FRACTIONAL FINANCE

Fractional Finance includes the services of finance professionals such as Fractional CFOs.
They can also deliver part-time, and special project services.

What is Fractional Finance?

Fractional Finance is a term that ambitious owners of businesses of all sizes and stages of growth should become familiar with. The greatest benefit however resides with those in the following stages:

Start-up;
Post start-up growth;
Mid-Market:
- with expansion opportunities; or
- with opportunities to beat the competition.

Here's why:

In today's competitive business world, entrepreneurs of all sizes are constantly on the prowl for ways to arrange their cost structures in order to maximize their return on investment. In the past, the focus was mainly on facilities, equipment, and nurturing customer relationships. However, thanks to the rise of the Cloud, businesses now have the golden opportunity to broaden their horizons and apply these strategies across a wider array of expenses. One place where this "best bang-for-the-buck" can now place a fresh spotlight is on the ROI of human capital.

Larger enterprises have, until very recently, held a competitive edge over businesses on their journey of growth, by holding a virtual monopoly on highly trained professionals that have experience that would be invaluable if it could be obtained at an affordable cost.

In the realm of a business' finance function and needs, three factors bring the costs of such services down substantially at the individual business level. They are:

Automation of business and finance related activities (see our articles on the $million tech-stack);
The Internet as a foundation for the access to and distribution of financial data; and
Cloud-based applications that reduce the costs of data entry, and allow for 24-7 access to all this data for summarization, reporting, analysis, and action.

InHouseCFO-Infographic-v2023

Except for those strategic skills that can only be effectively delivered in person by experienced finance professionals, all other components of an enterprise's finance needs can now be met working remotely. This boosts a finance professional's capacities, enabling them to share their expertise through fractionalization. The outcomes are extraordinary, presenting an immense yet surprising (to me anyway), as yet untapped potential for achieving faster and more significant results in a truly meaningful manner.

Components of Finance that can be Fractionalized

As mentioned above, all the finance-related functions and services that a business needs can now be fractionalized. These functions and services are:

Chief Financial Officer (CFO):
- see our article on the roles, job description, and capabilities of a valuable CFO
Controller:
- see our article on the roles, job description, and capabilities of a valuable Controller
Accountants:
- see our article on the roles, job description, and capabilities of a valuable Accountant
Bookkeepers:
- see our article on the roles, job description, and capabilities of a valuable Bookkeeper
Analysts;
- see our article on the roles, job description, and capabilities of a valuable Analyst
Specialists:
- see our article on the roles, job description, and capabilities of a valuable Specialist
Project Managers:
- see our article on the roles, job description, and capabilities of a valuable Project Manager

Depending on a business' needs, any or all of these can be provided, individually, or bundled, and either in an ongoing manner, or for defined periods of time.

What finance-related services are not provided by Fractional Finance Professionals?

Imagine a grand rectangular board-room table, where business professionals gather to strategize and make important decisions. Among them, seated on the same side as the business owner(s), are Fractional Finance Professionals ("FFP"). On the opposite side of the table, you'll find the experts sought after for their technical knowledge in specific subject matter, such as law, tax regulations, auditing, and other jurisdictional matters. These professionals are bound by the legal and accounting regulatory regime, which, among other things, requires them to maintain an "independent" state of mind. While they play a crucial role in ensuring compliance, their effectiveness in providing the comprehensive finance services that businesses need to thrive may be limited. However, FFPs often oversee these service providers, ensuring that the business's financial operations remain on track.