How is my practice different from other fractional CFOs? Let me compare my practice to the typical fractional CFO practice. There are several of them in town.
The typical model for most fractional CFO firms is to have each of their CFOs work on two-to-four clients at a time. At each client, the CFO will work anywhere from half-a-day a week (a 10% FTE CFO) to two days a week (a 40% FTE CFO). Above 40% and it is clear that a full-time CFO is in order. This approach makes sense and is efficient for the individual CFO and the fractional CFO firm.
But what about businesses of a size that simply don’t need a CFO that often? I’m talking about businesses that have CFO level challenges less than 10% of an FTE. Or just need general guidance for their accounting staff? Or want to call on a CFO when they have a question, just as they do with their attorney?
That’s where I come in. Rather than working with two-to-four clients at a time, I’m working with 20 to 25 clients at a time. Obviously, this is a much lighter touch than the other model. Often, I have a monthly meeting with a client that serves as a general business check-up. That meeting typically lasts 90 minutes to two hours. Sometimes special projects come out of these meetings that require more time. But at the end of the month, I invoice most of my clients for only two to six hours for the month. That keeps the cost of having a CFO reasonable.
There are a lot of businesses that have a need for a CFO on this basis. Why don’t others use the model I do? Some do, but it is a challenge for me to stay efficient in the use of my time. Covid was the best thing that ever happened to my practice because we all discovered how effective we can be with virtual meetings. My time spent traveling has almost been eliminated.
You’re probably thinking that keeping track of what is going on in that many businesses would be a challenge, and you’re right to wonder. My secret is that I keep thorough notes on every meeting I have, so I can refer back to those notes. I have these notes for clients going back almost 15 years.
The monthly meetings that are the cornerstone of my practice start with the review of the most recent month and the year-to-date financial performance. This includes Income Statements, Balance Sheet, and a number of other financial statements. The specific reports depend on the client and management’s preferences. Together we develop a standard package of reports.
From there we cover cash flow, taxes, financing, and budgets, if those topics are relevant at that point in time. From there, the topics get less financial in nature, such as backlog (under contract but not performed yet) and pipeline (prospects for future work).
Other topics may follow unless the client has other trusted advisors for these areas. These include marketing, sales, operations, personnel issues, facilities and CapEx, IT, and risk mitigation.
We usually conclude with long-term plans. This topic depends on the time of year and whether the client is working on any of these special areas: business plans, strategic direction, exit strategy, acquisition, or disposition.
Topic coverage and frequency is specific to the client’s needs. In many cases, the client and I develop a monthly agenda specific to the client’s needs. For most clients, this serves as a monthly check-up on the health of their business.
If you know anyone who needs a fractional CFO who works this way, please refer them to me. I like helping businesses this size.
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