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Fractional CFO vs Full-Time Controller – The Right Choice for Your Agency

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Overview

Join Zack DeLisa from Level10 CFO as he dives into the key differences between a hiring a full-time controller vs. a fractional CFO in a business, highlighting the crucial role of financial expertise in decision-making. Discover when it’s time to hire a full-time controller or fractional CFO, and the risks businesses face without the right strategic financial partner. Explore the benefits of fractional CFO services and how they cater to different business needs, providing professional expertise without overwhelming costs of traditional in house finance team. Gain insights into the process of transitioning to a fractional CFO and how they integrate with the team. Don’t miss out on this informative discussion that will empower your business to make more informed and strategic financial decisions.

Sections

[00:00:08] Understanding the Roles of Controllers and CFOs in Business
[00:08:05] When to Hire a Full-Time Controller or CFO for Your Agency
[00:10:11] The Importance of Having a Controller or CFO
[00:12:45] Understanding the Costs and Benefits of Hiring a CFO or Controller for Your Business
[00:18:34] Discussion on the Role and Complexity of CFO, Controller, and Staff Accountant in a Business
[00:25:32] Understanding the Fractional CFO Space with Zack DeLisa at Level10
[00:29:16] The Benefits of a Fractional CFO for Growing Agencies
[00:34:38] Zack DeLisa Discusses the Value and Efficiency of Fractional CFO Services
[00:37:47] Understanding Fractional CFO Services
[00:46:03] Transitioning to Fractional CFO Services with Level10CFO
[00:52:17] Engagement of a Fractional CFO with Team
[00:54:51] The Benefits of Fractional CFOs for Various Industries and Company Sizes
[00:57:10] Role of a Fractional CFO in Business Decision Making
[01:05:11] The Necessary Engagement Level of Fractional CFO in Your Business

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Transcript

[00:00:08] Understanding the Roles of Controllers and CFOs in Business

Topics: Accounting, Finance, Business management

Zack DeLisa elucidates the main differences between the roles of a controller and a CFO in a business. While a controller’s responsibility centers around the protection of cash and ensuring transactions are accurately recorded and the financial statements are accurate, timely, a CFO uses the financials provided by the controller to make crucial business decisions. They are more forward-looking, they help in decision-making based on financial projections.

What is the difference between a controller and a CFO?

The controller oversees the accounting process and focuses on recording transactions and ensuring accurate financial statements. The CFO, on the other hand, uses the financial statements to make decisions and guide the organization.

What are the main responsibilities of a controller?

The main responsibilities of a controller include creating a control environment to protect cash, ensuring accurate financials by working with bookkeepers, delivering the financial statements in a timely manner, and providing monthly reporting to give insights to the leadership.

What does a CFO do?

The CFO takes over from the controller and focuses on using the insights from the financial statements to help the business owner make decisions. They are forward-looking and start with an annual financial plan, using it as a roadmap for the business. The CFO compares the monthly results against the plan and determines if the business is on track or needs adjustments.

How can an agency know if they need help in accounting and finance?

An agency may feel the need for help in accounting and finance when they experience growth and notice a blind spot or gap in their financial information. It often starts with a need for a bookkeeper to handle transactional work, but as the agency wants to use the numbers for decision-making, they require higher-level accounting and finance resources.

[00:01:25 – 00:01:39] “And then the CFO takes over where the controller leaves off and uses those financials to help the business owner make decisions and use those numbers to guide the organization.”

Notes
– The controller oversees the accounting process and is responsible for creating a control environment to protect cash and ensure approved receivers receive it. – The controller also ensures accurate financial records by working with bookkeepers to record transactions correctly and creating accruals or adjustments when necessary. – Timeliness is another important aspect of the controller’s role, as they need to deliver the financial reports to the CFO or business owner in a timely manner so that decisions can be made promptly. – The controller also prepares monthly reports, comparing prior months’ performance to budgets and providing insights to the leadership team. – The CFO takes over from the controller and focuses more on using the financial information to make strategic decisions for the business. – The CFO starts with an annual financial plan or budget, which serves as a roadmap for the business and helps determine if it’s on track or not. – The CFO compares the monthly results to the budget and makes adjustments as needed to keep the business on track. – The CFO works closely with the business owner to make informed decisions and steer the business in the desired direction.

[00:08:05] When to Hire a Full-Time Controller or CFO for Your Agency

Topics: CFO, Controller, Staff Accountant

Zack DeLisa discusses when a company might determine its need for a full-time Controller or CFO. He explains the distinction in roles between a staff accountant, a controller, and a CFO. He also points out that hiring a full-time staff might only become necessary when a company’s revenue is around 25-30 million.

How can I know if my agency is large enough to need a full-time controller or CFO?

The decision to hire a full-time controller or CFO depends on the size and financial needs of your agency. Typically, a small business will reach a point where they need help in finance and accounting. However, hiring just one role, such as a controller or CFO, may not be sufficient. You would need a full accounting staff, including a staff accountant, controller, and CFO. This level of financial support is generally necessary when your agency reaches around 25 to 30 million in annual revenue.

[00:08:25 – 00:09:34] “If you hire that one role, that person is going to be in the wrong seat for two of the three functions that need to get done.”

Notes
– Determining when to hire a full-time controller or CFO is a difficult question with no set answer. – The roles of a controller and a CFO are distinct and serve different purposes. – In addition to a controller and a CFO, there is also a staff accountant role that handles day-to-day transactions. – Small businesses reach a point where they need help in finance and accounting. – Hiring only one role, such as a controller or CFO, may result in the person being in the wrong seat for two of the three functions. – To hire a full accounting staff, a business should probably have a revenue of around 25 to 30 million dollars.

[00:10:11] The Importance of Having a Controller or CFO

Topics: Strategic Financial Partner, Risk Management, Financial Control

In the absent of a strategic financial partner such as a controller or CFO, businesses can face multiple risks. The less severe implications include poor decision making due to lack of in-depth financial analysis. However, the more serious problems might involve potential financial and cash flow errors, due to inexperienced staff handling these crucial issues. In some cases there can even be outright theft due to lack of checks and control measures.

What are the risks involved with not having a controller or CFO in place?

The risks include bad decision making without considering the financial impacts, potential loss of money due to errors or theft, and the lack of control over financial processes.

What is the best case scenario without a strategic financial partner?

The best case scenario is poor decision making without considering the financial impacts of those decisions.

What is the worst case scenario without a controller or CFO?

The worst case scenario involves potential loss of money, overpaying vendors, paying bills that are not due, and the risk of theft due to a lack of control in the financial system.

What is commonly seen when a business lacks a strong financial partner?

Poor decision making and decisions not based on financial impacts are commonly observed when a business lacks a strong financial partner.

[00:11:02 – 00:11:18] “At worst you’re actually losing money. We’ve seen situations where you have the one person, maybe an office admin that’s been kind of promoted into accounting because they’ve shown some propensity for numbers, but they’re not doing it right.”

Notes
– Poor decision making and decisions made in a vacuum without considering financial impacts are a risk of not having a controller or CFO in place. – Inadequate accounting practices can result in overpaying vendors or paying invoices that are not due, leading to financial losses. – Lack of control over financial processes can increase the risk of theft or misuse of funds. – Not having a strong financial partner can result in inefficient use of resources and missed opportunities for growth and profitability.

[00:12:45] Understanding the Costs and Benefits of Hiring a CFO or Controller for Your Business

Topics: Cost of Hiring, Controller, CFO

Zack DeLisa discusses the cost range for hiring a controller or CFO, varying based on the complexity and size of the business. He expands upon the decision-making role these positions play and how businesses can understand when they need financial expertise.

How much does it typically cost to hire a full-time controller or CFO?

The cost of hiring a controller or CFO can vary depending on the complexity and size of the business. For a controller in a $3-5 million company, the cost would usually be around $100,000 to $120,000 per year. However, in a large company with more complexity, the cost could be as high as $180,000. For a CFO, the cost is higher, starting around $175,000 for someone qualified, and it can go up to $300,000 or more for an experienced CFO with M&A and fundraising experience.

How can you determine if you need help and additional financial expertise?

There are a few indicators to consider. First, ask yourself if you confidently use your financial results to make course corrections and steer the business. If you’re not confident in how to use the numbers to guide decisions, it may be a sign that you need help. Secondly, consider if you trust the financial numbers you receive. Are you consistently getting financial results? Do you trust those numbers when you review them? Finally, evaluate if the accounting function is just a “no” machine that dismisses forward-thinking investments without proper analysis. If you have the expertise but are not getting insights or collaborative decision-making from your accounting team, that could indicate a need for additional financial guidance.

What is the role of a CFO or controller in decision-making?

The role of a CFO or controller is decision support. Their expertise helps enable sound financial decision-making for the business. They provide insights, analysis, and guidance based on financial data. The CFO takes a higher-level strategic perspective, including M&A and fundraising, while the controller focuses more on day-to-day financial operations and reporting.

[00:15:24 – 00:15:33] “A good sign. There’s a couple of indicators you can use to say, yeah, I need some help and some financial expertise. Kind of over and above what I’m getting.”

Notes
– The cost of hiring a controller or CFO will vary depending on the complexity and size of the business. – For a controller, the cost can range from around $90,000 for someone junior to $180,000 for a more complex company. On average, a controller for a $3-5 million company would cost around $100,000 to $120,000. – CFOs are more expensive, starting at around $175,000 and potentially going up to $300,000 or more for someone with extensive experience and additional skills like M&A and fundraising. – There are several indicators that a business may need to hire financial expertise, including: lacking confidence in using financial results to make decisions, not trusting the numbers being provided, not having regular access to financial reports, and a lack of collaboration and forward-thinking discussions about investments. – Ultimately, the key factor is whether the business has the necessary information to make sound financial decisions.

[00:18:34] Discussion on the Role and Complexity of CFO, Controller, and Staff Accountant in a Business

Topics: business growth, financial roles, business complexity

Zack DeLisa talks about the roles of the CFO, controller, and staff accountant in businesses, and how these roles vary based on the complexity and scale of the business. He emphasizes that while the core roles don’t change, the complexity and scope of these roles increase as a company grows and transactions increase. Therefore, the necessity of hiring full time employees for these roles usually arises when the complexity of decision-making and transactions increase significantly.

How do the roles of the controller and CFO shift as an agency grows?

The roles of the controller and CFO do not change as an agency grows, but the complexity and scope of their roles increase. The staff accountant handles transactional work, the controller ensures accurate and timely numbers, and the CFO focuses on forward-looking and strategic planning.

What changes as a company scales?

As a company scales, the volume of transactions increases, adding complexity and workload to the staff accountant role. The controller’s role becomes more complex as they need to manage more balance sheet accounts and multiple departments in the financial system. Similarly, the CFO’s role becomes more complex as they need to build budgets and forecasts at a more granular level and make more complex decisions that impact different departments.

Does a company eventually need to bring in full-time resources for these roles?

Yes, a company will eventually need to bring in full-time resources for the controller, CFO, and staff accountant roles. However, the fractional model, where these roles are outsourced on a part-time basis, can support a company for a longer period than previously expected. The decision to bring in full-time resources depends on the growth and complexity of the company, with the key factor being whether the company can afford the entire department’s cost.

Are there any specific indicators that show the need to transition from fractional to full-time resources?

The need to transition from fractional to full-time resources arises when complexity grows significantly, budgets become more granular, and the decision-making process becomes more complex, particularly in areas like mergers and acquisitions. However, this transition also depends on the company’s ability to afford the full cost of the department. Once a company can afford to bring in a full-time staff, controller, and CFO, the value of the fractional model diminishes.

[00:24:06 – 00:24:37] “If you’re at a point that you can afford or you can take on the burden of cost of the entire department. So the staff, the controller and the CFO and you can bring those in house and you can afford that whole group. I think at that point that the value of the fractional model starts to diminish.”

Notes
– The roles of the controller and CFO do not change as an agency grows, but rather the complexity and scope increase. – Regardless of company size, there should be a staff accountant, controller, and CFO. – The staff accountant handles transactional work, while the controller establishes a control environment and ensures accuracy and timeliness of numbers. The CFO is forward-looking and strategic in building a roadmap for the business. – As a company scales, the volume of transactions increases, adding complexity and workload to the staff accounting role. – The controller role becomes more complex with more balance sheet accounts and departments to manage. – Building budgets and forecasts also become more complex as the company grows, requiring more in-depth analysis and consideration of various factors. – Eventually, there may come a point where it makes sense to bring in full-time resources for these roles. – The decision to bring in full-time resources depends on factors such as the company’s growth, complexity, budget, and ability to handle the cost of an entire department. – The fractional model can still be effective even as a company grows, especially if complexity is primarily related to transactional volume. – There may be situations where the fractional model continues to make sense even when a company can afford an entire department, as the fractional resource can scale in proportion to the business needs.

[00:25:32] Understanding the Fractional CFO Space with Zack DeLisa at Level10

Topics: Fractional CFO Services, Finance and Accounting Outsourcing, Full-stack Model

Zack DeLisa from Level10 provides an in-depth discussion about the varying types of Fractional CFO services, their growth, and how they cater to different business needs. From the seasoned veteran offering strategic direction without necessarily being hands-on to the full-stack model, which offers a holistic approach by providing a complete outsourced solution in finance and accounting, the CFO space is seen as both diversified and revolutionary.

What is a fractional CFO?

A fractional CFO is a professional who provides part-time or project-based CFO services to companies. They typically have extensive industry knowledge and offer strategic direction and guidance to organizations. There are different models within the fractional CFO space, ranging from traditional consulting roles to full-stack outsourced solutions.

What is the traditional fractional CFO model?

In the traditional fractional CFO model, experienced professionals nearing retirement age transition into consulting roles. They offer strategic direction and act as a roadmap for companies, but may not provide hands-on assistance with financial tasks.

What is the network-based model of fractional CFO services?

Some firms operate as networks of 1099 resources, matching talent to the specific needs of clients. These firms bring in resources from their network to address specific financial requirements, such as raising funds or seeking private equity buyers. However, this model often only offers CFO-level resources.

What is the full-stack model of fractional CFO services?

The full-stack model of fractional CFO services, used by Level Ten, provides a turnkey finance and accounting function. It brings together a team of staff accountants, controllers, and CFOs to deliver a complete outsourced solution. This model offers a more comprehensive and integrated approach to meeting the finance and accounting needs of organizations.

How does the full-stack model differ from other fractional CFO models?

The full-stack model goes beyond providing just a fractional CFO and offers a complete finance and accounting team. This model is ideal for companies that require a comprehensive outsourced solution, as it includes staff accountants and controllers in addition to a CFO, allowing for a more customized and right-sized solution.

[00:28:07 – 00:28:47] “The newer approach and the approach level ten uses is the full stack model. And what the full stack model is, is it’s really a turnkey finance and accounting function and it’s bringing the full team, if you will, and it really offers a full outsourced solution. So you’ve got the staff accounting, you’ve got the controllership and you’ve got the CFO all working together as a team to deliver what the client needs in the finance and accounting function.”

Notes
– The fractional CFO space is growing rapidly. – There is a wide range of offerings in the fractional CFO space, from traditional consulting to network-based models. – Traditional consulting fractional CFOs provide strategic direction and guidance but may not be as hands-on. – Some firms use a network of 1099 resources to match talent to specific client needs. – Level Ten uses a full-stack model, which provides a turnkey finance and accounting function with a team of staff accountants, controllers, and CFOs working together. – The full-stack model offers a complete outsourced solution for the finance and accounting needs of growing agencies.

[00:29:16] The Benefits of a Fractional CFO for Growing Agencies

Topics: Fractional CFO, Business Growth, Accounting

Zack DeLisa discusses the benefits of employing a fractional CFO for businesses, especially agencies with a revenue under 25 million. DeLisa posits that a fractional CFO offers a more balanced alignment of resources across the three levels of finance and accounting, offering flexibility as the business grows and providing professional expertise in the field of accounting.

Why is a fractional CFO a better choice for a growing agency?

A fractional CFO is a better choice for a growing agency because it aligns resources more effectively at different levels of accounting and finance (CFO, controller, and staff accountant).

What is the benefit of aligning resources in a fractional CFO model?

When resources are aligned correctly, each role can focus on their specific tasks, such as transactional work for staff accountants, control work for controllers, and strategic decision support for CFOs.

How does a fractional CFO offer flexibility as the business grows?

The fractional CFO model allows for flexibility by adjusting resources according to the needs of the business. This includes supplementing staff accountants for increased transaction volume and bringing in additional expertise for complex initiatives or acquisitions.

Why is it important to work with professional accountants in a fractional CFO model?

Professional accountants who specialize in accounting and finance can provide expertise and knowledge that may be lacking in an in-house accountant who doesn’t have as much experience. Working with professionals ensures that the business receives high-quality accounting services.

[00:29:43 – 00:31:11] “And the reason I think it’s a better solution, or seen it be a better solution, is number one, is a better alignment of resources going back to the three levels of accounting and finance. If you hire one of those resources, they are going to be a mismatch in the other two roles.”

Notes
– Fractional CFO is a better choice for a growing agency. – Fractional CFO provides better alignment of resources (CFO, controller, staff accountant). – Hire one resource for all three roles leads to misalignment and frustration. – Full stack fractional support right sizes the resources needed at each level. – Flexibility is another advantage of fractional CFO. – As the business grows, the fraction can change and resources can be adjusted accordingly. – Additional resources can be added for increased transaction volume. – Expertise can be brought in for specific initiatives or projects. – Professional accountants provide expertise and a higher level of proficiency. – Professional accountants have seen what good looks like and strive for better. – Professional accountants do accounting and finance all day, every day, across multiple companies and industries.

[00:34:38] Zack DeLisa Discusses the Value and Efficiency of Fractional CFO Services

Topics: Fractional CFO, Strategic Planning, Business Growth

Zack DeLisa delves into the capacities of a fractional CFO, challenging the notion that a full time CFO provides superior oversight and planning. By utilising a ‘fractional’ model, small to medium-sized businesses can leverage skilled CFO services as and when they are needed, rather than being overwhelmed by a full-time resource. The approach adopted by Level10CFO is described as pseudo employee relationship that offers hands-on, strategic support as part of the leadership team.

Can a fractional CFO provide the same level of oversight and planning as a full-time CFO?

Yes, absolutely. With a full stack approach and a pseudo-employee relationship, a fractional CFO can provide the same level of oversight and strategic planning as a full-time resource.

What is the advantage of using a fractional CFO?

The advantage of using a fractional CFO is that you get exactly what you need for your business without having to hire a full-time CFO who may have excess capacity. It allows for tailored financial support and decision-making without unnecessary costs.

What level of involvement can a fractional CFO have in the business?

A fractional CFO can have as much involvement in the business as needed. At Level Ten, they take a hands-on approach and aim to be a part of the leadership team, offering support and guidance on financial matters.

What types of work can a fractional CFO handle?

A fractional CFO can handle a range of financial tasks, including financial analysis, budgeting, forecasting, decision support, and strategic planning. They can also provide guidance on improving financial processes and implementing cost-saving measures.

Does a fractional CFO only work on a project basis?

A fractional CFO is not limited to project work. They can provide ongoing support and be involved in the business for the long haul, taking on the responsibilities and tasks required for effective financial management.

[00:36:02 – 00:36:39] “The beauty of the fractional resource is that you’re not getting fractional work, you’re getting the work you need. If you were to hire a full-time CFO, what you would find yourself doing is giving them a bunch of non-CFO work because you have this heavy-duty resource that really only needs to be doing planning and financial analysis and decision support on a fraction of the time.”

Notes
– A fractional CFO can provide the same level of oversight and planning as a full-time CFO. – The key is to have a full-stack approach and take a hands-on approach as a pseudo employee. – The fractional model is beneficial because it provides businesses with just the resources they need, without having to give non-CFO work to a full-time CFO. – The level of strategic planning and oversight provided by a fractional CFO depends on the needs of the business. – Level 10 takes a hands-on approach and wants to be a part of the leadership team and the organization. – The level of involvement is tailored to the needs of the business.

[00:37:47] Understanding Fractional CFO Services

Topics: Fractional CFO, Cost comparison, Business growth

Zack Delisa discusses the role of a fractional CFO and how cost-effective it can be compared to a full-time CFO. He also highlights the possible risks of going the fractional route, including a misalignment of skills with business needs and the potential for higher costs for non-CFO level services. The decision of hiring a fractional CFO should be based on your financial support needs and growth goals.

How does the cost of hiring a fractional CFO compare to a full-time CFO?

The cost of hiring a fractional CFO is a fraction of the cost compared to a full-time CFO. A good rule of thumb is to compare the cost of a fractional CFO to what you would pay for a controller. The cost of a full-stack offering CFO-controller and staff is usually comparable to what you would expect to pay for a full-time controller.

What are the downsides of bringing in a fractional CFO?

The biggest risk is that the finance and accounting function operates too well and makes other leadership look bad. But on a serious note, the biggest risk is finding a cultural fit. If you need heavy operational support but hire a CFO with a background in banking and finance, it may not work well. Another risk is paying CFO rates for non-CFO services, which can happen if you bring in a single fractional CFO without the right support.

How do you determine if a fractional CFO is right for your business?

You need to assess if you are getting the financial support you need and if there are gaps in your finance and accounting function. If your revenue is at $25 million or less, looking at a fractional CFO, especially from a full-stack firm, should be a top option until proven otherwise. Additionally, your growth goals can determine if you need a CFO. If you’re happy with the status quo and don’t desire significant growth, a fractional CFO may not be necessary, and a controller could be adequate.

[00:40:00 – 00:40:29] “If you hire a CFO, if you’re really needing heavy duty operational support, you need somebody to come in and roll up their sleeves and really understand the business at a very granular level to help you understand the business and improve your decision making.”

Notes
– The cost of hiring a fractional CFO is a fraction of the cost of hiring a full-time CFO. – The cost of a fractional CFO is comparable to what you would pay for a full-time controller. – The cost can range from $90,000 to $120,000 for simpler organizations, and up to $180,000 for more complex organizations. – The biggest risk of hiring a fractional CFO is finding a cultural fit and ensuring they have a vested interest in the business. – Another risk is paying CFO-level rates for non-CFO services. – To determine if a fractional CFO is right for your business, consider if you need additional financial support and if you have growth goals. – If your revenue is $25 million or less and you have growth goals, a fractional CFO should be considered as a top option.

[00:45:02] N/A

Topics:

The transcript describes a short discussion between Zack DeLisa and an unseen individual. Minimal information is seen concerning the context or topic of the conversation, except the mention of ‘Blaine’ and ‘fly away’.

What did Zack send Blaine a note about?

Zack sent Blaine a note regarding something specific.

Did Zack manage to go back to something?

Yes, Zack was able to go back to something.

What did Zack say after saying “Hold on”?

Zack mentioned that he thinks something has “fly away.”

Was Zack ready for something?

Yes, Zack confirmed that he is ready.

[00:45:02 – 00:45:05] “All right, let me just send Blaine a note”

Notes
– Zack DeLisa is sending a note to Blaine. – There was a mention of “fly away.” – Zack DeLisa is confirming that they are ready.

[00:46:03] Transitioning to Fractional CFO Services with Level10CFO

Topics: Fractional CFO services, Transition Process, Business Landscape Audit

In this recording, Zack DeLisa discusses the process of transitioning from a self-managed accounting setup or a traditional bookkeeper to a fractional CFO firm like Level 10. He emphasizes the importance of understanding and agreeing on the CFO’s responsibilities upfront to avoid any misalignment with the business’s priorities. Level 10 employs an in-depth onboarding process, known as the Business Landscape Audit, to identify key opportunities and developments for the business, and provide a clear roadmap and budget for their services.

How does one transition from self-managing their finances or having a bookkeeper to working with a fractional CFO firm?

To successfully transition, it is important to have a clear agreement with the fractional CFO firm about the services they will provide and what constitutes success. This alignment needs to happen upfront to ensure the CFO’s priorities match those of the business. One approach is to start with a Business Landscape Audit, where the fractional CFO firm thoroughly examines the organization, including reviewing strategy decks, financials, and conducting interviews with stakeholders. From this audit, the firm can identify opportunities and create a roadmap for addressing them. The engagement is typically on a fixed-fee basis, and quarterly plans are created collaboratively between the firm and the business to determine priorities and allocate resources.

Can a fractional CFO help with fundraising, exit planning, and strategic partnerships?

Yes, a fractional CFO should be able to assist with fundraising, exit planning, and strategic partnerships, as these are core functions of a CFO. However, the extent to which these services are included in the fractional CFO’s fees may vary. Ongoing activities like regular acquisitions can be integrated into the monthly fees, while one-off or occasional needs may require additional resources that can be flexibly allocated from the firm or external sources.

[00:48:46 – 00:49:14] “We see getting the chart of accounts and it’s pretty basic, but we got to get that built first. Then we can look at doing some system changes, then we can build out your annual financial plan. And so we kind of lay that roadmap out and we sit down and we have a collaborative working session with the business and come to an agreement.”

Notes
– Transitioning from self-managed finances or a bookkeeper to a fractional CFO firm can be a tricky process. – It is important to outline and understand the agreement between both parties about what services are being provided and what good outcomes look like. – The Business Landscape Audit is an onboarding process used by the fractional CFO firm. It involves a thorough analysis of the organization, including strategy decks, board meetings, and historical financials. – Interviews are conducted with the business owner, CEO, and other stakeholders to understand how finance and accounting can better serve the business and provide decision support. – The Business Landscape Audit helps identify opportunities and create a roadmap for addressing them, with priorities and timelines agreed upon in collaboration with the business. – Quarterly planning meetings ensure that priorities and resources are aligned and that the fixed fee retainer covers the agreed-upon work. – Fractional CFOs can assist with fundraising, exit planning, and strategic partnerships, as these are core functions of CFOs. If a fractional CFO cannot help in these areas, it may be necessary to find a different firm. – Fees for these additional services may be included in the monthly fees if they are ongoing, but in most cases, they are treated as separate projects and resources are flexed accordingly. – The fractional CFO firm can leverage internal or external resources to support specialized needs for transactions or other actions.

[00:52:17] Engagement of a Fractional CFO with Team

Topics: Fractional CFO, Communication, Team Engagement

Zack DeLisa discusses how the fractional CFO of his company, Level 10, integrates and engages with the rest of the team using the preferred communication methods of the organization. Regular touch bases with the CEO and involvement in leadership meetings are important, but the engagement is adjusted according to the needs and budget of the organization.

How does the fractional CFO engage with the rest of the team?

The engagement style can vary by firm, but at Level Ten, we try to match the communication methods used by the client’s team. We can engage through Slack, email, or any other preferred communication channel. We aim to have a weekly one-to-one meeting with the CEO or owner to stay connected with the business and discuss project status. We also try to participate in leadership team meetings to contribute to discussions on numbers, strategy, and business direction. However, the level of engagement can be adjusted based on the needs and budget of the organization. We strive to make our engagement seamless with the client’s existing team communication.

[00:52:26 – 00:52:58] “So if your team is their primary means of communication is Slack, and it’s kind of that more conversational work, then we’re going to want to be in that Slack channel and in those Slack channels, and we’re going to want to be engaging with your team using Slack.”

Notes
– The way a fractional CFO engages with the rest of the team can vary by firm. – At Level Ten, they try to mirror the engagement style of the client’s team. – They will use the same communication tools that the client’s team uses, such as Slack or email. – They will touch base with the CEO or owner on a weekly basis for a one-to-one meeting. – They will try to be a part of leadership team meetings, at least for a portion of it. – The level of engagement will be right-sized to the needs and budget of the organization. – They will be involved in discussions related to numbers, strategic initiatives, and the direction of the business. – The goal is to make the engagement seamless and similar to the way the rest of the organization communicates and engages with each other.

[00:54:51] The Benefits of Fractional CFOs for Various Industries and Company Sizes

Topics: Fractional CFO, Company Size, Industry Type

In this discussion, Zack DeLisa talks about the benefits of engaging a fractional CFO and the factors involved in choosing whether to have this resource in-house or externally. While all industry types can benefit from a proficient fractional CFO, DeLisa highlights that the size and complexity of a company are key determinants in making this decision. He suggests that companies with revenue of 25 million or more, or with a large number of departments across many states, might be better suited to a full-time, in-house CFO.

Are there any specific industries, agency sizes where the fractional CFO is most beneficial or can be beneficial?

All industries can benefit from the right fractional CFO partner, but company size and complexity are key factors. Once a company reaches around $25 million in revenue or has a high level of complexity, it may be on the borderline of needing a full-time CFO. Manufacturing industries, especially those with inventory management, may require a full-time resource earlier than professional services organizations operating in a single state. The right partner is crucial, and at Level Ten, expertise lies in professional services and technology companies.

[00:55:03 – 00:55:44] “I think company size and complexity to me is the big indicator of where the fractional CFO firm makes sense versus bringing it in in house. And again, 25 million in revenue is a rough benchmark where above that level you’re probably borderline of needing that full time resource or a super complex business.”

Notes
– Fractional CFOs can be beneficial to businesses of all industries. – The size and complexity of a company are indicators of whether a fractional CFO or an in-house CFO is needed. – Companies with revenues around $25 million or with complex operations may need a full-time CFO. – Manufacturing industries with inventory management may require a higher level of involvement from a CFO. – Professional services and technology companies are the areas of expertise for Level Ten’s fractional CFOs.

[00:57:10] Role of a Fractional CFO in Business Decision Making

Topics: Fractional CFO, Decision Support, Risk Mitigation

Zack DeLisa discusses how a Fractional Chief Financial Officer (CFO) can help businesses make more informed and strategic decisions, especially regarding financial matters. He underlines how beneficial a fractional CFO could be even for businesses that do not have any financial problems. Zack emphasizes the importance and advantage of having decision support, potential opportunities for improvements, and risk mitigation which a CFO offers.

How can a fractional CFO help your business even if you don’t have financial problems?

Even if your business is profitable and growing, a fractional CFO can help make your business more profitable, set up generational wealth, and make financial decisions easier and more sustainable.

How can a fractional CFO help me make more informed strategic decisions?

A fractional CFO can help by providing decision support, taking known data and assumptions to create financial impacts of different decisions, and evaluating if a decision is good, the best, or presents risks. They can quantify and mitigate risks and provide early warning systems for potential risks.

[01:02:00 – 01:02:57] “So if I buy a building and that business is going to cost me X amount of money and I need to hire X staff in order to support that building, but it’s going to give me the opportunity expanded to this additional market, what does all that look like and what are the financial impacts of that decision?”

Notes
– A fractional CFO can help businesses improve profitability and make better decisions with their finances. – Even if a business is profitable and growing, there are always opportunities for improvement and a CFO can help identify and implement those improvements. – A CFO can help make financial processes more systematic, repeatable, and scalable, reducing stress and ensuring long-term sustainability. – A CFO’s primary role is decision support, helping business owners make more informed and strategic decisions. – They do this by taking known factors and assumptions, and using financial analysis to understand the potential impacts of those decisions. – They then evaluate whether the decision is a good one and consider trade-offs and resource constraints to determine the best course of action. – A CFO also quantifies and mitigates risks, helping to identify and address potential risks before they become major problems. – Their role is not to be risk-averse, but rather to be risk-conscious and proactive in managing potential risks. – Ultimately, a CFO helps businesses make decisions that will lead to long-term success and financial health.

[01:05:11] The Necessary Engagement Level of Fractional CFO in Your Business

Topics: Fractional CFO, Business Communication, Strategic Planning

In this talk, Zack DeLisa emphasizes the importance of a close, constant, and effective communication between business leaders and their fractional CFO. As a strategic partner and advisor, the fractional CFO needs to be involved in various aspects of the business. Their involvement in weekly discussions, project management, sales meetings, budgeting, and expense tracking, among other things, ensures they are well positioned to provide crucial financial insights for business growth.

How often should you expect to communicate with your fractional CFO?

You should really be connecting and communicating with your fractional CFO as often as the business dictates. It’s pretty often they’re your partner in leading the business. If done correctly, they’re one of your strategic advisors for the business. If you’re not consulting with them and not communicating with them, then you’re kind of wasting your money. At least weekly, you should be sitting down and talking to your CFO, if nothing else, just to talk about what projects are we working on, what’s the status of those projects, and are there any needs coming up in the business that the CFO should be aware of. The CFO should also be a part of leadership meetings, sales meetings, and any other relevant discussions and decision-making processes. The controller and staff-level employees should also be in communication with the business, depending on their specific responsibilities and tasks.

[01:05:11 – 01:05:38] “You should really be connecting and communicating with your fractional CFO as often as the business dictates. If done correctly, they’re one of your strategic advisors for the business”

Notes
– Communication with a fractional CFO should be as often as the business dictates. – A fractional CFO should be a strategic advisor for the business. – Weekly meetings should be scheduled with the CFO to discuss projects and the status of those projects. – The CFO should be involved in leadership meetings, sales meetings, and any other relevant discussions or decisions. – The controller and staff-level employees should also be in communication with the business, depending on their specific roles and responsibilities. – The controller should work with project managers to ensure that expenses and revenue are accurately captured and applied to projects. – Regular communication is necessary to ensure that the numbers reflect the reality of the business.