Managing finances can often become a daunting task, especially for the busy small business owner with so many other responsibilities to juggle.
One role that can significantly ease this burden is that of a Chief Financial Officer (CFO). Traditionally, a CFO is a high-ranking executive who oversees the financial actions of a company, including tracking cash flow, financial planning, analyzing the company’s financial strengths and weaknesses, and proposing corrective actions. However, for many small businesses, hiring a full-time CFO may not be financially feasible. This is where the concept of a fractional CFO comes into play.
A fractional CFO is a financial expert who offers their services to small businesses on a part-time or contract basis. This allows businesses to reap the benefits of a CFO’s expertise without bearing the full cost of a full-time executive.
During a recent interview, Christin Price, a seasoned accountant with over two decades of experience, highlighted the importance of having someone like a fractional CFO who can provide a higher level of understanding and strategic insight into a company’s financials.
What to Look for in a Fractional CFO
When searching for a fractional CFO, it is essential to find someone who not only has a deep understanding of financial management but also has experience with your industry.
Additionally, they should be someone who can communicate effectively and openly about sensitive topics like finances.
The Advantages of a Fractional CFO
Having a fractional CFO in your small business can provide several advantages. They can offer strategic advice on cash flow, forecasting, and budgeting, which can help the business grow sustainably.
As Christin mentions, “small business owners need to know throughout the year an idea of what that tax bill is going to look like. But they also need to know what can they do to grow and to fulfill this purpose that they have with their small business.”
The Differences Between a Bookkeeper, Accountant, and CPA
Understanding the difference between a bookkeeper, an accountant, and a Certified Public Accountant (CPA) can help when deciding who is best suited to fill the fractional CFO role.
A bookkeeper is responsible for the day-to-day financial transactions of a business, such as recording invoices and balancing the checkbook.
An accountant, on the other hand, takes on a more strategic role, analyzing financial data, and providing advice on financial decisions.
A CPA, meanwhile, has a broader sense of the tax world and can represent taxpayers in front of the IRS. They have sat for the state-certified exam and have a much deeper understanding of tax codes and regulations.
Both accountants and CPAs can serve as highly qualified fractional CFOs, depending on the specific needs of your business.
In conclusion, finding the right person to fill the role of a fractional CFO can provide small business owners with valuable insights and strategic direction, leading to more sustainable growth and success.
Listen to the full interview with Christin Price in the player below.