What is a Fractional CFO, aka Virtual CFO?

In short, part-time CFOs for small companies are also known as fractional CFOs. Having a fractional CFO allows small businesses to most cost-efficiently access professional finance and accounting experience and expertise without committing to a full-time hire. And with the help of cloud-based bookkeeping, even the smallest companies are now able to gain access to fractional CFOs, as well.

Why Should You Hire Fractional CFO Services?

There is a variety of reasons a small business would benefit greatly from a customized financial strategy, including:

Your busy schedule does not allow you to perform accounting and bookkeeping.
Predicting and forecasting have become too stressful and complicated.
You are seeking vertical integration or emerging into a new market.
You are switching your business plan and are uncertain of the outcomes.
You are onboarding new equity partners.
You are collecting outside equity capital.
You have closed on an investment and must manage your cash correctly.
Your cash is tied up in receivables or inventory, and growth is severely limited.
You are seeking to refinance old debt and even get new debt.
You are considering acquiring another business or merging.

In the end, it is best to discuss your needs and options with a qualified and experienced advisor, a finance professional, or your board of directors.

What Fractional CFO Services Can Small Businesses Benefit From?

Both full-time and part-time CFOs perform the same functions, including:

Month-end accounting
Regular bookkeeping
Budgeting for the year
Actual analysis vs. monthly budget
Collaborating with management and using their financial expertise to create a strategy
Negotiating and bargaining debt arrangements
Cultivating relationships with lenders, investors, and banks
Evaluating lifetime values and customer acquisition costs
Collaborating with CPAs on annual tax filings
Maintaining the value and due diligence for all business acquisitions

How Should I Choose a Fractional CFO?

Look for an Expert in Your Industry

Whether your tasks are financially simple or complex, you must look for an experienced professional. However, suppose you are involved in more financially complex businesses such as cannabis, technology services, medical services, transportation, marketing, real estate, construction, or distribution. In that case, you may require a specialty fractional CFO to handle your case best. Other markets like SaaS, consulting services, and retail often just need a qualified CFO professional.
Consider Three Fractional CFOs
Interview your top three fractional CFO candidates with these questions in mind:
- Are they just a contractor, or will they be an integral part of our team?
- Do they understand your business and listen to your needs and concerns?
- Are they personalizing their recommended service list, or generalizing their “off the shelf” product offer?
Attend Workshops

Before paying for any services, you should learn the fractional CFO’s business style and practice. So, attend workshops to gain a better insight of your candidates.

How Much Do Fractional CFO Services Cost?

Unfortunately, there is no definitive “one-size-fits-all” cost because the services will vary for each business. However, part-time CFO services typically cost anywhere between $150-$500 per hour. This price is affected by the number of hours the fractional CFO will quote you and the individual’s efficiency and task management.

Other significant factors that will affect the overall cost include:

The size of your business. Per usual, a larger business will often require more work, thus driving up the cost.
Your balance sheet’s complexity. Deferred revenue, multiple bank accounts, and inventory increase bookkeeping work and increase the cost.
The potential outcome of the financial strategy. Your part-time CFO will have to work harder and more meticulously when making big business decisions. So, if they are studying your gross margins, analyzing the cost of growth, helping raise equity funding, and brokering a huge debt deal, be prepared to pay more than average.
The services you and your business require. If you are like many other small businesses and already have your own bookkeeper or accountant, your fractional CFO can focus on other tasks such as forecasting and creating strategies, thus lowering your overall cost.
The CFO’s team. It will be more expensive to hire a CFO with a team rather than an individual.

It’s also important to note that great fractional CFO consultations should never involve excessive quotes or unnecessary tasks. As you search for your next CFO, make sure you pay for the services you need and the right amount of work.

At Perpetual CPA, we operate based on two maxims:

1. Always strive to provide high-quality professional services and deliverables to our clients.

2. Always strive to provide more value to our clients than they pay for.

If you are looking for a qualified and experienced fractional CFO, contact Perpetual CPA today at (503)217-4114!

Located in Portland, Oregon, we are a full-service CPA firm working with clients nationwide. We offer a wide variety of services catered to assisting business owners, executives, and independent professionals from all over the country. You can trust our qualified and experienced team to handle your business affordably and efficiently every time. Call us today!

frequently asked questions

What Is A Virtual CFO & How Can It Transform My Business?
- a. A Virtual CFO can be a much-needed sounding board, coach, and guide. Outsourced Virtual CFO is generally not just one person, but an experienced team of professionals providing a full-stack Accounting and Finance Department at a fraction of the cost that it would otherwise cost a business to hire even just one full-time CFO internally. The right virtual CFO service team, such as the one at Perpetual CPA, can deliver timely, detailed, comprehensive financial reporting, interpret the financial data, prioritize recommendations, give expert guidance on how to execute those recommendations, and ultimately give a better path to business success.
How can a Virtual Accounting Department help small businesses scale and grow?
- a. A growing number of small businesses are opting to outsource services such as IT, human resources, or accounting. The benefit of a Virtual Accounting Department is that the company can reduce or increase services to accommodate current business needs. Because the service provider has multiple clients they can absorb fluctuations in workflow more easily than the average small/medium business can on its own.
  
  b. A Virtual Accounting Department can integrate with a company’s own accounting department to create a blended solution or provide a full-stack accounting department, including Accounting Staff, Manager, Controller, and Virtual CFO. By using a Virtual Accounting Department Small business owners don’t have to worry about hiring, training, figuring out compensation, and payroll compliance for the internal accounting team. Also as the business grows and new and more complex accounting and tax issues come up, the outsourced Virtual Accounting Department can provide all the needed expertise to facilitate continued business success.
What are the benefits of hiring a CPA firm?
- a. Certified Public Accountants (CPAs) do a lot more than just crunch numbers and prepare taxes. They provide valuable expertise and strategies to help businesses and individuals achieve their business and financial goals. A CPA firm can help small businesses with management financial reporting, tax compliance, strategic business advice, and much more. Firms like Perpetual CPA, that specialize in helping small and medium-sized businesses achieve growth, can also provide Virtual CFO services, that help the business owners have the foresight into the short-term future cashflows and be able to more successfully navigate their business performance.
What are the best strategies for small business growth?
- a. A business growth strategy is, simply, a plan of how a business gets from where it is today to where it wants to be in the future.
  
  b. Some of the questions to consider when coming up with a growth strategy are:
  i. Where will the business get new customers from?
  ii. How will the business expand into new markets?
  iii. What new products could the business offer?
  
  c. In reality, what happens with many small businesses, is that they generally achieve a specific level of business activity or sales and then the business growth trend flattens. In those cases, working with a firm like Perpetual CPA, which provides Virtual CFO services, can help small businesses avoid stagnation. Virtual CFO services, aside from providing timely accounting and tax reporting, can also provide valuable insight into the current performance of the business, as well as, foresight into the future cash flows for the business. Perpetual CPA Virtual CFO team helps small businesses interpret their financial information and come up with business strategies to help improve business performance and achieve growth.
What are the best strategies for small business risk management?
- a. A risk management plan helps a business develop a detailed strategy to deal with certain risks that are particularly important for the businesses’ success.
  
  b. For many small and medium-sized businesses, the easiest way to develop and implement a business risk management plan is to work with a reputable CPA firm, such as Perpetual CPA. Large corporations invest a lot of resources and time into managing risk, which is a material factor that allows those large corporations to continue to generate billions of dollars in revenue every year. Small businesses, however, almost never manage any business risks, which is the major reason that over half of all the small businesses do not survive for more than 5 years. Generally, small business owners are not experienced corporate business professionals and lack the needed business knowledge, yet they often have to wear many hats while trying to get their businesses off the ground. In those situations, a CPA firm such as Perpetual CPA, can help small businesses better manage tax compliance risks, cash flow, internal controls, business administration, financial reporting, and much more.
What is Strategic Advisory and Virtual CFO? / How do Strategic Advisory and Virtual CFO services work?
- a. When small businesses start spinning wheels, it is a good time to consider hiring a reputable CPA firm, such as Perpetual CPA, which can provide both Strategic Advice and Virtual CFO services.
  
  b. As a strategic advisor, the CPA firm will work with business management to improve the effectiveness and profitability of the business. They will look holistically at the business and find ways to operate the business more efficiently, increase customers through additional or improved marketing or improve customer touchpoints and service.
  
  c. As a Virtual CFO, the CPA firm is like a part-time version of a traditional CFO or Chief Financial Officer plus a full Accounting support team. They perform the tasks that in a larger organization would be performed by the CFO, Controller, and Accounting Staff such as preparing and overseeing the budget process, identifying and analyzing current and future trends, and developing strategies for the business growth.
How can timely financial visibility and management reporting help with better business decisions and growth?
- a. A simple way to a successful business is to prioritize the timely financial visibility and management reporting as it means:
  i. Timely financial information and analysis are essential for making informed decisions, evaluating your company’s results, improving financial performance, and ensuring you are on the path to meet your strategic goals.
  ii. Management reporting is a source of business intelligence that helps business leaders make more accurate, data-driven decisions. But, these reports are most useful if they are available timely and the management receives proper interpretation of the business financial information.

WHAT IS A FRACTIONAL CFO, AKA VIRTUAL CFO?