It is important to highlight that in the highly unstructured and competitive environment of startups, the issue of adequate financial control cannot be overemphasized. This is pegged on the fact that the roles of a CFO become very significant with growing startups as they transact through different phases that involve funding, scaling of operations, and efficiency. But employing a full-time CFO could prove to be exceedingly expensive for many. Yet, the full-time engagement of this resource could turn out to be very costly to many of these firms. Hiring a fractional CFO is advised at this stage due to the fact that activities are less demanding than in the previous phase. Fractional CFOs is one good solution for those organizations that would want to hire several financial consultants at a go but with the option of not having to permanently hire them in their companies. This is justifiable specifically because most of them offer the intricate services of a skilled CFO in a diminished capacity.

 A fractional CFO is an experienced part-time CFO or for a certain responsibility of work providing his/her years of financial services to various businesses. Fractional CFO differs from the base CFO, who works as the corporation’s chief finance officer and is occupied with the company’s affairs only, being, thus, concentrated on the corporate functioning. As a fractional CFO, one company is worked on at once, which means that a professional is exposed to more possibilities to encounter more tides of trade facets and various aspects of assessing trades. The principal duties of a fractional chief financial officer (CFO) consist of:

 ● Financial Strategy and Planning: Helps to define and assess the efficiency of the optimal financial systems most suitable for the developed objectives and goals of the organization.

• Cash Flow Management: Cash control, anticipating the financial requirements and being able to meet them through being liquid.
•  Budgeting and Forecasting: Budgeting, budgeting control, and financial planning and/or forecasting.
•  Fundraising and Investor Relations: Such as helping in the organization of fundraising rounds, in preparation for meetings with investors, and in relations with investors.
•  Financial Reporting and Compliance: As for the member states, the objectives included faithfully accomplishing the financial reporting responsibilities and addressing statutory compliances.

The benefits of outsourcing a fractional CFO are as follows:The benefits of outsourcing a fractional CFO are as follows:

 Thus, fractional CFO working for a business has a lot of advantages in comparison with using a competent employee for a reasonable price. Some of the primary advantages are as follows:Some of the primary advantages are as follows:

 1. Cost-Efficiency

 He said that most start-ups lack adequate capital and; therefore, they cannot afford to hire a full-time CFO. The same professional services are significantly cheaper, which is understandable, given that fractional CFOs are paid by the hour and also obtain consultation revenues instead of an annual wage and overhead costs.

 2. Experience and Knowledge

 Nevertheless, fractional CFOs have some experience, as they have been employed in different organizations, all fields of business. Thus, they can put forward options and recommendations for virtually any situation and problem. Startups can acquire such levels of experience from a consultant at a much lower cost.

 3. Flexibility

 As a fractional CFO is not paid with wages like a regular employee for the client startup, then an organization will be in a position to compensate the fractional CFO for a more extensive period subject to the discretion of the company’s functioning. This is why a fractional CFO is beneficial to the team, irrespective of the company’s position or whether they are provided with specific help when they are in an active fundraising state or not, as well as businesses that may occasionally need a finance check-up.

 4. Strategic Objectives

 Whilst a fractional CFO is mandated to focus on the firm’s objectives, internal finance teams may end up getting lost in process, small work, and repetitive work that robs them of a wider perspective. Also, sometimes an individual’s brainstorming could additional focus on an issue or an opportunity that the management of the organization did not consider before.

5. Enhancing Financial Planning and Analysis’s (FP&A) functionality

Because of their extensive FP&A experience, fractional CFOs may help startups create strong, negative processes. This includes developing thorough models with forecasts for the balance sheet and income statement, scenario analysis, and guidance to help with appropriate decision-making.

Bringing a Fractional CFO into Your Startup

 To ensure the best is gotten out of a Fractional CFO in a startup, there is the need to properly plan and be well-articulated. Here are some steps to ensure a smooth integration: Here are some steps to ensure a smooth integration:

 1. Define Expectations and Objectives

 Enumerate all the expectations one has from the Fractional CFO and all the objectives to be achieved. This involves the identification of its objectives, quantifiable goals, and required products and services together with due dates. From the above explanation, adequate clarification would be achieved on what the company intends to accomplish so that the appropriate candidate could be chosen and put on the right track.

 2. Onboard Effectively

 Ensure that on onboarding the Fractional CFO, you give him/her a proper orientation. This must include access to information on the firm’s financial performance, information on other members of the teams, and an outline of the firm’s strategic direction and environment.

 3. Establish Regular Communication

 Communication should also be regular to maintain the course of work and coordination. Set a weekly or biweekly meeting to focus on current implementation and timeline of projects, financial reports, and overall strategic plan. This will be instrumental in keeping the relationship between business functions one of cooperation and would facilitate the review of strategies and plans at the right time.

 4. Leverage Their Network

 Fractional CFOs generally have a wide pool of business contacts that could be quite valuable to the startups. I agree with the previous comment stating that this network can be highly beneficial whether it is in terms of investors advisors or service providers.

Case Studies: The Activities of Fractional CFOs
Take into consideration these fictitious situations to demonstrate the effects of a fractional CFO:

Startup A: This software company had trouble with investor presentations and financial forecasting as it got ready for its Series A investment round. The business successfully raised $5 million in capital by enhancing its financial models, creating engaging presentations, and recruiting a fractional CFO.
Startup B: This e-commerce company hired a fractional CFO to improve cash flow management procedures because it was experiencing cash flow issues as a result of its quick expansion. As a result, operational efficiency rose and cash burn was significantly reduced.

In the hustle and bustle of startups, the presence of a Fractional CFO controlling the finances can go a long way. Thus, a Fractional CFO is the adaptation of a highly skilled professional who provides financial solutions on an as-needed basis to firms and startups.

 At ERB we value the financial woes experienced by startup and growing companies. We at ERB offer a range of services and abide by so many principles that ensure you get value for your money. With this experience and references to excellence, we help startups solve problems of finance and become successful in a definite market. Contact us to know more about how they can help in implementing your financial plan.