What’s on your Fractional CFO Qualifications Checklist?
Published on by Jill Prendergast in Client Accounting & Advisory
Fractional CFOs can be deployed at any stage in an organization’s lifespan, however, they’re most often brought in during periods of high growth. The process of identifying a qualified fractional CFO includes asking the right questions and keeping track of the variables in the market. To make an informed choice as to who you have providing financial guidance for your future, here are the key considerations we recommend you include in your qualification checklist:
Track record
The ideal fractional CFO will have significant experience and a deep understanding of the challenges and opportunities that come with phases of growth. They should also be able to provide insight and advice on financial planning and projections, technology, and scaling strategies. Overall, they should have a history of success in financial management and an ability to demonstrate their abilities to drive advancement and scale.
Business strategy
The fractional CFO’s primary focus should be on the development and execution of your strategy to enhance a business and successfully achieve your financial growth targets. They should be able to provide advice on a range of financial issues, from industry standards, measurements for key performance indicators, cash management guidance, analyzing a company’s financial strengths and weaknesses, and proposing strategic directions.
Industry expertise
Industry knowledge and know-how are key considerations when qualifying a fractional CFO. While all fractional CFOs should have a strong understanding of financial management principles, those with industry experience will have an in-depth knowledge of the specific sector in which your business operates. This can be invaluable in providing advice on areas such as regulation, compliance, and competitive landscape analysis.
At the same time, you don’t want an advisor who’s so specialized that they’re out of touch with other industries. It’s critical to ensure that the fractional CFO you select has the right mix of financial proficiency and sector-specific knowledge to meet the needs of your organization. This way, your fractional CFO will be able to provide value-add advice on both specific and general issues.
You want to ensure that your fractional CFO can:
- Understand market trends and related business impacts to drive the organization in the right direction.
- Identify areas of expansion and determine when and how to grow the business, considering all financial implications.
- Provide insight and data analysis to support leadership’s decisions.
- Evaluate the risks and benefits of alternate business models and determine the right one for the organization.
- Drive learning, growth, and an improved risk/return ratio.
Cultural add
Cultural Add is replacing Cultural Fit in that it brings three benefits to the table when qualifying talent:
- Evolving culture instead of stagnating culture
- The difference in ideas, not values
- Diversity & Inclusion
Cultural Fit means “fitting in with the current culture,” but it only brings people who think the same to the organization, which can lead to groupthink, poor innovation, and a lack of multiple perspectives – creating potential for poor problem-solving.
Cultural Add develops the culture of an organization by isolating talent based on how they fit into the organization at a new level. It’s about finding talent who will bring fresh ideas and different perspectives on how things are done. This is not to say that the talent’s values shouldn’t align with the organization’s values – they absolutely should – but that different ideas, perspectives, and backgrounds are allowed for in executing the organization’s growth strategy.
Here’s a list of questions you should consider when qualifying a fractional CFO:
- Can they collaborate closely with existing staff and help them develop new skills?
- Do their values align with the organization’s mission and values?
- Can they collaborate effectively with you, the CEO, and other members of the executive team?
- What is their communication style?
- Will they be able to share their own insights and expertise with your team on an ongoing basis?
- What type of availability does your organization need from this talent, and how will you measure their cultural add?
- Do you see yourself being able to build a foundation of trust and comfort to allow for a long-term business partnership?
- Do you feel confident that they will be able to set and execute your growth strategy? If not, what clarifying questions do you need answered to obtain that confidence?
Compliance & regulation controls
When having discussions with a potential fractional CFO, it’s vital to evaluate their background and knowledge base regarding compliance and regulatory matters your organization is accountable under.
You should ask about:
- Their experience with recent leasing standards, revenue recognition, or other SEC requirements.
- Their knowledge of present changes in tax regulations.
- Their knowledge base regarding GAAP, IFRS, or other financial reporting requirements your company is required to report under.
If they don’t have the knowledgebase or background required, discover if they have resources available to them that can advise them on overseeing such matters on your behalf.
It’s important to understand their institutional knowledge regarding compliance and regulatory controls to ensure reporting accuracy based on your organization’s current and future financial position.
Continuing education
The CFO’s role has evolved significantly in the last 10 years, as they now need to have broader knowledge and expertise beyond the traditional financial competencies. Now they must navigate the intricacy of today’s business landscape of regulatory changes, client needs, technological advancements, employee expectations, investor pursuits, and customer demands. Today’s CFOs need to constantly adapt, develop, and improve to keep up with business’s accelerated pace of change.
Continuing education equips professionals for building a future-ready profession. CFOs should not view continuing education as a check-the-box compliance obligation, but as a significant component of their professional development toolkit, making them more informed, engaged, strategic, and value-driven professionals.
Consider asking your fractional CFO these questions when qualifying them for your engagement:
- What continuing education courses have they taken lately to understand the future of their profession?
- What is their background in process automation, data analytics, and business intelligence that has helped them perform better professionally, enhance their client service, and create efficient and effective operating functions?
- What is their digital competency? When working in a hybrid world, it’s critical to ensure you have access to them as needed both in person and remotely. If they lack digital competencies, your access to them may be limited as well.
Why Barnes Dennig’s fractional CFO practice checks all the boxes
Continuing Professional Education (CPE) is in our DNA. Barnes Dennig encourages all of our employees to stay ahead of the curve, with dedicated resources providing our people with the best and most cutting-edge continuing education.
Compliance and regulation are also in our DNA, and we excel at both. Our assurance reporting has earned us stellar peer reviews and a clean inspection from the Public Company Accounting Oversight Board (PCAOB). We’re members of the AICPA’s Governmental Auditing Quality Center. And in 2021, for the tenth reporting period in a row (covering 30 years), Barnes Dennig received the highest possible rating from the American Institute of Certified Public Accountants.
Sometimes business leaders get tangled up in numbers. Barnes Dennig professionals have the vision to see beyond them. We see industry trends, as well as ways to improve effectiveness. And as our in-depth knowledge of your unique situation grows, our bench of professionals in your industry grows deeper. Add to that our focus on advisory and consulting services, and you’ll have to look long and hard to find a challenge we can’t tackle.
So, what are you waiting for?
If you want to see how our fractional CFO practice stacks up to your qualification checklist, our top team of outsourced accounting pros can help. Contact us for a free consultation. We’d love to provide you with the immediate relief you need and the long-term guidance that will help your business grow and scale.
You may also be interested in when using a fractional CFO makes sense…and when it doesn’t, how the 3Ts can help move your business forward, or deeper insights into how the fractional accounting model works.
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