When it comes to managing a company’s finances, a chief financial officer (CFO) plays an important function that may guide the firm towards profitability and success. Yet, due to the high expense of the function, hiring a full-time CFO may not be realistic for small to mid-sized organizations. A fractional CFO might help you save money in this situation. But which solution is best for your company?
A full-time CFO is a senior-level executive who is in charge of the company’s financial strategy and operations. They are responsible for developing and implementing financial plans, managing budgets, projecting revenue, and advising the executive team on financial matters. A full-time CFO often works in-house and is always available to the firm.
A fractional CFO, on the other hand, is a part-time financial executive engaged to provide financial services to a firm on a project or hourly basis. Typically, fractional CFOs are recruited to bridge the gap between a company’s need for financial competence and its inability to engage a full-time CFO owing to budget restrictions. Fractional CFOs work from home and are only available to the firm part-time.
Which is the better option for your business? Consider these reasons as you consider hiring a fractional or full-time CFO.
One of the main advantages of hiring a fractional CFO is cost. A full-time CFO can be expensive, with salaries averaging around $150,000 and plus per year. In addition to salary, a full-time CFO may also require additional benefits and perks, such as health insurance, retirement plans, and stock options. A fractional CFO, on the other hand, is paid on an hourly or project basis, which can be a more affordable option for businesses with a limited budget.
A full-time CFO has the advantage of working with a company on a daily basis, which allows them to develop a deep understanding of the company’s financial operations and business strategy. A fractional CFO, on the other hand, may not have the same level of familiarity with the company, but they can still provide valuable financial insights and guidance through their experience working with many companies in your field.
A fractional CFO provides businesses with the flexibility to hire financial expertise on an as-needed basis. This means that businesses can hire a fractional CFO for specific projects or during periods of financial transition, such as a merger or acquisition.
Another advantage of a fractional CFO is time. A fractional CFO\ can be available to the company as much or as little as needed. This allows businesses to get the financial expertise they need, without having to commit to a full-time employee.
Ultimately, whether you hire a full-time CFO or take advantage of fractional CFO services is determined by your company’s unique demands and budget. A fractional CFO may be a more cost-effective alternative for organizations that require financial experience on a part-time basis, whereas a full-time CFO may be more appropriate for firms that require financial expertise on a constant, daily basis. Your selection should be based on your company’s present financial demands and the resources available to satisfy those goals.