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Do I Need to Hire a Fractional CFO Near Me?

When hiring a Fractional CFO, many assume they need to look locally, but studies show most of the CFO's tasks can be done remotely.

When hiring a Fractional CFO, many assume they need to look locally, but studies show most of the CFO's tasks can be done remotely.

For one reason or another, you've decided it's high time to bring a fractional CFO, also known as an outsourced CFO, on board. Maybe, your company is growing too fast, and you need someone to handle the books and perform the forecasting. Alternatively, your company might be going through a tectonic shift, getting acquired, for example, and you need an experienced executive to ferry you through these rough waters.

Whatever the reason, you are asking yourself one simple question: "Where can I find a good fractional CFO near me?"

However, we want to challenge you and ask an even more fundamental question: "Do you need a fractional CFO near you? Or, can a remote one, who can be located halfway across the country, do fine?"

Should I get a fractional CFO near me, or can a remote one do the job just as well?

The answer, like most things in life, is it depends. But, in most cases, a fractional CFO working from home can do as good a job as the one working from your offices, if not better. It all boils down to what you need the CFO to come in and do; the clearer you are on your objectives, the easier it will be for you to decide. 

For instance, if you need a fractional executive to train your finance team, then you would benefit more from having someone in your location popping into your offices whenever you need them. On the other hand, if you need a professional to support your compliance and accounting practices, a remote professional should be able to take care of that for you with little to no difficulty.

But why go remote in the first place? Why not just limit the search to fractional CFOs in my area?

During COVID-19, the entire world opted for remote work out of necessity. And while several companies have been slowly trying to bring employees back into the office, others have embraced remote as a way of life. 

More importantly, over those two years when we were all grappling with quarantine restrictions and stay-at-home orders, we learned plenty about the benefits and drawbacks of remote work. For example, remote workers exhibit lower absenteeism while being just as productive as their colleagues in the office. Conversely, research shows that remote workers have a harder time collaborating together or sharing important information as a lot of their communication is asynchronous. 

So, let's take a look at some of the advantages of remote work and compare those to the advantages of hiring a fractional CFO near you.

What are the advantages of hiring a remote fractional CFO?

While there are several pluses to highlight, here are the main ones:

Wider pool means lower cost

When you look for a remote executive, you are expanding your search pool. This means that you can find a CFO with experience that best aligns with your needs who costs less. Moreover, seeing as virtual CFOs will have usually worked with companies all over the country rather than being constricted to a single location, their experience will be more diversified and varied in comparison to your average CFO. However, there are additional factors that determine the cost of a fractional CFO that need to be considered, such as industry experience, company background, and more.

Easier to find a cultural fit

Another benefit is cultural fit. You see, when you hire a fractional CFO, more often than not, you will have found said executive through an intermediary of sorts, be it through a partnership of CFOs like McCracken or a staffing agency like TopTal. Even though you can't be sure that the fractional CFO you bring will mesh with the rest of your team, you have a much better chance of finding what you're looking for if you go virtual.

Better productivity and lower absenteeism

As mentioned above, remote work helps employees and executives alike perform better. The reason is that when people work from home, they are able to get stuff done when it best suits them: So, a nocturnal fractional CFO might be better off building your pitch deck at 1 o'clock in the morning instead of 1 in the afternoon. 

Additionally, since remote work gives people the freedom to choose when and where to work, they can focus more on the work rather than having to contend with being stuck in traffic or coming in late because they overslept. And if a family emergency comes up, they can attend to it without having to sacrifice their work for the day.  

The end result is a more productive workforce that is happy with its autonomy.

Remote work increases productivity.

The above image displays how after COVID-19 locked us in our homes and pushed us toward remote work, reported employee productivity went up. 

What are the advantages of opting for a fractional CFO near me?

Although going for a remote executive makes sense, there are also some clear advantages that come with choosing a fractional CFO to work side-by-side with you in the office:

Better ability to build rapport with you and your team

Technology has changed the ways we communicate with one another. You can send a document to your fractional CFO who lives halfway across the globe. You can communicate asynchronously with your entire team, leaving them a message tonight so they read it in the morning. And you can have a video call with your supplier from Europe, making it seem as if they were right in the room with you.

Nevertheless, none of this is ever a substitute for actual face-to-face communication. There is something hard to put into words about physically being with someone in the same room: when you see someone's face and body language up close, it is easier for you to trust them and build rapport with them. And when you run into someone in the hallways, these chance encounters can cement your relationship and give you an opportunity to exchange information on the fly.

And why does any of this matter?

If you want the fractional CFO to train your finance team, then rapport is essential.

If you're looking for a strategic consultant and confidant, i.e., someone with whom you can bounce big-picture ideas, you want to give yourself the best chance to build rapport and trust with your fractional CFO. Additionally, have the fractional CFO local is vital for certain special projects, such as a strategic transaction.

And, if you need your fractional CFO to be always up-to-date and aware of every piece of news as it is unfolding, then it might pay to have them on-location.

Access to your CFO's local network

When you hire a fractional CFO from your area, your newly appointed executive will likely have a vibrant network within your region. This can pay dividends, especially when fundraising or looking for new equity partners.

Fewer security concerns

If your business deals with sensitive information or intellectual property, you must guard your data. Unfortunately, with a remote CFO, security can be a bit of a hairy situation as you will send them countless documents online, many of which are filled with sensitive data. Should your fractional executive be careless or, God forbid, get hacked, this could end up costing you. None of this is to mention what could happen if your CFO decides to work from a coffee shop or use any other public Wi-Fi where their device is even more vulnerable to a malicious attack.

But security is much less of a concern when your fractional CFO shows up to work every day. For one thing, they will access your sensitive data through your network, so your cybersecurity measures will cover them. 

With each option's benefits, how can I choose between a fractional CFO near me and a virtual one?  

Before anything, you need to realize that whether a job can be done remotely or needs to be done on-location is dependent on the tasks involved.

According to a paper by McKinsey & Company, several factors determined whether a certain task needed to be done on-location or could be done remotely:

The need to be present on-site

This pops up whenever the task requires you to be physically there. For example, a construction worker can't build a skyscraper while lazing on a lounge chair in the comfort of their home.

The need to interact with others

The more you need to collaborate with others, the harder it will be for you to do your job remotely. At the extreme end, these are people whose job is all about serving others (think nurses and servers) and who have no option but to show up to work every day. 

The need to use special equipment

Many jobs require the use of special, and usually expensive, equipment. For instance, a chemist needs lab equipment to analyze specimens and perform experiments. 

Over and above, while the three above factors distinguish between work that can be done remotely and work that needs to be done on location, some tasks can be done remotely but not as effectively as they would be done on location. The most obvious examples include training, counseling, building relationships, and negotiating. Microsoft even found that remote work can impact innovation and lower overall employee creativity.  

Of a Fractional CFO's tasks, many of them can be done remotely with no sacrifice in quality.

When it comes to a fractional CFO, how much of the job can be done remotely?

McKinsey & Company looked at different jobs, scrutinized the tasks involved, and were able to gauge how much of the job could be done from home. They found that for most jobs in the Finance and Insurance fields, 86% of the job could be done from home while almost three-quarters, 76% to be exact, could be done remotely with no loss in quality whatsoever.

In fact, when ranking different jobs and seeing how amenable they are to work-from-home policies, the consulting firm found that finance and insurance jobs ranked first. 

Finance and insurance tasks have the highest potential for remote work.

That's all great, but how does it help me find the right fractional CFO for my company?

Given the above information, it stands to reason that the first thing you want to do is be crystal clear on what you want the fractional CFO to do. If this is a task you don't have the internal expertise to accomplish, it may require you to engage a financial expert to assess your finance function before you decide on what capacity you need to engage a CFO moving forward.

To figure out the jobs you need done, you might want to take a hard look at your business and ask yourself a few questions:

  • What changes have affected your business over the past year? Have you expanded aggressively, making old accounting processes no longer suitable? Are you currently raising funds for such an aggressive expansion? Your business stage and model will play a huge role in the tasks you need to tackle. 
  • What areas are you struggling with most? Is it financial planning and analysis? Can you manage your business's cash flow while remaining efficient? 
  • Where would the fractional CFO have the most impact? Would it make more sense for them to train your team rather than do the work themselves?

Once you've homed in on the required tasks, you need to decide which of these tasks can be done remotely and which needs the CFO to operate out of your offices. 

One framework that can help you throughout the entire process is McCracken's 10 pillars of finance. These pillars encapsulate the major responsibilities of the CFO, and they can guide you toward figuring out what you need your fractional CFO to do, as well as whether these requirements can be done virtually.

Pillar Examples of tasks within the pillar Can it be done remotely?
  • Accounting processes
  • Accounting Policies
  • Financial reporting
Yes, with no sacrifice to quality
Financial Planning and Analysis
  • Forecasting
  • Budgeting
  • Periodic Trend Analysis
Yes, with no sacrifice to quality. Even presentations to the board, investors, or lenders can occur online.
Treasury & risk
  • Investor relations
  • Cash Management
  • Tax Strategy
Yes, with no sacrifice to quality
Strategic Transaction
  • M&A
  • IPO
  • Restructuring
Yes, with no sacrifice to quality
Information Technology
  • IT Operations
  • IT Planning
  • IT Security
Yes, with no sacrifice to quality
Business Model and Industry
  • Operations Experience
  • Company Knowledge
  • Commercial Insight
Yes, but the quality will be somewhat sacrificed. When a CFO is on-site, they have better access to information, especially informal knowledge trapped in the employees' heads.
Enterprise Management and Optimization
  • Data Mining
  • Automation Analysis
  • Outsourcing Analysis
Yes, with no sacrifice to quality
Cross-Functional Engagements
  • Operational Management
  • Marketing Management
  • Integration Activities
Not as effectively. As the name suggests, this pillar is cross-functional, forcing the CFO to work with other stakeholders within the company. This collaborative dynamic makes having the CFO on-site the better option.
Enterprise Governance
  • Ethics and Reporting
  • The Board and Audit Committee
  • Investors and Lenders
Yes, with no sacrifice to quality
Executive Leadership
  • Employee Evaluations
  • Leadership Development and Coaching
  • Culture Development
Not as effectively. As this pillar requires consistent interaction between the CFO and different employees at the company, it would be much better if the CFO were actually there.

As you can see, a virtual fractional CFO can tackle most of the above pillars. But it should be noted that there are always exceptions. For instance, your company might need a fractional CFO on the ground despite the required tasks involving data analysis or establishing the best accounting policies to ensure compliance.

Putting it all together…

To figure out the best type of fractional CFO for you, begin by figuring out the tasks you need handled. After that, you need to weigh the pros and cons of having your financial executive on-site vs. having them work from home, which differs on a case-by-case basis. You will have to consider several factors, including:

  • Do you have the technological capability to work with a remote fractional CFO?
  • Will your company culture allow it? 
  • How important is collaboration to you?

You should be able to make an educated decision once you know what you need, know how feasible it is to perform these tasks remotely, and understand how the pros and cons will affect you. After you've made your decision, you will need to monitor and evaluate the performance of the fractional CFO and make adjustments where necessary.

If you are still unsure or would like someone else to help you decide which path is best for you, don't hesitate to reach out. We have connected companies with fractional CFOs for over 30 years. We welcome offering you a free consultation to help your business find the best path forward.

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