Interim CFO vs. Part-Time CFO for small businesses

If you run a startup or a small- to mid-size company, you probably can’t justify hiring a full-time chief financial officer. But, you do need some level of financial help from an expert, someone who can cast a trained eye on your cash flow, margins, key performance indicators, and overall profit picture while you concentrate on your team, your products, and your strategies for growth.

What happens when you have to navigate a period of financial disruption and that CFO isn’t the right person to see you through it? Or your CFO leaves abruptly in the middle of a critical time? In either case, you need to hire a CFO. So, when should you hire an interim (temporary) CFO, or a fractional (part-time) one?

An Interim CFO Explained.

Interim CFOs are finance experts who come in, usually on a full-time basis, typically for one to three months, to help steer a company through a financial crisis, operations change, preparation for a sale, or the gap between one CFO’s departure and the hiring of a new one.

What is a Part-Time CFO?

A part-time CFO is a critical partner during times of transition. Whether you’re a startup maturing from a Series A funding round, a private equity firm looking for an experienced leader to step in and help manage a portfolio company, or a later-stage company looking for someone to perform CFO duties while the search for a full-time CFO is underway, the skills and experience a part-time CFO can provide are invaluable to help your company grow and thrive.

When You Need an Interim CFO

  • An interim CFO doesn’t typically work with startups although it is not impossible. It’s more likely to be middle-market companies who call on folks like me to come in on a full-time basis for a very short, defined period of time. Usually, there is a catalyst, something undesirable happening to the firm’s financial health. Companies generally don’t bring in an interim CFO when things are going well.
  • Every organization undergoes periods of transformation at some point. As a company expands, growing pains often result. Financial reporting issues, accounting errors, or maybe lack of systems and processes altogether can negatively impact an organization. An Interim CFO can assist your business with:
  • Prepare for Exit or Transaction- An Interim CFO is the greatest insurance policy for company owners going through a transaction to sell, refinance, or acquire another company. The role of the CFO in M&A is critical to a successful transaction. Especially for companies who haven’t had to report to outside investors, a sale or merger may require a whole new level of financial reporting and accountability that most companies are not ready for.
  • Distressed Financial Situations- When a company is out of covenant on loans, is experiencing decline in revenue, or suspects fraud, an interim or fractional Chief Financial Officer can help. With experience in turnarounds, an experienced Interim CFO assesses what is causing the organization distress and rapidly creates and implements a plan to address the crisis whether it be re-negotiating with creditors, recapitalization or even liquidation.
  • Financial Planning and Analysis-  An Interim Chief Financial Officer can help an owner with cost accounting, putting good financial systems and accounting policies and procedures into place. Interim CFO services can be critical in properly recognizing revenue, cash flow analysis, budget forecasting, and financial modeling. You no longer need to wonder what projects are profitable.
  • Financial Controls, Process & Procedure-  As fast-growing companies expand, the finance function must grow up as well. An Interim CFO provides strategic solutions to help navigate through growth such as Sarbanes Oxley Compliance (SOX), BPO, implementation of an ERP system, budgeting and forecasting, risk and compliance, and even finding a permanent CFO to move the company forward.

Turn to a Part-Time CFO When You Need This.

Businesses require expertise and experience to drive profitable, sustainable growth. A Part-Time CFO can identify new growth strategies and provide methods to reduce costs to improve your business’ profitability, at a fraction of the cost of a full-time CFO.

  • Cash Flow Management- Manage your capital runway, debt obligations, and ensure the ability to invest in new projects.
  • Profitability Optimization- Identify opportunities to improve margins through granular analysis of channels, service lines, products, and more.
  • Exit Strategy- Prepare your company with defensible financials and a logical strategy before an interested party comes calling.
  • Fundraising Support- Plan for the timing, format, and level of funding required to support business operations.
  • Internal System Implementation- Put systems and controls in place across your business to accelerate growth.
  • Business Strategy- Setting a strategy for your business, after a thorough analysis of your entire business environment, will give your company the best chance for success.
  • Mergers and Acquisitions- Make informed business decisions when considering M&A opportunities. We can evaluate, negotiate and close transactions and assist in the successful transition into your existing business.

Final Thoughts

One reason to clarify the difference between these two types of finance professionals is that fractional CFOs often use the term interim CFO. Another is that people sometimes think they need an interim CFO when they really need a fractional CFO. And one last piece of advice for small- to mid-size business owners and upper management: One of the best reasons to hire CFO services is if you are spending more time doing administrative, finance, and back-office tasks than on growing your business.

Limitless Investment and Capital’s Part-Time and Interim CFO Services in Denver and Detroit

Limitless Investment & Capital provides growing and established organizations with experienced CFO-level talent on an outsourced, part-time basis at a fraction of the cost of a full-time employee. Our CPAs and consultants provide specialized skill sets to navigate times of transition when you can’t afford to be without a CFO.

We price our service offerings very sharply at rapid mandated turnaround times and place exceptional quality CFOs, Financial Controllers, and Analysts on the project, by leveraging on our varied and wide resource database pool.