If you are planning to outsource a fractional CFO and you want to build budgets and models for your revenue and operations, then consider this:
First, realize that fractional CFO’s are just that, fractional. To get the most out of a fractional CFO, you should be prepared. A really great fractional CFO will appreciate your financial reporting readiness. Show up to their table with your process already under control and your operations and planning data well organized. Your new CFO will love you!
Take these three steps to prepare for a great Fractional Executive experience.
You can shorten the onboard time for any outsourced management consultant, including CFOs, COOs, and Digital Transformation Experts: Things can get expensive when using a highly qualified fractional executive resource with years of top level experience ($$$-$$$$). Fractional CFO’s can have as many as 5-8 clients. This allows only a certain amount of time for your gig. If a consultant or outsource CFO has to clean up your accounting, and then establish budgets, and then help you with long range planning tools, it will take some time before she/he can really help you with your business and get to critical parts of your CFO and executive engagement. Those important things a CFO can really do for you will be neglected until these parts are done.
Just the business basics, the things you should already have: well-organized books; a monthly budget process; and, long range 5-year planning.
Get better faster outcomes and lower cost estimates from your CFO process. If you have financial processes in control, real budgeting and financial reporting at the ready, then as your new outsource partner, a CFO can onboard quickly and become effective almost immediately for your business. With the basics already in place, your CFO can access well organized data as soon as she/he arrives. Now your CFO can get you ready for customers, and banks, and angel investors or venture capitalists you might want to talk to. A fractional CFO with these 3 tools in place can hit the ground running. Don’t waste your CFO’s time getting bogged down in an initial mess to clean up. Be ready to work with your new CFO on your strategy, financial plan and organization.
Sharpen Accounting and Financial Report Readability
Install a Budget Control Process
Create a Long Term Business Model to Stress Test Strategies
Are you embarrassed to show off your company’s books? Are your accounting reports difficult to read and make sense of? Does your financial data tell the story of your business and represent you well? Do your business books conform to professional standards? If you want to know the secrets to easy cleanup of chronic, messy reporting from your accountant or bookkeeper then read this article.
What about budgets? Have you implemented them? Do you review your department budgets monthly with your team? Do your budgets auto update from your accounting software, CRM, and other MIS systems? Does your organization appreciate and use budgets to benchmark performance and control cash? If you want to know the secrets to pulling great and usable budgets and predictive cash flows from your systems, and be able to review them monthly with your executive team members then read this article.
Do your pro forma projections and spreadsheet models accurately reflect your business strategy and goals? Does your model predict performance accurately and surface your cash investment needs? Is it connected to your systems feed and your KPI performance dashboards? Can you use the pro forma model for strategy and scenario testing? Does the model give you an idea of your business growth and enterprise value over time? If you would like to have the type of model that private equity firms use to analyze value, risk, and cash requirements for their business acquisitions and sales, then read this article.
I’ve been a fractional CFO, consulting to small and mid-sized startups and growing businesses since 2007. Every client I’ve assisted has needed and benefited from these 3 key programs. And, if you implement them before you hire a CFO, or outsource executive, then you will get much more from your fractional executive experience. Do these first and you will be prepared. to save yourself some time and money in the long run.
Three Important Steps: Implement these 3 key accounting, budgeting, modeling and reporting controls. Hire your fractional CFO to tackle critical CFO level financial service issues. Be prepared with the basic analytics for your business already installed.
1. Systems Tuneup.
A systems tuneup prepares your business for expansion and digital transformation.
2. Budget Toolkit.
A budget toolkit can put your business processes into control and bring discipline to your department planning processes.
3. Scenario Projections.
A long range scenario model can provide business strategy and valuation analysis for presentations to banks, vendors and investors.
Description: Tune up your finance and accounting data and processes with this Accounting and Control Systems Review. Includes chart of accounts (COA) tune-up and revisions.
Cost: $1,200 to $4,000, depending on size and complexity of client business. (May cost additional for large numbers of reclassifications in your accounting system.)
Timing: 1-3 weeks
Executive Burden: 2-4 meetings
Deliverables: Revised COA; summary report with recommendations for system data and control changes.
Description: Manage and Control cash, and business infrastructure growth with this Monthly Budgeting Toolkit. Includes links to accounting, CRM, and other MIS systems, with optional update and/or training services.
Cost: $2,500 to $12,000, depending on component modules and training requirements.
Timing: 1-6 weeks.
Executive Burden: 4-8 meetings.
Deliverables: Budget model with appropriate modules, input, and import forms.
Additional Services: Manual updates, automation, additional training.
Description: Test your growth/cash requirements and value your business with this 5 year annual projections model including assumptions, flexible scenario options, and data links to the Budget Toolkit. Add annual and quarterly review services.
Cost: $3,000 to $15,000, depending on component modules, number of scenario requirements, and business complexity
Timing: 3-12 weeks.
Executive Burden: 3-9 meetings.
Deliverables: Annual model with appropriate modules, input, and import forms.
Additional Services: Manual quarterly or annual updates, automation, additional training, strategic and market research.
Learn more about how to use outsourced CFO services effectively. Read our blog.