Fractional CFOs – The benefits to businesses
In our final article in the series on the growing demand for fractional CFOs, we look at their advantages to businesses, and talk to the CEO of Pi Datametrics, a Mercia Ventures’ portfolio company that is benefitting from the support of fractional CFO.
Fractional CFOs – The benefits to businesses
In our final article in the series on the growing demand for fractional CFOs, we look at their advantages to businesses, and talk to the CEO of Pi Datametrics, a Mercia Ventures’ portfolio company that is benefitting from the support of fractional CFO.
Over the past couple of months, in collaboration with Victoria Robson from Mercia Ventures, we have been examining the rise of the fractional CFO market, and how this has impacted both finance professionals and businesses. In our first article, we looked at the shift from “part-time” to “fractional CFO, our second article explored the growing demand for fractional CFOs, in our last article we talked to two successful CFOs about their transition from full- time roles to fractional careers and in this final article, we will look at the many benefits to businesses and hear from a business leader who works with a fractional CFO.
In today's dynamic business environment, companies are increasingly turning to fractional CFOs to navigate financial complexities and drive strategic growth. A fractional CFO offers high-level financial expertise on a part-time or contractual basis, providing an attractive solution for businesses that may not require a full-time CFO. The benefits are many including:
Cost effective access to expertise
One of the primary advantages of hiring a fractional CFO is cost savings that businesses can make. This significant difference allows businesses to access top-tier financial leadership without the financial commitment of a full-time executive.
Strategic financial planning
Fractional CFOs bring a wealth of experience in financial strategy development, cash flow management, budgeting, forecasting and risk management. Their diverse backgrounds enable them to offer fresh perspectives and unbiased advice, helping businesses identify opportunities and mitigate risks effectively.
Flexibility and scalability
Engaging a fractional CFO provides businesses with the flexibility to scale financial leadership according to their needs. Whether a company is experiencing rapid growth, managing seasonal fluctuations or undertaking specific projects, a fractional CFO can adjust their involvement to match the business's requirements.
Access to a broad network
Many fractional CFOs have extensive networks within the financial industry. They can leverage these connections to facilitate fundraising efforts, establish banking relationships and provide access to potential investors. This network can be invaluable for businesses seeking to expand or secure additional capital.
Diverse industry experience
Fractional CFOs often possess experience across various sectors, allowing them to apply best practices and innovative solutions tailored to a company's specific challenges. This diversity of experience brings a fresh perspective to the boardroom, fostering creative problem-solving and strategic thinking.
Victoria Robson spent some time with Daniel Titterton, Co-founder and CEO of Pi Datametrics, a Mercia Ventures’ portfolio business that delivers organic search intelligence and insight to the digital content and SEO community. Daniel has benefitted from working with Julie Ritchings, a fractional CFO, for the past nine months.
What attracted you to the hiring of a Fractional CFO rather than an alternative full-time hire?
When a group of founders get together to build the business model around an idea and through the early proof point in executing this it’s not always the case that one of the team is a CFO. Quickly, as was the case for us you start to understand that some basic know how is dangerous. Getting a full time CFO that meets your founder grade standards is tough, attracting and retaining the best becomes a big distraction. We tried many options and met some exceptional people on the way, but we struggled to get the right balance of investment and output relative to our business challenges.
Fraction CFOs offered in principle a way to get exceptional talent engaged in the formal outputs of the business while saving on the mental and financial overhead. Getting the right fit remained the challenge, without a compatible mindset and personality the best and brightest would still struggle.
What are the main benefits the Fractional CFO brings to the business? Both expected and unexpected!
Expected benefits included gaining a sense check on financial operations and getting the core financial metrics in place to ensure decision making for the business leadership was focused on strategy and execution and not on reconciling metrics and accounts. There were a lot of unexpected benefits and maybe these are not exclusive to fractional CFOs, but with our current CFO, we gain a lot of insight that comes from them working in other businesses, whether that’s in similar sectors or in teams with similar challenges. We’re also very lucky in our current situation as our fractional CFO is available for ad hoc questions and quick check-ins outside of formal time allocations.
What is the impact and benefit on cost?
The cost benefit can be seen in a few ways, a good CFO is a proper investment, with more significant benefits. With such functions you need to be wary of false economies and it never makes sense to treat this as a place to apply cost savings. For us the cost impact allowed us to trade time for quality. So in a sense you might not win on cost but the quality and experience you gain shifts the return on investment heavily in your favour.
There is no doubt that the fractional CFO model offers UK businesses a flexible, cost-effective approach to accessing high-level financial expertise. By leveraging the skills and experience of a fractional CFO, companies can enhance their financial management, drive strategic initiatives, and position themselves for sustainable growth.
A quality CFO represents a strategic investment with substantial returns. Treating this role as a cost-saving opportunity creates false economies. For us, the fractional model optimised time versus quality - while costs remained similar, the enhanced expertise and experience dramatically improved our ROI.
The fractional CFO model gives UK businesses flexible access to senior financial expertise, enabling stronger financial management, strategic execution, and sustainable growth.
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