrate the maturity of their financial processes and infrastructure before approving any form of financing – whether that’s debt or equity. Hiring a fractional CFO and leveraging their expertise puts your business in the best position to get the most favorable financing and loan terms possible.
Budgeting and Forecasting: one of the most important (and overlooked) benefits of an outsourced CFO is their ability to anticipate problems before they occur. This foresight gives your business the information needed to forecast financial performance, sustain long-term growth, spot emerging trends, and capitalize on important opportunities.
Cash Flow Management: by analyzing your operations and spending, a CFO consultant can help you with tips to improve cash flow, manage your burn rate, and plan for long-term sustainability.
Due Diligence: if your business is preparing to engage in any type of M&A activity, having a trusted advisor to help navigate the financial due diligence stage is critical to your success. Partner with a CFO consultant to both prepare for the sale of your business and help you navigate the demands of a live deal.
Once your company understands what can be accomplished with a fractional CFO, it’s time to focus on finding the right partner for your firm.
The next step in maximizing the services of a CFO consultant is the selection process.
Focus on an outsourced CFO’s experience, their ability to answer your strategic questions in detail, and their history of success with clients similar to your business. Consider questions like these to determine if a fractional CFO is up to the task:
What steps will the CFO consultant take to drive financial growth?
How does the CFO consultant guarantee that reporting is accurate?
What proof points can the CFO consultant share to support the success they’ve achieved for other businesses?
What is the CFO consultant’s approach to improving business processes?
Use this vetting process to establish an open line of communication between your firm and a fractional CFO.
Once you’ve hired a CFO consultant, the next step in maximizing their services is to develop a productive working relationship.
Poor communication can turn any consultant relationship into a miserable experience. Use these best practices to make sure your outsourced finance team can deliver all of the insights and leadership your business needs to be successful.
Before you make a hire, consider your business’s current level of financial maturity and identify existing (or emerging) gaps. Could your company’s CEO benefit from strategic tips for negotiating with investors and board members? Does your business need help looking ahead with risk mitigation and forecasting? Is there a need to review day-to-day bookkeeping and accounting processes to improve decision-making processes?
Discuss questions like these to develop a clear understanding of how a fractional CFO could positively impact your business. If you can’t articulate these needs internally, your company will struggle to position an outsourced CFO for success.
Think of your fractional CFO as more than a third-party accountant. They are also a valuable resource when your business needs to tackle strategic negotiations and decision-making. They shouldn’t just be another vendor––they should be a trusted advisor, and you should treat them as such.
Addressing multi-million dollar disputes with major investors. Solving disagreements between company leadership and board members. Repairing relationships with lenders following a rescinded line of credit.
These are just a few of the numerous scenarios where a fractional CFO’s experience can be invaluable in helping your company turn a bad situation into a good opportunity.
Proactively monitor your business’ financial performance and overall progress toward strategic goals. If you see any issues start to emerge, bring your CFO consultant into the conversation as soon as possible.
For example, immediately communicate if you expect your company to fall behind on financial covenants or compliance requirements. This will allow your CFO to respond immediately and limit any long-term negative impact. By giving your CFO consultant as much notice as possible of any emerging issues, you give them the best possible chance to respond in an effective way that will address your problems.
To get the most out of your relationship with a CFO consultant, it’s important to give them a platform to be successful. Make time for your CFO consultant: meet with them on a regular cadence, share updates on your business, and make sure your team knows to proactively reach out to them.
To do this successfully, make sure you plan ahead. If you repeatedly give your outsourced CFO last-minute assignments, you’re not giving them the best opportunity to deliver real value. Whenever possible, management teams should plan out assignments and make sure that their CFO consultant has sufficient time to perform the analysis and develop effective strategic recommendations.
Finding the right CFO consultant can be a game-changer for any business. Experienced outsourced CFOs bring financial expertise to all kinds of challenges: from building out your internal accounting department to helping you raise money from investors or tackle critical performance issues.
But finding the right fractional CFO is only half the battle: you also have to develop a meaningful working relationship, rely on their input, and understand how they can help your business. With the right approach, it’s a partnership that will pay significant dividends for years to come.
G-Squared Partners offers proven fractional CFO services for businesses across multiple industry verticals. Our team is formed of experienced financial experts who specialize in delivering customized CFO services that align with the unique needs and challenges of your business.
Contact G-Squared Partners today to learn more about how we can help you run a more profitable, efficient business with the help of a CFO consultant.