Fractional CFO: The Ultimate Guide to Driving Growth and Profitability

Whether you’re relying on an internal or outsourced bookkeeper or accountant for your day-to-day accounting, finance, and tax work, at some point your needs will outgrow their capabilities. You still need them to handle essential tasks—but you also need more.

A fractional CFO can prepare budgets, develop financial forecasts, and conduct financial modeling to help you assess what-if scenarios. They can help you understand the tax implications of your business decisions, especially if you’re considering expanding into new tax jurisdictions or venturing into global markets for the first time. If you are a consumer packaged goods company, they can ensure you are complying with strict generally accepted accounting principles (GAAP) rules for calculating cost of goods sold (COGS) or help technology companies and other innovation-focused businesses take advantage of research & development (R&D) investment tax credits and deductions.

No matter your industry or focus, a fractional CFO can provide the senior-level finance, accounting, and tax support you need to drive aggressive growth and accelerate profitability.

To gain insights on how to improve revenue and profitability, you need a solid financial foundation in place. A fractional CFO can lay that financial groundwork for you, without requiring you to hire a full-time employee.

For instance, they can help you choose and implement the right accounting software to simplify and improve recordkeeping. They can establish accounting practices and procedures that ensure everything is done accurately and consistently. And they can set up the financial reporting you need to make informed decisions—both at the organizational level and within operating units or departments—reporting back to your investors or other stakeholders.

By establishing a strong financial foundation, a fractional CFO provides the footing you need to grow strategically and profitably.

The most effective strategic decisions can make a difference in moving your business forward. But decision-making is more complex than ever—demanding that you rely on data-driven insights, not gut instinct.

A fractional CFO can provide customized insights that allow leaders across your business to make the most informed decisions. They gather and analyze data to produce accurate forecasts. They help you allocate your finite resources and capital effectively based on data trends and forecasts. And they develop and monitor key performance indicators (KPIs) that measure progress against goals.

With a fractional CFO on your team, you gain confidence to make the best decisions to grow the business and/or improve your profitability.

Business leaders recognize that they need data to enable knowledgeable decisions across the entire operation, especially when it comes to finding and capitalizing on growth opportunities. CFO-level insights provide the clarity to make increasingly complex decisions that impact a company’s ability to grow and thrive. As a decision-making tool, financial data needs to assess where your business is today and where you want it to be tomorrow.

Financial modeling plays a critical role in helping businesses evaluate various what-if scenarios and make sound decisions designed to achieve stronger growth and profitability. Financial modeling uses sophisticated software tools that combine your current financial data with assumptions about the near term, then forecast how you’ll perform in the future. By reviewing your current income statement, balance sheet, and cash flow statement—along with your historical financial data—finance professionals can use modeling to help predict what your business and your finances might look like down the road. Identifying and collecting the right data supports production of accurate forecasts for appropriate resourcing. A professional CFO’s analysis provides leaders the confidence to make the right decisions to increase market share, improve profitability, and foster growth.

You might be doing well growing revenue. But are you also taking care of your bottom line?

The more complex your business becomes, the more challenging it is to scale profitably. A fractional CFO can help you maintain your margins even through times of aggressive growth, drawing on their experience in helping many other businesses do the same. They can also help secure capital to fuel greater growth by preparing investor-ready financials that stand up to venture capital or private equity scrutiny and ensuring you don’t dilute too much ownership in the process of fundraising.

Progressive companies recognize that it’s no longer enough to tap into historical data and use it as a guide to making future decisions. Now, organizations are taking a much more forward-looking view—using predictive and prescriptive analytics to learn from the past, anticipate the future, and apply those insights to decisions. It means going beyond just considering where you have been and forecasting where you’re headed, using financial modeling to consider and assess different scenarios.

The importance of taking a forward-looking, predictive view of data cannot be overstated in the current climate; the ability to stay agile and pivot as your environment evolves can mean the difference between thriving and merely surviving. Witness how leading organizations like Wal-Mart, Target, and Netflix didn’t accurately foresee the combination of inflation and eased COVID restrictions would impact consumer demand for their products and services.   

To scale your business profitability, you need the experience and guidance of a fractional CFO.