Blog Posts, CFO

What’s the Difference Between a Virtual and a Fractional CFO?



Scaling quality and financial guidance

Every business operates by a process of creative interaction with the economy. The investment, creation and return cycle runs on energy and decision-making skills, but it only runs optimally based on sound financial strategy. 

CFOs specialize in the analysis and optimization of financial flow. CFOs ensure company resources go where needed within a company’s ecosystem. They inform management on financial decisions and ensure optimized investment. A competent CFO, standing beside a firm’s owner or CEO, informing and directing financial flow, is the difference between a thriving  and a failing organization.

What happens when we take a CFO’s financial expertise and apply it to the ecosystem of a start-up,  a small business, or a medium-sized firm?

Good things happen!

These days, access to a CFO isn’t limited to those who can afford to hire someone full-time. According to some sources, the median CFO’s salary in the US is $393,377 per year. Small firms can also benefit from the expertise of an experienced CFO without having to hire one on a full-time basis. 

Fractional and virtual CFOs offer consulting services and packages tailored to the needs of any business, regardless of size. 

But what’s the difference between fractional and virtual, and which is better for you?

What is a Fractional CFO?

As mentioned above, a fractional CFO provides financial services, insights, and data to a variety of companies simultaneously. “Fractional” means that services are offered on an as-needed basis or in company-specific packages. Rather than handling all things financial for one company, a fractional CFO works with a variety of clients. 

When you take the broader trend of personalization and specialization and apply it to the world of financial consulting, you get a fractional CFO. Fractional CFOs offer services based on the needs of their clients. Some clients require help with savings or optimization. A CFO will be able to advise clients on how to channel funds toward impactful investments. Another client might need to move into a new tax system. A CFO could help solve  all of these issues.

In short, fractional CFOs solve financial problems. Both those problems, you know you have and, sometimes, those you didn’t know you had.

What is a Virtual CFO?

A virtual CFO, as the name implies, is a CFO, or CFO-service provider that takes care of financial issues remotely, through a virtual platform. But it’s also more than this. Like a fractional CFO, a virtual CFO means that start-ups and small firms can get access to financial services they might not have been able to afford previously.

A virtual CFO could be full-time or part-time. They could be billed hourly or they could be brought in on contract to solve a specific problem.

Often Virtual CFOs are hired to help start-ups with scaling-up pains. This might mean help with payroll or accounting automation. It might mean financial strategy, or it might mean financial reporting. A virtual CFO utilizes new technology to reduce the costs of financial management.



What’s the difference between a Virtual CFO and Fractional CFO?

As you’ve probably already grasped, there’s quite a bit of overlap between the term ‘virtual CFO’ and ‘fractional CFO.’ Both are relatively new services that remove barriers between small businesses, start-ups, and even medium firms, and high-end financial services.

Still, there are some differences. The term ‘virtual CFO’ refers more specifically to the use of new technologies in financial management. Virtual CFOs work remotely. They have the systems, and the resources, to handle your firm’s financials at a distance. Most virtual CFOs have set up their entire practice to provide, or integrate with, existing cloud technology and deal with problems remotely. This means all you have to do is give them relevant access, or information. They can take it from there, all without physically showing up at your front door or office. For example, VerticalCPA deals with clients in the US, Canada, and even in foreign countries!

Fractional CFOs might also be virtual, but the term does not necessarily refer to remote CFO services. Whereas a Virtual CFO is often full-time with one company, a fractional CFO offers part-time services and packages. Fractional CFOs deliver services to multiple companies simultaneously. They might come for in-person meetings but they offer their services as needed. With fractional CFOs, the key is to identify where your firm needs optimization (a CFO can help with this) and then outsource that problem to someone with experience.

As with all services, it’s good to know what goes into the price of each type of CFO. Check out the 5 pricing criteria every startup and small business needs to consider when evaluating pricing for a virtual or fractional CFO.

Bottom Line

Whether you avail yourself of a fractional CFO’s services, go virtual with a complete suite of full-time financial tools, or keep blundering along doing everything yourself, just know that you have access to high-end financial strategy, services, and insights from an experienced finance professional.

Still not sure what’s right for you? Check out VerticalCPA’s quick checklist for those considering a virtual CFO. Or set up a meeting with one of our people…we know that sometimes there are just questions you need a real person to answer!

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