A CFO (chief financial officer) plays an important role in a business, managing finances and guiding financial decisions. But no matter how important the role may be, small businesses and startups may not have the resources to hire an in-house CFO full-time. That’s where fractional CFOs come in.
A fractional CFO can be hired part-time for as much time as you need them as you grow and expand your business. Part-time CFO services can fill in the gaps until you are ready and able to hire your own in-house CFO.
In addition to fractional CFOs, a business may choose to hire outsourced CFOs, which act as contractors outside of your business. You can outsource a CFO on either a full or part-time basis. If you only need a CFO for a short, specified amount of time, an interim CFO can fill in until you are ready to hire someone else.
In this post, we’ll cover the differences and similarities between fractional CFOs, outsourced CFOs, interim CFOs, and virtual CFOs, and provide advice for how to hire one.
CFO Services — What Does a CFO Do?
CFO stands for chief financial officer. The “chief” in the title represents an important corporate title within a company. They play a crucial role as an executive, responsible for the finances of a business. They have a wide range of roles, all relating to finances, including analyzing finances, preparing financial statements, monitoring expenses, and helping businesses make smart financial decisions.
There are many different chief positions that have corporate titles, including:
There is a hierarchy of titles within a business, and the CFO is very near to the top. CFOs are so important that they place 3rd in the hierarchy of chief business titles.
Hierarchy of executive titles:
- CEO, Chief Executive Officer
- COO, Chief Operating Officer
- CFO, Chief Financial Officer
- CIO, Chief Information Officer
- CINO, Chief Innovation Officer
- CSO, Chief Strategy Officer
- CCO, Chief Compliance Officer
- CMO, Chief Marketing Officer
CFO responsibilities include:
- Managing cash flow
- Financial planning
- Preparing financial reports
- Assessing and analyzing finances
- Economic forecasting
- Managing compliance
- Understanding rules and regulations
- Creating financial reports
- Making investment decisions
- Setting up the company for growth
- Providing financial leadership
- Providing financial recommendations to leadership and management teams
- Developing relationships with senior management, stakeholders, partners
- Giving guidance on important financial decisions
The salary of a CFO ranges considerably depending on the experience of the CFO and the industry they are working in. CFOs can be paid anywhere from $100,000 - $500,000 per year or higher for sought-after positions.
What is a Fractional CFO?
A fractional CFO only works part-time. Although they aren't a full-time fixture in the company, they still play an important role in guiding the finances and financial decisions of a business.
Fractional CFO services are ideal for businesses that want the executive guidance of a CFO but aren’t large enough to hire someone full-time. A part-time CFO is an investment in the financial future of a company. They may continue to work part-time, or their role may expand to full-time as the business and their responsibilities grow.
Fractional financial services are often sought-after by small businesses and startups that don’t yet have the capital to hire a CFO outright. A fractional CFO can be virtual depending on the needs of the business and the availability of the CFO you choose to hire.
What is an Outsourced CFO?
Outsourced CFO services are hired outside of your company. CFO outsourcing can be an advantage because the role is filled by a contractor instead of an employee.
Contract CFOs are more likely to take on part-time or fractional roles than employees, who are often looking for full-time work. When hiring contractors, employers aren’t required to cover taxes, health care, or vacation pay.
An outsourced CFO could be a fractional one if they only complete work for your business on a part-time basis. You could also have an outsourced interim CFO if you only hire their services for a short portion of time, and any of those combinations could be virtual if the CFO completes work virtually rather than in your physical office.
A 1099 form is required for contractors. Learn about the 1099 Tax Filing Requirements According to Your State.
What is an Interim CFO?
An interim CFO, or temporary CFO, is a temporary position. This is different from a fractional CFO in that they don’t (necessarily) work part-time but rather work for a short portion of time at the business. Interim CFO services vary, but interim CFOs complete the same types of tasks as outsourced or in-house CFOs, only on a short-term basis.
The interim CFO could be full-time, part-time, outsourced, or virtual, but they are a temporary fixture. They may be brought on as a company looks for the ideal hire or to fill in for an existing CFO that needs to take time away from the company but plans to come back, such as maternity leave or a leave of absence.
What is a Virtual CFO?
A virtual CFO has the same duties as a regular CFO, only they work virtually. This could be from home, a coworking space, while traveling, or anywhere in between. They communicate and interact with teammates through online means and do not participate in in-person office interactions.
Virtual CFO services are beneficial because businesses have the ability to choose from the best of the best. When hiring a virtual CFO, you are hiring from a pool of the best talent in the world instead of the best talent that happens to live near your business’s location.
They have the freedom to choose how and where they work, which can build trust, boost morale, and increase productivity. You may also choose a hybrid remote approach, which means the CFO works partially in the physical office and partially from home/virtually. Hybrid working agreements give employees or contractors the flexibility to work where they want for a portion of their working hours while keeping them involved in the physical workplace for important meetings and team building activities.
Virtual CFO pricing is similar to an in-house CFO. They have the same credentials, experience, and job tasks—the only difference is they work virtually.
How to Hire a CFO
When looking for a CFO for your business, no matter the type, it’s good to start asking around within your own networks. Ask mentors, friends, and business peers who they have worked with in the past and what services they have used for outsourcing. Getting a recommendation from the beginning helps you find a CFO that’s already backed by a positive review from someone you know.
If you fail to find a CFO through someone you know, take your search to your social networks. You can ask for recommendations within business networks, such as industry-specific Linkedin groups.
Once you have a few options to choose from, get to know them better by asking targeted questions. It’s important that you choose a CFO who aligns with your business values and understands the direction you want to take your business.
Questions to ask potential CFOs:
- What experience do you have working with businesses in a similar industry?
- How did you get into financial advising?
- What experience do you have helping businesses grow?
- What would your top priorities be for us in your first 6 months?
- Are you willing to grow with our businesses, beginning in a part-time position?
- What are you looking for in an employer?
- Which of our brand values do you connect with most?
- In what type of work environment are you the most productive?
- Why do you think you’d be a good fit for our team?
- Why do you want to be a part of our team?
- Do you have references I could speak to about your previous work?
💡 Learn about the importance of organizational fit, how to establish your company culture, and how to hire the right candidates for your business: Organizational Fit: The Importance of Culture Hiring.
Virtual CFO and CFO Consulting Services
Outsourced or contract CFO services can be hired through online networks. Below are a few options if you’re looking to hire an outsourced, interim, or virtual CFO.
More from Blue Summit Supplies
💡 An executive coach can give you guidance on important financial decisions. They can help you decide when it’s time to hire a CFO and whether an in-house, fractional, or virtual one is the best choice. Learn more about executive coaching and how to find the best one for you.
💡 Any hiring decision is a difficult one, and hiring the wrong person, no matter their position, could be a costly mistake. Read: Interviewing Remotely: Strategies for Interviewers and Candidates.
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