How A Fractional CFO Can Help Startups

A fractional CFO works on a part-time basis. They offer the same expertise and experience as a full-time financial executive. However, a fractional CFO comes with fewer costs and complications. Even if something comes up, a business will find it much easier to part ways before looking elsewhere to fulfill its senior managerial needs. As such, a fractional CFO is a convenient way for a startup to tackle many hard but unavoidable financial problems.

Hiring an outsourced CFO can make these five things easier to handle:

Raising Capital

Startups need funding to fuel their expansion. Theoretically, they can make money by selling products and services. In practice, they'll struggle to do so when they're still setting up their revenue-earning operations. Instead, startups tend to fund themselves through debt and equity. Whatever ratio you settle upon, you'll need to convince lenders and investors your startup is worth betting upon. Hiring an experienced CFO gives you credibility. Moreover, they can fine-tune your financial reporting, compilation, and analysis to make your financial statements sound while enabling you to present your startup in the best light possible.

Negotiating Deals

Lenders and investors aren't the only ones who'll take an interest in your credibility. After all, whenever two sides do business, one loses if the other fails to uphold their part of the deal. As a result, everyone you deal with has reason to gauge your reliability. CFOs tend not to take the lead in negotiating these transactions. Still, their work can do much to help you prove your claims.

Crafting Strategy

Every business needs a strategy to guide them where to go. You don't need to hammer out every detail for yours because strategizing is focused on the big picture. Even so, you'll need some numbers to give yourself a clearer idea of what is and isn't possible, which is where a CFO can contribute. Besides this, a fractional CFO can also craft your startup's financial strategy, which can continue offering guidance far beyond their involvement in your operations.

Setting Up Systems

Crafting a financial strategy isn't enough. There is still setting up the new systems needed to carry it out. Luckily, a fractional CFO should have plenty of experience in everything from choosing the right tools to convincing people to do things the new way. Indeed, their work with startups and other small companies means they should be more familiar with setting up new systems than the average financial executive.

Handling Audits

Auditing gives numerous benefits. Despite this, it can be a stressful experience because few people enjoy being scrutinized so closely. Financial executives are the ones best prepared to work with auditors. This means you can entrust the task to a fractional CFO if you'd prefer someone else to answer questions about how your startup accounts for things and why your startup accounts for them that way.

For more information on fractional CFOs, contact a professional near you.