What is the Role of a Fractional CFO in India?

Although a fractional CFO is not a full-time employee of the organisation, he brings experience and expertise in dealing with the organisation’s financial problems. In a highly specialised role, the Fractional CFO helps the organisation:

• In developing the strategic planning to fix the existing issues.
• In determining the key performance indicators, the effectiveness of the business operations must be analysed.
• In creating comprehensive business plans and detailed pitch decks to raise funds.
• In developing a compliant financial model to check the performance of the business, projects, assets and investments.
• In helping the business solidify its market valuation.
• In setting up Mergers & Acquisitions (M&A) due diligence process for healthy evaluation of target companies.
• In developing a Virtual Data Room (VDR) or Deal Room, a secure online repository used during M&A. VDR helps store and share confidential documents required for the due diligence process.
• In preparing the Forecasting and Budgeting with variance analysis. While forecasting and budgeting helps predict the future financial performance of the business, the variance analysis helps compare predictions to actual results to identify discrepancies.
• In fixing cash flow management, this process comprises monitoring, analyzing, and optimizing the organisation’s cash flow to ensure liquidity.
• Managing banking relationships through negotiations involving business terms, financing, account, and warranting compliance though a series of financial agreements and regulations.
• In leveraging business intelligence for analysis of financial data, performance improvement, strategic decision making, and driving informed decisions and financial plans.
• In overseeing Financial Planning and Analysis (FP&A) by offering valuable inputs on important business aspects such as budgeting, forecasting, performance monitoring, and strategic financial decision-making processes.
• In preparing financial reports and presentations to all the stakeholders to ensure the seamless communication of financial insights.
• In offering decision support through the analysis of financial data to support strategic insights for making informed business decisions.
• In leading business negotiations after duly analysing financial propositions, arranging deals, acquiring favourable terms, and ensuring alignment with strategic business goals.  
• Is responsible for managing relations with investors by communicating financial performance, maintaining transparency, addressing stakeholder concerns and fostering confidence in business strategy.

Fractional CFO vs Full Time CFO

Most Start-Ups work in a very challenging environment and business landscapes. They have limited budgets and often look forward to cost-effective, flexible resources and expertise to manage their daily operations and finances. A Fractional CFO can prove to be a disrupter helping them scale their business with limited available resources.

Let’s take a look at the reasons why Start-Ups should hire a Fractional CFO over a Full-Time CFO:

1. Employment Status – A Fractional CFO is a part-time employee of the organisation and can work for more than one organisation at one given point in time. A Full Time CFO is a committed employee of a single organisation bound by the organisation to not lend his service to any other organisation while working for it.
2. Remuneration Status & Overhead Expenditure—A Fractional CFO is hired on a need-basis, and his compensation is limited to the period of service lent to the organisation. However, as a committed employee, a Full-Time CFO is paid annual remuneration, which costs the company annually. A Fractional CFO is a cost-effective solution to save overhead expenditure.
3.  Hiring & Availability—A Fractional CFO is available immediately, and the hiring process is relatively easy and short. Hiring a Full-Time CFO is a tedious task and takes a long time. Besides, a Full-Time CFO who intends to join a new place of work may have to serve a notice period, which means his availability is not immediate in such cases.
4. Hiring Risks—A Fractional CFO is not a permanent employee of the organisation, but his hiring exposes the organisation to the hiring risks associated with senior leadership. As such, the organisation can use this experience to fix the loopholes. However, hiring a Full-Time CFO comes with inherent risks and gives no scope for improvement to the hiring team.
5. Flexibility—A Fractional CFO is the perfect fit to manage the dynamic financial landscapes of Start-Ups, as they can hire on a need-basis. However, a Full-Time CFO does not offer such hiring flexibility. 
6. Scalability – A Fractional CFO can adjust well to the changing financial needs of the Start-Ups since his hiring is on need basis. However, as a permanent employee, restructuring a Full Time CFO in case of changing economic landscapes is challenging.
7. Business Valuation – A Fractional CFO is experienced to help boost the organisation’s valuation much before a Full Time CFO can be hired.
8. Readjust Focus – A Fractional CFO allows the organisation to outsource its financial management while readjusting its focus on core competencies by senior leadership. However, with a Full Time CFO the focus remains divided. Thus, modern-day businesses prefer Fractional CFO services.
9. Risk Management—A Fractional CFO’s immediate availability during financial crises makes him a better fit to manage risk than hiring a Full-Time CFO in a similar situation.
10. Networking – A Fractional CFO is exposed to a huge professional network including bankers, auditors, and taxation experts thanks to his association with multiple organisations. His contacts can be leveraged by the Start-Up in times of need. It may not hold true for a Full-Time CFO.

When Should You Avail Fractional CFO Services?

Start-Ups are mostly working in a dynamic environment with ever-changing financial landscapes. They aim is to scale up business, boost growth, invite investment, reduce cash flow issues, and plan strategic moves such as mergers and expansions. However, given their budgetary challenges, when Start-Ups realise that hiring a Full Time CFO is expensive, they can opt for Fractional CFO services, who handles the financial issues with same expertise as a Full Time CFO but at a much affordable cost.

Top Fractional CFO Services that your Business Needs

Start-ups need to avail the Fractional CFO services to benefit from his experience in the financial domain. His expertise can be availed at an affordable cost on a need basis to manage the business’s strategic planning, cash flow management, and scalability issues. Some of the top Fractional CFO Services that businesses need include:

• Financial Planning & Analysis
• Cash Flow Management
• Strategic Financial Guidance
• Fundraising
• Investor Relations
• Financial Reporting & Compliance
• Risk Management
• Developing Financial Systems