Part-Time CFO for Small Businesses

When it comes to making decisions that will affect your bottom line, it’s best to have the insight of a CFO to go by. But hiring a full-time CFO can be expensive.

Enter part-time CFOs.

A part-time CFO handles similar duties as a full-time CFO, but at reduced hours and hence reduced cost. When it comes to small businesses, part-time CFO services are a great alternative to an unaffordable C-suite. That’s why the Wall Street Journal said that part-time CFO services are on the rise.

 

What Is a Part-Time CFO?

Many people have misconceptions of what CFOs do. They hear “financial” and think that it has to do with taxes and bookkeeping. But these are mundane tasks best left to a CPA or internal accounting staff. Such tasks would be a waste of a CFO’s expertise, which is in analyzing major financial decisions to chart the best course forward.

A CFO handles things like pricing, quantity produced, and other things that may impact on a business’s bottom line. A CFO analyzes potential decisions for their impact on sales, revenues, profits, etc. and provides recommendations on what to do.

Where these decisions may be happening with a fair degree of frequency and urgency in larger businesses, smaller businesses don’t typically have the workload that would require the attention of a full-time CFO. A part-time CFO for small businesses is a good choice that balances the need for financial expertise with the actual demand within the institution for such expertise.

Part-time CFO services, also called fractional CFO services or contract CFO services, give your business access to a CFO’s wisdom, without committing to daily engagement. Instead, you liaise with your part-time CFO a few times a month and fractional CFO rates vary based on contact time.

 

What Does a Part-Time CFO Do?

Like a full-time CFO, a part-time CFO is your organization’s highest ranking financial officer. As such, they oversee all financial data and make strategic recommendations based on their analysis.

Some line items that a part-time CFO might keep an eye on include:

  • Liquidity–This refers to the amount of cash and assets easily convertible into cash. Strong liquidity indicates an ability to pay off short term liabilities.
  • Return on Investment (ROI)–This is the revenues generated divided by the initial amount of the investment or investments your business made or is going to make. A higher return on investment, the more money is made on an initial investment.
  • Sales–This is the total amount of money made from delivering your product to end users. There are many ways to make sales, and your CFO will likely have suggestions for how to increase them and make them recurring.
  • Profits–Profits are the total amount you make in revenue minus the costs paid over the same period. Increasing profits is the central goal of most businesses.

With these and other key performance indicators, the CFO will use various analysis techniques to forecast the impact different financial decisions will have on your business. Your CFO will likely take into account not only internal metrics related to the health of your business, but also various data indicating market conditions.

In addition, your CFO will use these key performance indicators to generate reports about your financial health. From balance sheets to cash flow statements to profit and loss statements, your CFO will be able to give you a clear picture of the financial status of your business.

 

 

Why Hire a Part-Time CFO?

Many business owners see the reduced cost and contact time of a part-time CFO and think that they are compromising, but in many ways, a part-time CFO is a better alternative to a full-time CFO for a host of reasons not related to cost savings.

For starters, a part-time CFO works with several different clients, often in many industries, giving them insight that a CFO who works at one business simply doesn’t have. This means that they are better attuned to market conditions and may be able to borrow sales methods from other industries.

Another reason part-time CFOs are better is that they are not actually a part of your company. This means they won’t be affected by internal office politics and will be able to give you an outside perspective on your business.

 

Michigan CFO Associates for Part-Time CFO Services

Michigan CFO Associates is a nationwide provider of fractional CFO services. With our flexible pricing model, you can get the CFO services you need when you need them.

We have served over 200 clients in our over 16 years in business, and they consistently give us top marks for our performance. See why our clients stay with us for an average of four years. Contact us today.

 

Photo Credit: micheile dot com

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