10 Things Your Fractional CFO Should Be Doing | London & UK Guide
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- A fractional CFO is responsible for making sure your monthly financial historical data is accurate. A Fractional CFO will not be doing payments, running payroll, VAT Returns, bank reconciliation, etc., but they will be responsible for ensuring that your monthly historical data is accurate and insightful.
This is very important because a lot of companies have messy data. The way a fractional CFO is ensuring the financial data is accurate is to spend few hours a month and check if the bank reconciliation is accurate, revenue recognised correctly, expenses allocated to the right expense categories, check your accounts receivables, payables, etc. It's like a quick monthly audit of your financials.
- Make sure you don't use spreadsheets for reporting or board pack. A fractional CFO is responsible for implementing a proper reporting tool that give you the right financial and non financial information that will help you grow your business.
The reporting a fractional CFO is preparing can also be used as a board pack and presented to your board.
- Budgeting. A fractional CFO is responsible for creating a 12-month budget for your business. This means having conversation with the team leaders and understanding the spare capacity in their team, what are their hiring expectations, are there any urgent hirings they need to do it, etc.
A fractional CFO will also explain to team leaders what are the company's growth expectations so it can be linked to the hiring plan. In terms of growing a business there is always three scenarios: worst, base and the best. All these three scenarios needs to be linked to different hiring plans.
- Make sure your company is leveraging AI as much as possible. While a fractional CFO can not implement automation and AI for all the areas of your business, such as sales & marketing and customer success, a fractional CFO is responsible for making sure your company is leveraging this technology.
One way for a fractional CFO to do this is during budget talks by speaking with the team leaders and asking questions about how the department is leveraging AI, what they think the impact on their work is of AI, and also discuss a monthly allowance, for example, £200 where tell team leaders to use it and explore new tools.
- A fractional CFO is responsible to provide you with a 12-month cashflow forecasts that is updated every month and shows you when the company might run out of cash and what are the solutions.
- A fractional CFO will help you with fundraising, how much money you need to raise without losing too much equity and also build a financial model and explain it to you.
- A fractional CFO is responsible to make sure you understand your company's financials including metrics and margins, what they mean and how they work.
- A fractional CFO is responsible to go with you over the long term growth plans and help you get a better understanding of what you need to achieve every quarter in order to get to your desired valuation.
- At founder's discretion, a fractional CFO could join a board meeting and present the numbers and answer any finance questions member of the board have.
- Ad-hoc inquiries. Founders typically have at least one urgent finance question per week. A fractional CFO is responsible to assist the founders with such question in a quick manner, which means replying to most of the emails within a few hours and having regularly strategic meetings.
