Achieving Financial Health: The Top Six Benefits of Hiring a Fractional CFO for Your Business
Peter Thelen Sr. CPA
From ROIC and liquidity to solvency and operating efficiency, there are so many considerations a business owner must take into account when making decisions about their company’s finances. If you're like most business owners, you probably wear a variety of hats. You're responsible for marketing, sales, product development, and operations - but finances are one aspect that will ultimately determine the success or failure of your business. The bottom line is that profitability (or lack thereof) is the deciding factor on whether your business will be able to sustain itself in the long run.
Your profit margins are, in the most basic terms, determined by your revenues and expenses. But there's much more to it than that. Achieving financial health requires strategic decisions about how you allocate your resources, your operating structure, and your pricing model. It's a complex puzzle that can be difficult to navigate without the help of a financial expert. This is where a fractional CFO can be an invaluable asset to your company. A fractional CFO is an expert in financial management who, if experienced enough, will take a holistic approach to your company's finances, providing you with the invaluable insights and specialist advice you need to make informed decisions about your business.
Perhaps the most important benefit of hiring a fractional CFO is that they can help you obtain a clear picture of your financial wellness. This is essential for making informed decisions about the future of your business. A fractional CFO will take into account all aspects of your finances, from revenue and expenses to cash flow and solvency. They will also look at your financial history to identify trends and areas of improvement. They'll assess your risks and opportunities in order to develop a comprehensive roadmap for your business. This information will be presented to you in a clear and concise manner with actionable steps, allowing you to think about the future with reliable data in your hands.
One of the most valuable things a fractional CFO can do for your business is improve your return on invested capital (ROIC). By working with you to create and implement strategies that increase profits and decrease costs, a fractional CFO can help you achieve a higher ROIC. This, in turn, will make your company more attractive to investors and help you secure the funding you need to grow your business.
Another benefit of hiring a fractional CFO is increased liquidity. A fractional CFO can help you improve your cash flow by working with you to optimize your receivables and payables cycles. This will give you the flexibility you need to invest in new growth opportunities and weather unexpected challenges which, given the unexpected events of the last two years, is more important than ever before.
A fractional CFO can also help you improve your company’s solvency. By working with you to reduce debt and increase equity, a fractional CFO can help you strengthen your balance sheet and improve your ability to withstand tough economic times. When it comes to overcoming an economic downturn, having a strong balance sheet is essential so that you can continue to invest in your business even if revenue decreases.
In addition to improving your financial health, a fractional CFO can also help you improve your company’s operating efficiency. The two go hand-in-hand as a healthy business is typically a well-oiled machine. By working with you to streamline processes and reduce waste, a fractional CFO can help you increase profits and free up cash flow that can be reinvested in growth. This will not only improve your bottom line but also make your business more efficient and enjoyable to work in!
Decision Making Capabilities
Finally, a fractional CFO can help you make better decisions about your company’s finances. By providing you with insights and advice, a fractional CFO can help you make informed decisions about where to allocate your resources, how to price your products, and which growth opportunities to pursue. An exceptional CFO will help guide you to develop your own business acumen as they provide you with the tools and guidance you need to make sound financial decisions for your business.
Our Final Thoughts
Outsourcing CFO services might seem daunting. As a business owner, you want to have full control over your company’s finances. However, hiring a fractional CFO to advise you on financial decisions is, in fact, an essential part of the growth journey that all thriving businesses must consider. When profitability is on the line, you simply can’t afford to go it alone.
If you are interested in learning more about how a fractional CFO can help your business flourish, contact us today to find out how our Business 360 service can give you the clarity you need to take confident steps towards sustainable growth.
About the Author
Peter Thelen, a licensed CPA, has served at the top of operating service companies and brings significant operational and financial experience to the partnership. As fractional CFO and COO consultants, we can provide the financial and operational support you need to get your business to the next level.