Tactical vs. Strategic. This is one of the challenges fractional CFOs have in educating their potential clients. Bookkeepers and accountants perform day to day transactions. This tactical role is meant to address the need for recording the company’s financial information. The fractional CFO is the strategist who studies the future of the company in order to help business owners understand, anticipate, prepare for and gain advantage from coming changes. We use foresight to describe what could happen in the future and in some cases, what should happen in the future based on industry trends and metrics. Businesses have a lifecycle: start up, growth and reinvention. If they become stagnant they will likely not make it. Fractional CFOs understand where their clients are in the lifecycle and present recommendations based on the business owner’s vision and goals.
What is the first thing a fractional CFO should do when starting an engagement with a new company? It’s not understanding current cash position or even the cash forecast. It’s understanding the client needs. Some business owners only want help with strategic plan analysis while others want hands on input on current financial statement strengths and weaknesses. An experienced CFO understands that he or she must ask questions to identify the needs of clients. The standard checklist that a fractional CFO uses may not apply to all organizations because business owners have a variety of skill sets and needs.
In any new engagement, the CFO should obtain an understanding of the client’s current cash position and their cash forecasting. The CFO should review the client’s policies and procedures. In order to bring the most value to each engagement, the CFO needs to understand what the client wants to get out of the relationship. There is no such thing as a “standard agenda” or a “standard checklist.” Experienced CFOs understand the need to take a holistic approach to understand how businesses thrive regardless of the industry they are in. Working as a fractional CFO allows us to tailor our skillsets to best meet the needs of each client.
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