The strategic priorities that lead businesses to engage a fractional CFO may vary, but uniformly CEOs, Chairs and Investors are recognising the impact and value fractional financial leadership adds to their business over both the short and long term.
During 2024 the single most frequent theme of our conversations was Fractional CFOs, and in this article we pull together the key insights and learnings from all our stakeholders (investors, fractional CFOs, CEOs and Chairs) that we conversed with.
Strategic Alignment
The drivers that trigger clients to consider enhancing their leadership team with Fractional CFO expertise are often both tactical and highly strategic. Indeed every Fractional CFO that we have engaged for our clients balances overall accounting function management with individual task ownership and strategic financial leadership.
Common drivers that trigger conversations are investment raises and exits; M&A and new service/product launches; cost analysis and management; commercial strategies; CEO partnership and accounting team development; and meaningful financial data and analysis to guide Board decision-making.
Fractional CFOs recognise that they will often be ‘down in the weeds’ and take ongoing ownership for key tactical elements of financial management, but equally we work together with them and our clients to ensure there is strong strategic alignment with the immediate and longer term business plan. Without exception, the fractional CFO plays a key role at the Board table, delivering not only the role brief they have been initially given, but also proposing and driving initiatives that they have identified from their initial induction into the business.
Execution Impact and Value
The speed and scale of Fractional CFO’s impact is often staggering for our clients. Sometimes having perhaps waited a little while to engage financial leadership, the execution impact within the first or two month is dramatic – a full suite of financial and Board reports with analysis and recommendation; an assessment and development plan for the current finance function; the beginnings of a true value driven trusted advisor partnership forming with the CEO. Indeed, in many instances, execution impact within the first quarter can often also involve a full annual Budget or investment round/M&A.
The execution impact of an optimal finance function should then continue over the long-term, coupled with specific initiatives that focus on specific value drivers and events in the business plan, whether that be exit planning and execution, acquisitive strategies, or deep operational efficiency and tech enablement programs. Fractional CFOs bring their expertise, network and market knowledge to each of these initiatives, often having trodden the pathways many times before, guiding the business and team to avoid pitfalls and optimise levers of value.
Reflections on Success & Lessons Learned
Relationship building with the CEO is key – the quicker a trusted advisor relationship is established, the swifter and greater the impact a fractional CFO can deliver.
Flexibility and adaptability is key – from the tasks in any given month, to the average number of days worked each week, fractional CFO assignment pro-actively flex to meet the changing demands of the business.
Replacing oneself at the right time - the fractional CFO should support their client in scoping and hiring their replacement, whether that be a different fractional CFO for the next stage of the journey, or a first permeant CFO hire. Whilst some of our Fractional CFOs stay with a client for one-two years, some assignment have been targeted projects such as M&A which then transition to a longer-term different CFO. The beauty of the fractional model is that you can adapt your leadership team in line with your growth journey and changing business dynamics.
Recognition of success – whilst our clients derive huge value from their fractional CFOs, likewise, it’s vital that our incredible CFOs also derive value from their role beyond their commercials. The attraction of these roles for many of our CFO network are that they feel they can deliver visible and high impact results to the client, and whilst not a permanent member of the exec teal or Board, it’s important that their impact is recognised and celebrated in the same way it is for all other members of the executive team.
About the author:
Mark Widnall, Fractional CFO
Having qualified as an Accountant with EY, Mark has focused his career on supporting start-up and high growth scaling businesses. He has built an inter-connected skillset encompassing financial management, investments and exits, risk and regulatory, FP&A, and systems management that has enabled him to hold a variety of roles from CFO to Operations Director and Managing Director.
