Startups and small businesses will often reach a point in their revenue growth journey when it's beneficial to bring in outsourced expert financial talent at the CFO level.
Strategic initiatives, timely projects, and talent gaps can arise that require someone to step in with dedicated effort and specialized knowledge beyond what is currently available on the team.
Fractional CFOs and Interim CFOs are two types of outsourced CFO talent. Which type does your company need? It depends on the circumstances and how much support your team requires. Familiarize yourself with the terminology by learning what each role entails and when your company might enlist each type of outsourced CFO.
What is the difference between a Fractional CFO and Interim CFO?
Both Fractional CFOs and Interim CFOs are outside contract resources but they have different purposes and strategic value.
Fractional CFO
A Fractional CFO manages a company’s financials on a part-time and often long-term basis when the needs of the company don’t require full time support. Oftentimes, Fractional CFOs are brought in during times of transition, which could include:
Experiencing rapid growth
Dealing with cash flow challenges
Preparing for an exit
Raising capital
Merging with or acquiring another company
Preparing for an audit, Quality of Earnings (QofE) or due diligence process
Fractional CFOs can be hired as supplemental resources to augment existing financial teams. They focus on high-level strategic initiatives and projects, and when hired proactively, they can help head off financial issues and pitfalls before they become significant problems.
Fractional CFOs have multiple clients and work flexible hours as much or as little as clients require. Fractional CFOs are equipped to provide guidance on matters such as accounting systems and processes, financial reporting, financial planning and analysis, capital fundraising, mergers and acquisitions, banking and credit line management, data visualization, cash flow forecasting, budgeting, and more. Ascent CFO Solutions’ clients find immense value in both the practical and strategic advice Fractional CFOs bring to drive their business to the next level of growth.
Interim CFO
In contrast, an Interim CFO is the best choice for companies who know they need full time support and leadership for a discrete period of time before a permanent team member returns or takes over. Interim CFOs can be beneficial for companies in many scenarios including:
Team members going on parental leave or taking a leave of absence
Running an M&A process on either the sell-side or buy-side
Transitioning from a junior financial founding team to senior expertise
An inflection point of needing full-time financial leadership while searching for a permanent hire
Leading a large, later stage fundraising rounds such as a Series B or Series C round
Crisis management such as CFO turnover or leadership changes
An Interim CFO is equipped with the same skill set as a Fractional CFO. However, given the full-time nature of the role, they can be involved in a wider variety of tasks. Companies are typically beyond the startup phase to merit the full-time support of an Interim CFO.
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Ascent CFO Solutions offers both Interim CFO and Fractional CFO services to startups, small businesses, and high-growth companies of all types. Our CFO bench includes financial professionals with a variety of industry backgrounds including SaaS, manufacturing, CPG, technology, healthcare, e-commerce, professional services, real estate, construction, nonprofits, education, and more.
Contact us today for a free needs assessment to discover if a Fractional CFO or Interim CFO solution is right for your business.