In today’s competitive and fast-paced business environment, financial leadership is critical for companies of all sizes. However, not every organisation needs or can afford a full-time CFO on staff. That’s where a fractional CFO can provide tremendous value. A fractional CFO is an experienced financial executive who works for your company on a part-time, outsourced basis to provide strategic financial guidance and operational support. 

Hiring a fractional CFO provides the expertise of a senior finance leader without the high cost of a permanent hire. A qualified fractional CFO has seen many different businesses and scenarios. This allows them to quickly understand your company’s financial pain points and opportunities. Their outside perspective provides an objective view of your finances. A fractional CFO also brings best practices that can be implemented in your company.

However, to get the maximum ROI from your fractional CFO, you need to use their time and talents strategically. Their part-time hours and involvement should be optimised to focus on the highest value activities, aligned with your business goals. 

Here are 5 tips to maximise the value of your fractional CFO:

Tip 1: Clearly Define Their Role and Responsibilities

When bringing on a fractional CFO, take the time upfront to clearly define the role and responsibilities you want them to focus on. Discuss the specific financial leadership and operational areas that need their attention. 

Some typical fractional CFO responsibilities may include:

– Strategic financial planning and analysis 

– Cash flow management  

– Budgeting and forecasting

– Metrics and KPI review

– Financial reporting 

– Building financial models

– Securing capital/financing

– Overseeing accounting and bookkeeping 

Given their part-time status, it’s essential to narrow the fractional CFO’s role to the activities that will deliver the most value. This avoids spreading their hours too thin and maximises their specialised expertise.

Clearly delineating responsibilities also sets clear expectations on both sides. The fractional CFO will approach the role knowing exactly what to prioritise. You’ll get the focused financial leadership your company needs. 

Take the time to meet with prospective fractional CFOs and discuss the role before signing any agreements. Make sure to cover your top priorities and pain points. Having alignment upfront ensures an engaged fractional CFO providing optimal value.

Tip 2: Schedule Regular Meetings and Communication Cadences 

Consistent communication and adequate facetime between your fractional CFO and leadership team is crucial. This allows your fractional CFO to fully understand your business model, challenges, and strategic goals. With deeper knowledge, they can better tailor their financial leadership and guidance.

Schedule standing meetings, at minimum monthly, but ideally every week or two. Status update meetings should cover:

– Overall company financial health 

– Budget variances and expense tracking

– Achievement of KPIs

– Performance of business units 

– Progress on strategic initiatives

– Cash flow and working capital 

Additionally, establish open communication channels like email, chat and phone. Your fractional CFO should be available for occasional quick questions and discussions.

Make your fractional CFO feel like a valued member of the leadership team, even if they just work a few hours per week. Keep them looped in on major company announcements, wins and organisational changes.

This level of steady communication allows you to maximise the strategic benefits from your fractional CFO. Their involvement remains fresh and informed, so the financial guidance provided is always relevant and impactful.

Tip 3: Focus the Fractional CFO on High Value-Added Activities

To maximise ROI, the fractional CFO should spend their limited hours on strategic, high-impact work for your company. Their time should center on value-added activities versus routine transactional tasks.

Examples of value-added fractional CFO activities:

– Financial modelling to inform business decisions

– Analyzing key metrics and financial ratios 

– Performing variance analysis on budgets/forecasts

– Reviewing pricing strategies and profitability 

– Identifying cost savings opportunities

– Providing strategic recommendations to management 

– Creating executive dashboards and reports

– Advising on financing options for growth  

Conversely, the fractional CFO’s hours should not get dominated by low value work like: 

– Data entry or bookkeeping

– Processing invoices and expenses

– Managing payroll

– Gathering paperwork for audits

– Creating monthly financial statements

These routine tasks are important but can be handled by your full-time accounting staff. The fractional CFO’s time is better spent on strategic analysis, planning and execution. 

Examine how your fractional CFO is spending their hours each month. If too much time goes into low value work, adjust their responsibilities and prioritise projects that impact the bottom line. This ensures you maximise the strategic financial leadership from your fractional CFO.

Tip 4: Foster an Environment of Open Communication

To get the most from your fractional CFO, create an environment where open communication,transparency and constructive feedback are encouraged. Make it clear your fractional CFO should feel comfortable:

– Providing objective opinions on your finances and business model

– Suggesting new metrics and analyses to guide decisions  

– Flagging changes and improvements needed in financial processes

– Identifying areas where additional financial support is needed

– Delivering tough messages about the company’s financial position  

Your fractional CFO’s outside perspective is incredibly valuable – take advantage of it. You want an advisor who proactively shares ideas and provides unbiased recommendations.

Also, be receptive to feedback from your fractional CFO on ways leadership can better support them or improve collaboration. Don’t get defensive if they bring up issues. Your fractional CFO wants to add value but needs information and input from you to do so.  

Regular check-ins are a great way to exchange constructive feedback. Make any needed adjustments to the engagement that allow your fractional CFO to provide maximum impact.

Tip 5: Review and Adjust the Engagement as Needed

Periodically, examine the fractional CFO engagement and assess:

– Is their time focused on the right priorities? 

– Are you getting value commensurate with the spend?

– Is the communication regular and impactful enough?

– What’s working well about the engagement and what can be improved?

Be willing to discuss adjustments to better meet your company’s evolving needs. You may need more or less hours from your fractional CFO depending on business conditions and strategic goals. 

Key aspects of the engagement model to review:

– Needed hours per week or month. Reduce hours if the fractional CFO is not fully utilised but increase if they are stretched thin.

– Scope of responsibilities. Dial up or down specific roles to align with current needs.

– Communication cadence and access. Increase touch points during busier periods.

– Reporting relationships and team integration. Ensure proper connectivity across finance and exec teams.

By regularly reviewing the fractional CFO engagement, you can ensure you maximise the strategic value from this role over time. Course correct quickly if you find the functions not delivering expected impact.

Conclusion

Hiring a fractional CFO allows growing companies to afford senior-level financial expertise – a huge competitive advantage. Follow these five tips to ensure your fractional CFO engagement is optimised for maximum strategic value:

1. Clearly define the fractional CFO’s role and ideal responsibilities.

2. Maintain consistent communication and integrate them into leadership.  

3. Focus their time on high value-added activities, not just transactions.

4. Encourage open feedback and exchange of ideas.

5. Review the engagement model regularly and adjust as the business evolves.

With the right fractional CFO, and the above best practices, companies can cost-effectively get the financial leadership they need to drive growth and performance. Implement these tips to maximise the ROI from your fractional CFO.