Secrets of a fractional CFO

Fractional CFOs—highly-experienced finance chiefs who work contractually—are increasingly in demand. But what would make a finance leader who has worked on a full-time permanent basis at multiple companies pivot to becoming a fractional CFO? It may be an opportunity to become more strategic instead of just crunching numbers.

“We’ve seen tremendous growth and appetite for [fractional CFO] services throughout 2022 and the beginning of 2023,” says Dan DeGolier, founder of Ascent CFO Solutions, a fractional CFO firm based in Boulder, Colo., that grew revenues 62% last year.  

During these uncertain times, hiring a fractional CFO on a part-time, hourly basis can be very valuable for companies, as opposed to trying to hire an experienced full-time permanent CFO with “a minimum base pay of $200,000 or $250,000, not including bonuses and benefits,” DeGolier says. “If you can get a highly experienced CFO on your team for just a day or two a week, they can really move the needle,” he says.

But what’s the value proposition for fractional CFOs? DeGolier shared his own experience.

After a more than 20-year career as a full-time CFO and in other financial leadership positions, he had an “aha moment” when taking a CFO role with a small, early-stage software company. “I was doing a lot of things besides just CFO-level work,” he says. “I was the controller, the accounting manager, and the payroll manager.” But he wanted to just focus on the strategic part of being a CFO, he says. “I thought it might be really interesting to be the CFO of multiple companies simultaneously,” DeGolier says. He pivoted to a career as a fractional CFO in 2011. “I gravitated toward the flexibility of working in different industries and with different cultures,” he explains. And the immediate wins were exciting, he says.

Jay Jung, the founder of Embarc Advisors, says he’s “always been an entrepreneur at heart” and works with startups as a fractional CFO and advises some as a consultant. His assessment was in line with DeGolier’s perspective. “Ideally, a fractional CFO should work with other management team members to drive strategy, not just closing the books and providing management reports,” says Jung, a Goldman Sachs and McKinsey alum.

Nowadays CFOs in general are becoming more of a strategic partner to the CEO and supporting the company strategy, according to McKinsey. Technology and empowering their accounting and  FP&A teams, for example, are playing a role in helping that happen. However, Jung says working as a fractional CFO has an advantage—you’re more likely to be a truth teller that the company needs in order to be strategic.

“We are comfortable delivering hard messages and trying to drive change where necessary,” he says. Fractional CFOs are “not afraid to be fired,” he says. Having an honest conversation with various leaders in the company provides fractional CFOs with “additional deeper insight into the organization, its potential issues, and opportunities.”

“An advantage is that you can kind of stay above the fray of office politics because you’re an outsider,” DeGolier says. Working as a fractional CFO, he didn’t have the same trepidation as a full-time permanent C-suite leader, he explains. There’s less fear “you’re going to lose your job and be unemployed after it’s over because you’ve got multiple clients,” he says.

But there are also some challenges with being a fractional CFO. “Some people in the company may not view you as a ‘boss,’ merely a contractor,” Jung says. To address that problem, his company offers a fractional CFO team, with junior and senior members who work together, he says.

“I think the biggest challenge for a fractional CFO is time management and communication,” DeGolier says. “If you’ve got three clients, you’ve got three CEOs. You have to be very communicative about expectations and deadlines and meeting deliverables.”

Whether you’d like to be a fractional CFO and stay with a company for a couple of months or years or be a permanent full-time finance chief, there’s no lack of opportunities as CFOs are in demand.

See you tomorrow.

Sheryl Estrada
[email protected]

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Big deal

Retail and food services sales rose 3% month over month in January, according to an S&P Global Market Intelligence analysis of U.S. Census Bureau data released Feb. 15. Shoppers in the U.S. Spent more than economists expected, estimating the figure to rise 1.7%. January's increase reverses a two-month decline in sales. "February's data will be closely watched to determine the direction of consumer spending and the economy this year," S&P Global Market Intelligence economists wrote.

Going deeper

The Federal Reserve Bank of New York's Center for Microeconomic Data released on Feb. 13 the January 2023 Survey of Consumer Expectations. It shows little change in inflation expectations at the short-, medium-, and long-term horizons. The report also found that the mean perceived probability of losing one's job in the next 12 months decreased by 0.6 percentage point to 12.0%. Also, the mean probability of leaving one's job voluntarily in the next 12 months decreased by 0.2 percentage point to 19.1%.

Leaderboard

Hagit Ynon was named CFO at WalkMe Ltd. (Nasdaq: WKME), a provider of digital adoption solutions. Ynon assumes the role after serving as WalkMe’s interim CFO for the past six months and EVP of finance and operations during the three years prior. Before WalkMe, she spent nearly two decades at NICE, a publicly traded tech company, in various finance leadership roles, including corporate VP of finance.

Christopher (“Criss”) Harms was named CFO at Amplitude, Inc. (Nasdaq: AMPL), a digital analytics platform. Current CFO Hoang Vuong plans to transition from the company. Vuong will remain at Amplitude in the interim to support the transition. Harms has more than 30 years of experience in finance. Before Amplitude, he spent seven years as CFO of Silicon Valley-based security company Forescout Technologies. He has also held financial roles at Socialware, IBM, British Telecom, and HP.

Overheard

“We think the inflation is going to be far stickier and longer lasting—in fact, a decade because in the United States, we have incredibly favorable demographics.”

—Bill Smead, chief investment officer at Smead Capital Management, told CNBC the Federal Reserve will find it hard to tame inflation despite rate hikes as 92 million Americans are between the ages of 22 and 42, and they tend to spend big.