An Interim CFO vs. A Fraction CFO: What are the Differences?

 

Hiring a CFO permanently for any mid-sized company or a startup may be out of reach. Usually, guidelines say that hiring a CFO can sometimes range up to $10 million annually. The amount is too high for a mid to small sized company to pay. That is why most of them tend to operate without a CFO or hire them on a project basis. 

The key of any business firm is to understand their finances in order to progress and grow. Therefore, the accounting partner must have knowledge of cash flow of the business organization. Without knowledge of cash flow and stock, the KPIs, profit potential, margins of the company would be at risk. Making decisions without this knowledge may hamper the company’s finances overall. 

On the other side, a small business must share equal attention to every part of the business. In the initial days, there are a lot of things to look at – product-market fit, promoting and marketing the product, driving adoption, and other activities which are the key elements. 

When a company decides on resource allocation, the start-up which focuses on sorting individuals in a team might lose attention from these major key elements. The situation worsens if the selected personnel has untrained financial skills. The reason to hire a  CFO is very strong but the cost trumps this decision.

A large business can easily bear the expense of a CFO, but the Small Business Accounting Services face issues. Sometimes CFO quit their jobs unexpectedly leaving a company in a difficult situation. This gave the rise to different hiring processes to retain the stability of the business organization. The options are interim or temporary CFO and fractional or part-time CFO. 

Here is how the two are different in their ways:

 

Interim CFO vs. Fraction CFO

Interim CFOs are hired to work full-time for a company for a shorter span. A typical period ranges from a month to three or more. An interim CFO guides a company through financial changes, crisis, or growth. They might operate the workspace instrumentally to keep everything stable at peak times, or they might work through permanent CFOs. The latter happens when a company has enough resources to accommodate both permanent and interim CFOs together.

On the other hand, a part-time or fractional CFO will have a full-time commitment for a longer period with your company. They might work for a few hours per week but are permanent members of the Small Business Bookkeeping finance team. Part-time CFOs have multiple clients where they work part-time. 

 

 

Fractional CFOs – Things you must know

A business can be small or big, if sales are consistent and growing every day with a steady increase in the brand name, you must focus on the financial side. Many businesses, especially start-ups start with a swing but have no bookkeeper and when they grow, entire accounting department gets messy without an Accounting Partner. 

To stay organized in the internal sector of the business, it is important to hire a Bookkeeper. But, if you plan to set up a permanent accounting system and track the working procedure, Part Time CFO Services is the best bet. The CFO will give the company all the essential knowledge which most of the bookkeepers will not. This financial support and knowledge can boost a business from zero to infinite success. 

A part-time CFO can assist investors and put them together with the company's needs. They can assure up-to-date marketing information and place updated information to the investors about your brand reputation. The Part Time Controller ensures capitalization tables and ownership percentage are correct.

Interim CFOs – Things you must know

For middle scale businesses, Interim CFOs are the ideal choice. Most of the time, the Interim CFOs are hired at urgent times of the company. These CFOs are looked upon to stabilize or control any urgent situation that the company is going through. 

Consider a situation where the company is dealing with an acquisition or a merger. Here, the presence of a CFO is very crucial as their knowledge will help the company to succeed. If your current Contract CFO does not have a strong foothold on finance, business, and accounting, the company might not come out of the crisis easily.

Temporary CFOs help with the assurance of the company in terms of diligence on every critical situation. The best part about the Interim CFO is that they can be hired in between permanent CFOs of a company. In certain cases, the CFOs leave a blank on their post without any explanation. If a company has multiple CFOs, a blank in the line will not hamper the overall business. 

Which one is right for your company?

Knowing all the details about CFOs is a must. They contribute the majority of the Tax services Canada through their loyal roles in the corporate world. Before you decide whom to hire, take a look at your current financial situation. If you are seeking a person to look after the agreements to finalize business, hire a lawyer instead of a CFO.

Only a CFO can present the company at its best to the investors to ensure long-term growth down the line. 

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