So you’re thinking about bringing on a fractional CFO to level up your financial strategy. Smart move! A part-time financial guru can be game changing for a growing company. But beware – there are some big mistakes I’ve seen teams make when hiring their fractional CFO that end up costing them big time. 

As someone who’s worked with countless leadership teams to dial in their financial operations, let me walk you through the top blunders to sidestep if you want your fractional CFO to start driving major returns. Avoid these pitfalls and watch your new finance ace excel!

Misstep #1 – The ol’ “We’ll figure it out” hiring plan

First things first – you and your potential fractional CFO need to be crystal clear on what you need them to do. I mean crystal clear. Leave anything vague or wishy-washy and you can bet dollars to donuts there will be frustration on both sides. 

Take the time to hammer out the specifics on their responsibilities, deadlines, expectations and key objectives. Get it all in writing so you’re aligned. If you don’t, you run the huge risk of your new star hire being pulled in multiple directions without making real progress. And nothing is more frustrating than missed expectations, right?

So do yourselves a favor and detail exactly what needs to get done, by when, and what success looks like. Your fractional CFO will thank you! It gives them the inside track on delivering value from day 1.

Misstep #2 – Hiring the cheapest option 

Alright, I get it. You want to keep costs reasonable. That fractional title has the word “fractional” right in it. But focusing purely on bargain basement pricing can backfire bigtime if you hire someone who doesn’t understand your specific business and industry. 

At the end of the day, you want a strategic expert to help steer your financial ship into the future. That means finding someone with relevant experience to your company. An e-commerce CFO won’t necessarily translate to a manufacturing environment. And someone used to large corporate budgets may fumble at a scrappy startup. 

Look for fractional CFOs with targeted experience in your niche and at companies around your size. Check references from other clients that look like you. Go beyond just costs in your search process. The price of hiring the wrong match can be steep when their advice just doesn’t hit home for your business goals. Think experience first, bargain second.

Misstep #3 – Tossing them the keys and saying “good luck”

You’ve signed your new A-player fractional CFO. High fives all around! But before you pat yourself on the back, make sure you set them up for success with a solid onboarding plan. I’ve seen way too many companies hire a fractional CFO and then just throw them into the deep end to figure it out. 

Want them to quickly get up to speed and start driving impact? Take the time to show them the ropes. Make introductions to key leaders and finance partners. Walk them through your systems, tools and financial history. Context is everything my friends. Share your organization chart, goals, challenges – give them the insider scoop so their advice will be tailored to what you actually need.  

And definitely don’t lock them out of accessing key systems and data! I see that way too often and it just shoots fractional CFOs in the foot. If you want top notch counsel, get them looped in on budgets, cash flow, financials and metrics. Set them up with proper access and training. A thorough onboarding experience lets your new star player hit the court running.

Mistake #4: Not Providing Access to Financial Systems and Data

A common stumbling block in fractional CFO engagements is companies not providing full access to financial systems, reports, data and tools. Limiting access denies fractional CFOs visibility into the numbers required to provide actionable counsel.

Financial leadership requires access to details like:

Accounting/ERP system like NetSuite, Quickbooks, Sage etc.

Payroll systems showing compensation, benefits and HR liabilities

Sales pipeline and projections from your CRM system

Marketing budget and spend levels across campaigns

Past financial statements and tax returns

Operational metrics like website traffic, churn rate etc.

Budgets and variance reporting for all departments

Cash flow statements and projections

Without access, fractional CFOs come in blind. How can they improve cash flow if they can’t analyze AP and AR? How can they optimize department budgets without visibility into past spend?

Before your fractional CFO’s start date, ensure proper security and permissions for critical systems access. Playbooks, guides and reports should also be provided. With the full financial picture, their advice will be infinitely more targeted and impactful.

Mistake #5: Micromanaging Instead of Relying on Their Expertise

The final pitfall companies make is micromanaging the fractional CFO’s work instead of leaning on their expertise. You are paying for their leadership, so empower them to put their years of experience into practice.

Of course oversight is necessary, but balance it by also removing roadblocks and trusting their judgements.

Here are tips on effectively partnering with your fractional CFO:

If they propose changes to financial reporting or operations, hear them out fully before pushing back. They likely have sound reasoning.

When they flag risks or make tough recommendations, don’t ignore them. Engage in dialog and be open to adjusting.

Empower them to make executive decisions related to finances without bottlenecks. Don’t require excessive approvals.

Check-in regularly, but avoid nitpicking or second-guessing every choice. Give breathing room.

Ask their perspective on strategic decisions company-wide, not just finance. Leverage their breadth.

By employing these tactics, you reinforce trust and enable fractional CFOs to provide the full value of their expertise. Find the right balance of oversight and empowerment.

The Bottom Line

Hiring a fractional CFO can be a game-changer for growth-focused companies. Their high-level expertise and strategic guidance pays dividends across the organization when applied correctly. However, companies often undermine this value by making common mistakes in the fractional CFO process.

Avoid the pitfalls outlined above to ensure your fractional finance chief delivers maximum impact:

Detail their duties and priorities in a service agreement upfront

Vet CFOs based on industry and size-stage experience

Invest time in a comprehensive onboarding

Provide access to all critical financial data and systems

Enable expert decisions without excessive bottlenecks

Correctly leveraging a fractional CFO provides the financial leadership of a full-time CFO at a fraction of the cost. Their support can be vital for startups to mid-sized companies looking to scale. By sidestepping these costly errors, you will see greater strategic value and measurable financial gains from this executive-level role.