Have you built solid experience in finance and are you thinking about continuing your career as a fractional CFO? In this article, we explain how the role works, its pros and cons, and the practical steps to make this career transition.
"Fractional", "outsourced", "on demand"... A CFO can share their expertise with several companies through part-time assignments. These can cover the "day-to-day" financial management of the business or specific projects.
The rise of this profession is driven by growing demand from companies, especially small and mid-sized businesses, that need a CFO but have neither the means nor the need to hire one full time. This demand is met by a growing supply of CFOs who want to stay independent and broaden their experience, and whose seasoned profiles can sometimes be too expensive for a full-time hire.
According to the latest study by the Observatoire des Directeurs Financiers à temps partagé (DFCG), half of outsourced CFOs work with at least three different companies, one or two days a week on average. Their main motivations are: project management and the variety of assignments (85%), autonomy in organizing their time (83%) and independence from the business owner (77%).
A major advantage of being a fractional CFO is the diversity and richness of the assignments. Since no two companies are alike, an outsourced CFO may lead very different assignments in varied sectors with very different stakes: setting up a budget, building financial reporting, preparing a financing file, carrying out an acquisition, performance management, structuring the organization, and more. This variety requires adaptability and the ability to quickly grasp the challenges of each new environment.
This diversity also means working with business leaders from very different backgrounds and quickly expanding your professional network. That network can prove crucial for finding new assignments and ensuring a certain stability of income.
Given the relatively high day rates charged, the pay can be comfortable once you manage to fill your available working time with one or more assignments. Keep in mind that this takes time and requires some planning so that assignments follow one another smoothly.
Finally, working as a fractional CFO for several companies multiplies your opportunities and can make it easier to return to more traditional salaried employment.
Getting the business off the ground can take time and require significant investment in business development. If you don't go through a CFO firm or a specialized company, you will need to grow and make the most of your network to find your first clients and sell your services.
Income can therefore be less predictable and lower for an outsourced CFO, especially when starting out and between assignments. Typically, they are paid a day rate of between 750 EUR and 1250 EUR, depending on the length and complexity of the assignment.
Switching from one environment to another and handling pressure from several environments at once is far from easy. The outsourced CFO role can therefore be stressful for some. That said, note that 90% of fractional CFOs want to continue their activity in the years ahead (2018 study by the Observatoire des Directeurs Financiers à temps partagé, DFCG).
There are several, non-exclusive ways to launch your activity as an outsourced CFO. Like lawyers and architects, you can join a firm or company of CFOs that allocates assignments based on its members' availability and skills.
You can also find assignments by tapping into your own network. While this may give you more freedom, the sales effort, and the stress that can come with it, will be much greater.
A third option is to make your profile available to specialized recruitment firms. They will help you find new assignments and will be paid by the company that hires you.
Some people become fractional CFOs after a career setback (e.g., a layoff), while others do so by choice (e.g., family life). In most cases, the move is possible when you can handle some financial uncertainty during the transition period and have gained enough experience to calmly take on multiple assignments... which will no doubt be highly rewarding.
In France, to recognize the expertise of fractional CFOs, the DFCG created a dedicated label at the end of 2017. This label allows fractional CFOs to have their experience and know-how recognized and to promote their services to potential clients. Only members of the network can apply, and the main eligibility criterion is experience: a minimum of ten years is required, but in practice around fifteen years as a CFO is often expected to gain the maturity and reflexes needed to handle multiple assignments. The jury also pays particular attention to the diversity of experience, in terms of the number of employers and industries.