Stephen Mc Elvaney - Fractional / Portfolio - Finance Director / CFO
As an experienced professional Accountant I form the bridge that allows smaller businesses to access the advantages which are usually only available to large multinational enterprises.
You have heard the term ‘Fractional Finance Director’ but what does it actually mean?
What is a Fractional Finance Director?
A Fractional Finance Director is an experienced senior Finance professional who splits their time over a number of businesses. In essence, the term refers to a Finance Director who provides the same level of commitment and expertise as a full-time equivalent, but over fewer hours which costs you less money. The term Fractional CFO is also now commonly used.
The concept is not new, but the term arrived relatively recently in the Ireland. Prior to this, the term part-time Finance Director was more commonplace but this term was often misunderstood as meaning the Finance Director only worked part time. This couldn’t be further from the truth – with a portfolio of several fast-growing SME clients a Fractional Finance Director often works much longer than a standard working week.
Another common misconception is that a Fractional Finance Director is akin to a consultant. Someone who parachutes in, writes a report, and suggests that you hire someone else to fix the problem. This isn’t how Fractional Finance Directors positions themselves and certainly isn’t how they work. Fractional Finance Directors roll their sleeves up and dig deep into the detail. They have great financial modelling skills and can produce scenario analysis as well as that all-important cash flow forecast.
How does using a fractional Finance Director work?
How it works is very simple:- First month or two, a deep dive:- Probably 10-12 days I learn the business properly. That's a once-off investment in education, and once I have it, I have it. I can assess the business and determine its needs. After that, it goes lightweight:- A low base cost, of between two and five days a month.
After that its pay-as-you-go:- when there's a growth event to ramp up for a capital raise, an acquisition, or due diligence, I'm already inside the business, so when you pull the trigger, the heavy lifting starts on day one, not after a three-month on-boarding.
Compare this to a consultancy re-learning your business on every engagement, charging you an arm and a leg, with no guarantee you get the same team twice? With me you get the same person every month, already in the room, already engaged.
A diverse set of skills and experience
As a Fractional Finance Director, I bring their diverse array of talents to a variety of businesses. My core set of specialised skills, such as risk management, acquisitions and disposals, restructuring, exit planning, or corporate governance, in addition to my broad range of experience will benefit your business.
By working across multiple businesses, I keep their skills up to date. I continually widen my knowledge in a broad range of sectors, industries, or businesses. As a Fractional Finance Director I will provide precisely what your business needs for a specific amount of time or reason. They are an excellent option for businesses looking for top-level expertise but aren’t yet in a position to pay an additional full-time senior level salary.
In my experience, many Fractional Finance Director roles start as a project, addressing an immediate issue within the Finance department. These could include helping with preparing your business for sale, assisting with fundraising, implementing a new ERP system or helping to improve systems and controls within the department. More often than not, this initial phase then morphs into longer ongoing relationships, where the Fractional Finance Director effectively becomes your “in-house” Finance Director.
More importantly, should your business be considering retaining the services of a Fractional Finance Director, or Fractional CFO?
Hiring a full-time Finance Director or CFO can seem expensive and potentially risky, particularly for smaller or growing businesses. The chicken and egg scenario is very pertinent here. To grow your business, you need in-depth understanding of your Finances as well as detailed and bold planning for the future. In other words, you need a Finance Director. But the cost of a full-time Finance Director, particularly if you don’t yet have that growth, can seem prohibitive. Yet without one, growth will be hard to build, manage and sustain.
Hiring a Fractional Finance Director will give you the knowledge to help you plan your growth. With that knowledge you should then be able to work out at what stage you can afford to bring in a full-time Finance Director. What you may find, however, as many enlightened business owners do, is that the requirement for a full-time Finance Director is often much further away than you originally thought!
A good Finance Director, whether they are fractional or full-time, will help you grow your business if that is your goal. They will have the ability to confirm which activities within your business are most profitable, so you can do more of them. A great Fractional Finance Director will expertly identify what the key risks are associated with each of your strategies and help prepare scenario models so that you can look at various ‘what if’ scenarios. He or she will also have a good handle on working capital and cash flow management, ensuring your company stays solvent whilst pursuing your growth ambitions.
Compared to a full-time Finance Director, a Fractional Finance Director is more flexible and cost-effective. By working with your business on a part-time or project basis, providing the same level of expertise as a full-time Finance Director, you stand to benefit from such a senior Finance expert. And the great thing is, you don’t have to commit in the same way as you would with a permanent member of staff. As one of our clients explained “I can turn on, and turn off the tap as and when required”.
A Fractional Finance Director will deliver:
Operational Clarity: Enables entrepreneurs to reduce the time spent on analysis, forecasts, and spreadsheets, to focus on managing the business and creating business growth.
Improved Reporting: Delivering the critical business information, the ‘dashboard’, in meaningful timely management reports together with opinion thereon.
Improved Cash-flow: Integrating directly with accounting and banking software to provide real-time cash-flow analysis and management of working capital.
If you’d like to find out more about our Fractional Finance Director service, then please complete the contact form or email Fractional@albeit.ie for a free consultation. We can book a discovery day at your business to find out if you could benefit from having a Fractional Finance Director / CFO in your business today.
