What is a Fractional CFO?
A fractional CFO is a skilled finance professional who works part-time. The main catch with a fractional CFO is that you get access to the knowledge of a full-time CFO but at a fraction of the cost.
A CFO’s role does not just focus on accounting and giving financial advice, but also includes developing, advancing, and implementing an efficient business strategy, handling operational issues, change management, and market expansions.
A fractional CFO is a professional who can take on an interim leadership role in the board of directors group. The Fractional CFO can orient themselves and provide a fresh outlook while detached from the usual team. The Fractional CFO can help communicate business goals and lead toward the vision.
There are a few key questions you should ask yourself to determine if hiring a fractional CFO is the right move for your eCommerce business:
- What is my current stage of growth?
- Do I have the internal resources to support a full-time CFO?
- What are my long-term goals for my business?
Answering these questions honestly will help you make the best decision for your eCommerce business.
What is a part-time or fractional CFO?
A Fractional CFO is a skilled finance professional who offers the full range of services that a regular CFO offers but at a fraction of the cost. A Fractional CFO is adept at developing, advancing, and implementing an efficient business strategy, handling operational issues, change management, and market expansions.
Fractional CFOs can be in either Fractional (or part-time) positions, interim positions, or even on customary purpose engagements. Hiring a fractional CFO can reduce business costs by providing expert-level financial analysis and decision-making without the need to commit to a full-time salary.
There are many reasons to consider hiring a fractional CFO for your eCommerce business.
A Fractional CFO can help you develop and implement an efficient business strategy
- Handle operational issues.
- Manage change.
- Expand your market reach.
What Does a Fractional CFO Do?
1. Troubleshooting Specific Problems
A fractional CFO can help a business with objectives such as creating a clear and concise list of goals, focusing on candidates’ ability to deliver on those goals, and budget forecasting.
Most eCommerce businesses will eventually need to hire a fractional CFO. The main benefit of having a fractional CFO is that they can provide financial expertise and guidance without the overhead of a full-time CFO.
A fractional CFO can help you with financial planning and analysis, decision support, and financial reporting. They can also help you with raising capital and managing cash flow.
If you are thinking about hiring a fractional CFO, the main thing to consider is whether or not you need the extra financial expertise and guidance that they can provide. If you feel like you can handle your finances on your own, then you may not need to hire a fractional CFO.
They can also advise businesses on how to grow, invest, and spend money in order to reduce their tax burden and other financial liabilities. Additionally, they can offer guidance on how to optimize operations in order to increase the business’s competitiveness. Ultimately, hiring a fractional CFO can help eCommerce businesses make more informed decisions about their finances.
2. Facilitating Fast Growth
A Fractional CFO plays an important role in facilitating fast growth for businesses with high growth potential, by providing financial guidance and guidance on raising capital.
For eCommerce businesses, a Fractional CFO can provide invaluable insights on how to best structure your business to scale quickly and efficiently. They can also help you navigate the complex world of online sales and marketing, and provide guidance on how to best use your eCommerce platform to drive growth.
The Fractional CFO helps to manage and grow the company’s cash flow, identify and invest in new opportunities, as well as secure financing. Hiring a fractional CFO can be beneficial for an eCommerce business looking to accelerate their growth.
3. Creating Healthy Financial Infrastructure
A fractional CFO is an accountant who specializes in financial planning and management for smaller businesses. A fractional CFO helps small businesses to manage their finances effectively and efficiently.
Why is this important?
Creating a healthy financial infrastructure is essential for any business, but especially important for smaller businesses. A fractional CFO can help eliminate disruptions associated with budgeting and goal setting and provide the CEO or company president with a clear understanding of the future.
How can I learn more?
If you’re interested in learning more about fractional CFOs and how they can help your business, there are plenty of resources available online. You can start by doing a simple search on Google, or checking out some of the articles we’ve linked to below.
4. Aligning Finances Around Goals
Working with a fractional CFO can help bring alignment between the financial strategy and growth goals of an eCommerce business.
The fractional CFO’s primary objective is to provide insight into the financial aspects of the business in order to make informed decisions about how to grow the business.
Additionally, they may assist in fundraising activities, investor relations, and more to ensure that finances are in line with desired outcomes.
How much does it cost to hire a part-time or fractional CFO for your ecommerce business?
1. Expertise and qualifications
The cost of hiring a full-time CFO is more expensive than hiring a part-time or fractional CFO for an eCommerce business.
A fractional CFO specializes in eCommerce accounting and can provide invaluable guidance on implementing strategies and protocols to reduce costs. Additionally, they can help speed up growth by providing oversight and recommendations, as well as helping guide businesses toward financial fluency. for example, a fractional CFO can help you:
- Understand your business’s financials and key performance indicators (KPIs)
- Develop and implement cost-saving strategies
- Make data-driven decisions to grow your business
- Understand and manage your tax liability
- Stay compliant with financial regulations
2. Financials
The cost of hiring and retaining a full-time CFO can range from $150k to $250k per year. Hiring and maintaining a fractional CFO, however, is less expensive and more manageable.
Fractional CFOs are experienced in ecommerce accounting and can provide financial guidance, cash flow management, benchmarking, and other financial advice unique to the digital world.
A fractional CFO can be a cost-effective way to have an outsourced financial executive for an ecommerce business that offers flexibility as well as frees up time for business owners to focus on other aspects of their business.
For example, if you are thinking about expanding your ecommerce business, a fractional CFO can help you with financial projections and advice on the best way to grow your business.
3. Compliance
Compliance is an important factor to consider when hiring a part-time or fractional CFO for an ecommerce business, as they are responsible for following applicable laws and regulations.
Fractional CFOs have the same legal obligations as full-time CFOs and must ensure all financial transactions are properly documented in accordance with accepted accounting principles.
Failing to comply with the law can result in costly fines or other penalties, which can negatively impact the profitability of any business.
For example, The Sarbanes-Oxley Act of 2002 is one law that affects ecommerce businesses. This act requires all public companies to maintain accurate financial records and disclose any fraudulent activity. A fractional CFO can help an ecommerce business stay compliant with this and other laws.
While some ecommerce businesses may not need the full-time services of a CFO, hiring a fractional CFO can be a wise decision. A fractional CFO can provide the financial expertise and oversight that may be lacking in an ecommerce business. This can help to ensure that the business is run in a financially sound manner and that any legal requirements are met.
4. Benefits
The benefits of hiring a Fractional CFO for an eCommerce business include guidance on business growth, cash flow management and financial forecasts, improving efficiency, and helping to steer the business towards financial fluency.
A Fractional CFO also provides the same insights and guidance as a traditional in-house CFO but with a specialization in eCommerce. Hiring a Fractional CFO can save money on an eCommerce budget compared to hiring a full-time CFO due to their hourly rates being lower than those of Seller Accountants.
For example, A Fractional CFO can help an eCommerce business in a number of ways, including providing guidance on business growth, cash flow management, and financial forecasting.
They can also help to improve efficiency and steer the business towards financial fluency. Compared to hiring a full-time CFO, a Fractional CFO can save money on an eCommerce budget due to their lower hourly rates.
5. Fluency
When considering the cost of hiring a part-time or fractional CFO for an ecommerce business, it is important to note that the hourly rate of a fractional CFO is higher than that of a full-time staff member.
Additionally, depending on experience and qualifications, full-time CFOs can cost between $150,000 and $250,000 per year. However, fractional CFOs are usually more affordable than in-house CFOs and have specialized knowledge of eCommerce accounting.
They provide the same insights and guidance as in-house CFOs but specialize in eCommerce. They also offer oversight and recommendations on cash flow management as well as financial forecasts and benchmarking. Furthermore, they can also help to guide businesses to financial fluency through strategies implementation.
All things considered, there are many advantages associated with hiring a Fractional CFO which should be explored further before making any decisions.
6. Start-ups
When it comes to financial operations for ecommerce businesses, hiring a fractional CFO can be worth considering.
Although more expensive than hiring a full-time CFO, fractional CFOs provide businesses with an hourly rate and come with less risk as they do not have control over the business. The average hourly rate for an outsourced CFO is $300, however, prices may vary depending on the hours required by the part-time CFO.
for example, a business that requires 10 hours per week would end up paying $3,000 per month for the service.
There are several benefits of hiring a fractional CFO which include:
- They have extensive experience and can offer sage advice
- Can help to develop financial goals
- Help to establish financial processes and systems
- Provide support during periods of growth
- Offer guidance during difficult financial times
7. Data complexity
The primary challenge of hiring a part-time or fractional CFO for an eCommerce business is finding someone who is qualified and experienced and understands the specific niche.
Additionally, retaining such a professional can be costly. There are also risks associated with relying on a single individual to manage finances. It may also be difficult to find someone who has specialized knowledge in both eCommerce accounting and digital marketing techniques.
Finally, setting up salary and benefits packages for fractional CFOs requires extra considerations that would not need to be taken into account with full-time staff positions.
8. Cost of hiring a part
The cost of hiring a part-time or fractional CFO for an ecommerce business can vary depending on the number of hours worked per week and the retainer amount. Generally, it can range from $3,000 to $10,000 per month.
This is significantly cheaper than hiring a full-time CFO which can cost between $300,000 and $350,000 annually. Therefore, contracting a part-time or fractional CFO could save you more than 50% in total costs.
What are the benefits of hiring a part-time or fractional CFO?
1. Cost-effective
Hiring a part-time or fractional CFO can be cost-effective for businesses because they are only paying for the services they need.
Fractional CFO services provide multiple benefits such as cost savings compared to hiring a full-time CFO, access to the skillset of experienced financial professionals, improved fundraising prospects, and speedier completion of projects due to added resources and focus.
2. Improved revenue
When a fractional CFO is hired, it can help to improve revenue and cash flow for an eCommerce business.
This is achieved by reducing costs and improving COGs, which leads to greater financial health and growth. An increase in growth often requires additional capital, as well as streamlined financial tasks.
3. Cost savings
Hiring a part-time or fractional CFO can save money by freeing up resources to focus on core business operations.
A CFO’s job is to investigate and analyze finances, which can help determine an ROI on production. Outsourcing a CFO also helps improve financial transparency and accountability, reduce the complexity of tax filings and increase efficiency in financial reporting and analysis.
4. Enforce administration changes
Enforcing administration changes can be a difficult and time-consuming task, but with the help of a fractional CFO, you can rest assured knowing that your financial reporting is accurate and compliant.
The role of a CFO is to oversee the financial procedures of a company and make sure they are being followed as the business expands.
A fractional CFO can help you set financial goals, prepare documents, and promote audit readiness. They can also help you change your legal status or forecast your financial future.
5. Streamlines business
Having a part-time or fractional CFO can help streamline a business by providing strategic financial advice to executive management and helping create a new vision.
They are also good at understanding reorganization and cash flow, which helps expand the company’s financial footprints.
For example, Dan, who is from California and enjoys running and mountain biking, brings to any business he works with a range of financial expertise including strategic finance, accounting, and supply chain management.
Furthermore, his experience with performance tracking and project management enables him to efficiently manage day-to-day issues while his reputation for providing trustworthy advice makes him an invaluable asset.
6. Great support system for the board of directors
A CFO is responsible for providing financial guidance and support to the board of directors. They develop strategic plans to ensure the organization’s long-term goal and financial health, as well as manage the budget.
The CFO also provides oversight and analysis of all operations, ensuring that the business is operating efficiently. Furthermore, a CFO works with other executives to create accurate reporting that can be used by shareholders, creditors, and regulators.
By offering experienced guidance on corporate finance matters, a fractional or part-time CFO can help businesses reach their goals while maximizing the resources available to them.
7. Fills the gap in leadership roles instantly
A fractional CFO can be a great asset to any eCommerce business. They offer professional leadership during buyout times and can quickly orient themselves even when detached from the company.
A fractional CFO provides the benefits of having an experienced financial leader without the full-time commitment, allowing for more flexibility and scalability for businesses that are just starting out or are looking to transition.
Additionally, having a part-time or fractional CFO on board can help with vital areas such as budgeting, cash flow analysis, and financial strategy development.
8. Helps with decision-making and resource allocation
A CFO can provide valuable insights and resources to the CEO, allowing them to make better-informed decisions when it comes to resource allocation.
They can also provide financial advice and guidance when it comes to making important decisions such as investing in organic growth or pursuing acquisitions.
Hiring a fractional CFO can be beneficial for businesses that are looking for quick and time-sensitive decisions regarding cash allocations or other strategic matters, as they have the expertise needed to ensure success.
It is important, however, that businesses take the time to ensure there is a strong fit when hiring a fractional CFO so that they get the most out of their investment.
How do you find a qualified part-time or fractional CFO for your business?
1. Assess your business needs to determine whether a fractional CFO is necessary.
It is essential for businesses to assess their needs before hiring a fractional CFO, as it helps them avoid making expensive mistakes and ensures that the right strategy is implemented.
A fractional CFO can provide valuable advice on formulating an appropriate financial strategy, managing payables and receivables, and helping companies that are growing slowly or have limited cash flow.
Additionally, they often have teams of experts who specialize in digital finance that can help with implementation.
2. Do your research and identify qualified fractional CFOs in your area.
Finding a qualified fractional CFO for your business requires doing the same due diligence as when hiring a full-time CFO.
Candidates must have a trustworthy and reputable character, with experience in both recent launches and more established enterprises in the same industry.
It is important to interview several candidates, test their personalities and operating styles, and find one who is an expert in the area you are looking for help with that can offer services tailored to your needs.
3. Ask for references, review their portfolio, and read reviews.
Businesses should create a clear and concise list of their objectives when considering hiring a fractional CFO. During the interview process, it is important to focus on the candidate’s capability and availability to deliver on those objectives.
To ensure that businesses are only matched with the best talent, Toptal screens its Fractional CFOs carefully prior to any match being made.
4. Make sure the CFO has the right experience and qualifications.
When hiring a CFO for an eCommerce business, it is important to look for a candidate who has experience in finance and accounting, is able to lead and manage a team of finance professionals, identify and analyze financial trends, assess risks associated with business decisions, provide financial guidance to management, listen carefully and comprehend what you are saying, be trustworthy and have a sterling reputation.
Furthermore, the CFO should have expertise in their field as well as experience with similar companies. It is also important that they offer services tailored specifically to your needs rather than just providing standard tasks.
Ultimately the role of the CFO is critical in helping establish growth paths so it’s essential that as much effort goes into engaging them as any other member of your management team.
6. Make sure the CFO has a good understanding of your business and its goals.
It is important that the CFO has a good understanding of a business so they can provide customized reporting, industry expertise, and advice on decisions.
They can also provide insights into financial ratios to help make informed decisions and form strategies around the business’s goals. The CFO’s knowledge of the industry also helps in negotiations and partnerships.
7. Make sure the CFO is familiar with the legal structure of your business.
The implication of having a CFO who is not familiar with the legal structure of an eCommerce business can be problematic, as they may not be able to give accurate advice regarding financial planning and budgeting.
Furthermore, the CFO might lack knowledge about the taxation structure for eCommerce businesses and how best to manage taxes in line with legal regulations. As such, hiring a fractional CFO who is experienced in dealing with eCommerce businesses could prove beneficial for long-term success.
8. Make sure the CFO knows how to create and manage accurate financial statements.
It is important that the CFO of an eCommerce business knows how to create and manage accurate financial statements in order to ensure legal compliance and avoid potential embarrassment, losses, and fines.
Accurate financial records are also necessary for investors, lenders, and tax purposes. Furthermore, having accurate financial records can help with cash flow management as well as support company expansion. A Fractional CFO can be a key player in obtaining new capital for the business.
10. Make sure the CFO has experience in dealing with funding and capital raises.
The experience that a fractional CFO has with funding and capital raises is important because it can help the company connect with better investment partners and provide insight into angel investors to approach.
This knowledge can give the company leverage when negotiating for investments, ensuring they get the best deals possible.
11. Make sure the CFO has experience in troubleshooting specific financial problems.
Business owners should look for a CFO who is well-versed in the AIM Framework and Accounting Impact Method, as they can provide practical solutions to financial issues.
Additionally, the CFO should have expertise in key areas such as Facebook and Twitter, which are important sources of information for businesses.
By hiring a qualified CFO with knowledge in these areas, business owners can rest assured that their financial problems will be troubleshot effectively.
12. Make sure the CFO is familiar with QuickBooks and other financial software.
It is important that the CFO is familiar with QuickBooks and other financial software in order to ensure accurate accounting and projection of finances.
Additionally, using cloud-based financial software can make it easier for the CFO to manage large amounts of data, saving both time and effort.
13. Make sure the CFO has a good understanding of tax savings for businesses.
A CFO with a good understanding of tax savings for businesses is essential for any eCommerce business.
This knowledge can help businesses minimize their overall tax bill and maximize their profits, allowing them to make better financial decisions and move their businesses forward.
A fractional CFO can provide the expertise needed to develop effective strategies in order to meet business goals while minimizing taxes.
Is a Fractional CFO Worth It?
EcomBalance Monthly Update – November 2022
The EcomBalance Monthly Update is a helpful resource for ecommerce businesses and entrepreneurs. It provides updates on company developments, market analysis, and product reviews to help investors and consumers make informed decisions.
The insights shared in the Partner Interviews at EcomBalance are also valuable for understanding the latest trends and technologies in the ecommerce space. All of this makes it a worthwhile investment for those looking to stay up-to-date with their business.
Partner Spotlight: Identify the Road to Successful Brand Marketing with Thore Hauthal from Stark Network
Identifying the road to successful brand marketing is important because it helps businesses create a clear plan for reaching their target audience, understand their needs, and create a product or service that meets those needs.
It also ensures that the brand message is tailored to each audience and kept up-to-date with changing trends. Hiring a fractional CFO may be beneficial in these efforts, as they can provide insights on how to effectively navigate the complexities of eCommerce business management.
What Is Catch-Up Bookkeeping? How It Works & Examples
Catch-up bookkeeping is a service that helps businesses stay on top of their accounting practices. It provides support to ensure that businesses are tracking and managing their finances effectively.
Catch-up bookkeeping also offers discounts on products through its partner program, as well as access to resources and support.
Additionally, there is a directory of businesses that offer catch-up bookkeeping services for eCommerce businesses.
Are There Any Other Options Than Using a Fractional CFO?
Instead of hiring a fractional CFO, other small businesses may be able to provide recommendations as to who they have used in the past.
Additionally, companies can consider outsourcing certain financial functions or using technology-based solutions that can help simplify and streamline their financial operations.
Do I need to hire a fractional CFO for my ecommerce business
For eCommerce businesses, a fractional CFO can provide valuable insight and guidance. A fractional CFO can help businesses make better financial decisions, manage their finances more effectively, and reach their business goals.
If your eCommerce business is growing and you need help managing your finances, a fractional CFO may be a good option for you. By providing expert perspective, coaching, and advice, a fractional CFO can assist businesses with Amazon accounting, eCommerce accounting, and eCommerce CFO coaching.
If an eCommerce business is looking to grow rapidly or if the cost/benefit of hiring an outsourced CFO makes sense for the company’s size then it may be beneficial to hire a fractional CFO.
The team at Marketing by ActiveCampaign offers resources such as blogs FAQs and podcasts in addition to services related to hiring a fractional CFO for your business.
If you have inquiries, require assistance, or believe you may require assistance in the near future, you can get in touch with Free Cash Flow for a consultation.
FAQs
What is the difference between a part-time and fractional CFO?
The benefits of hiring a fractional CFO include improved financial management skills and access to advice that is not available from a full-time CFO. A fractional CFO may be the right choice for an eCommerce business, depending on their size, budget, and needs.
A fractional CFO can offer expertise in areas such as forecasting, budgeting, cash flow management, and more. For businesses that don’t need or want to hire a full-time financial advisor but still require occasional guidance or assistance in financial matters, hiring a fractional CFO can be an ideal solution.
What are the most important qualities of a good CFO?
It is important for a good CFO to have a commitment level similar to that of the full-time team. They should also be aligned with the goals of the existing team, and there should be an incentive structure in place which rewards them in line with those of the full-time team.
When considering whether or not to hire a fractional CFO for an eCommerce business, these qualities are important to keep in mind.
What are some common mistakes businesses make when hiring a CFO?
Businesses often make mistakes when hiring a CFO, such as not having a clear understanding of what the position entails or failing to evaluate the candidate’s experience and qualifications.
Other common mistakes include not considering whether their needs would be better met by hiring a fractional CFO instead of an in-house CFO and failing to properly assess their financial situation before making the hire.
Taking time to understand the role and how it fits into their business plan is essential for making sure they get the most value from employing a CFO.
What are some tips for choosing the right CFO for your business?
When selecting a CFO for their business, entrepreneurs should be sure to consider the individual’s experience and qualifications. They should also ensure that the CFO understands their goals and objectives and has the necessary expertise to navigate complex financial matters.
Additionally, they should evaluate whether outsourcing financial services will help them focus on core business activities while consolidating and managing their finances. Finally, choosing a fractional CFO allows businesses to get access to quality advice without having to commit long-term resources or make huge investments in full-time employees.
How can a part-time or fractional CFO help my ecommerce business?
Hiring a part-time or fractional CFO provides eCommerce businesses with outsourced financial guidance and support. A Fractional CFO is experienced in eCommerce accounting and can help with digital finance issues.
They are also more affordable than an in-house CFO and provide the same level of service. By hiring a Fractional CFO, businesses can benefit from guidance on cash flow, financial forecasts, and benchmarking and achieve greater financial fluency. Consulting with an accountant or other financial advisor is recommended when considering the advantages of hiring a part-time or fractional CFO.
