As leaders of small and mid-size businesses continue to weather an unpredictable environment rife with high turnover, competitive pressures and economic uncertainty, a vast number are opting to bring in interim leaders for certain positions or to fill or augment critical roles with fractional personnel. This is most evident when it comes to the CFO and financial-oriented positions. According to data from the Business Talent Group (BTG) 2023 High-End Independent Talent Report, the most significant demand is in the office of the CFO, with interim CFO requests increasing by 103 percent since 2023. The position of controller is the fastest-growing interim C-suite role (+322 percent YOY).

Why Fractional Engagements Are on the Rise

While fractional support has always been an option, the recent rise in outsourcing is tied to the inflection point that occurred during the pandemic when employee attrition left a skills void for many companies. Spurred by a limited talent pool and employees’ growing resistance to working on site, employers had to scramble to fill the gaps.

Outsourcing enables employers to secure the high-caliber talent they require without the cost or risk of filling a full-time or permanent position. The trend has grown as employers discover fractional support provides ultimate flexibility and enables companies to scale up in a measured manner with less capital and minimal risk.

Who It’s For

While outsourcing works well for companies of any size, it is especially ideal for those with fewer than 50 employees. The arrangement is suitable for any business and highly valued by service industries, construction, real estate, medical offices, and not-for-profit organizations, and is often utilized to augment in-house accounting in manufacturing companies.

When to Hire a Fractional CFO or Controller

A fractional CFO or controller can be a valuable asset to your business under a wide variety of circumstances. Some companies, such as emerging businesses, may not find it affordable to hire an in-house accountant. In those cases, the responsibility often falls on an individual who doesn’t have an accounting background or the qualifications to perform the job successfully. A fractional controller can lift that burden and even tutor an individual to acquire the necessary skills for the job.

In other cases, complex situations, rapid growth, or inefficiencies may lead to frustration and unnecessary expense. A fractional CFO’s superpowers are the ability to resolve and overcome challenges, streamline operations and save time, money and a lot of aggravation.

• Rapid growth: When your business is experiencing rapid growth and needs strategic financial guidance to scale effectively
• Complex financial issues: If you’re facing complex financial challenges such as raising capital, mergers and acquisitions, or restructuring
• Lack of internal expertise: When your company doesn’t have the in-house financial expertise to handle specific tasks or projects
• Short-term needs: For temporary financial leadership during periods of transition, such as executive turnover or special projects
• Strategic planning: To develop a long-term financial strategy and plan for the future
• Prepare new leaders: To educate internal staff so they can take over certain functions, or help train a new hire who will assume financial duties
• Overburdened accounting team: If your accounting team is overwhelmed with day-to-day tasks and unable to focus on strategic initiatives
• Financial reporting challenges: When you’re struggling with accurate and timely financial reporting, classifying expenditures and capitalizing equipment and improvements correctly, preparing month-end closures and streamlining reconciliation
• Payroll accuracy: To ensure that payroll is accurate and reflects the appropriate amount of withholding and payroll taxes, W-2 and W-3 reviews
• Internal control weaknesses: To strengthen your internal controls and compliance processes
• Accounting system implementation: When implementing a new accounting system or making significant changes to your existing one
• Seasonal fluctuations: For businesses with seasonal peaks in accounting workload

Customized and Collaborative

An engagement may last just a week, a few years, or until resources are available to hire an in-house controller. Some companies choose to maintain the fractional CFO — even when there is a capable individual in house — not only for the added value, but because the fractional CFO provides stability and, in the event of employee turnover, ensures continuity and that historical company knowledge will remain intact.

In unpredictable times, one thing managers can count on is the value of hiring a fractional CFO or controller. It’s a collaborative approach that helps streamline accounting functions, analyze and establish best practices, maintain compliance, and often, save money. Most importantly, it frees up management’s time so they can focus on their primary goal — to build their business.

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Tammy Vondra, CPA, MBA, manages the Small Business Group at Fischer Cunnane. Specializing in outsourced accounting services, accounting and auditing, Vondra provides ongoing accounting and financial management consulting services to privately held companies in various industries and provides tax services to corporations, partnerships, nonprofits, and individuals. Contact her at [email protected] or 610-431-1003.