Every business generally operates on the fundamental principle of investing in its products and services to earn more revenue and successfully navigate through each stage of its life cycle, from startup to stabilisation. The flow of revenue in the business is the lifeblood of that principle, underscoring why effective financial management is imperative to a company’s success.
However, for small and medium-sized businesses, financial management can become stuck in an impasse. As businesses grow, accounting operations become more complex, requiring expertise and experience to develop a sustainable growth strategy. Because smaller companies don’t have the resources to justify hiring executives, fractionalisation has become more popular among SMEs.
Fractional CFO services are bridging the gap between complex financial needs and a business’s limited resources. More UK organisations are hiring accounting firms to address those expanding needs.
What are fractional CFO services?
Fractional chief financial officer (CFO) services provide financial leadership to organisations on an as-needed basis, rather than employing an executive full-time. These services can provide expert insight into strategic growth, scaling and overseeing major transactions without incurring the expense of a full-time employee, transforming organisational structures.
The services generally provide the senior leadership experience many small- to medium-sized enterprises (SMEs) need to implement more comprehensive financial management, but aren’t ready to commit to a full-time CFO. Fractional CFO services will focus on the organisation’s unique challenges to help achieve business goals as operations become more complex.
Generally, fractional CFO services offered by accounting firms include:
- Financial strategy
- Modelling and cash flow forecasting
- Business growth advice
- Financial controlling
- Business performance analysis and reporting
- Assistance with investments and funding
Why can fractional CFO services benefit SMEs?
Fractional CFO services are particularly popular with startups, non-profits and SMEs that have grown beyond basic bookkeeping needs but aren’t quite ready to commit to an executive hire. Businesses can get the same level of financial expertise to assist with the more complex aspects of accounting on a project basis, saving on the costs of a full-time CFO.
Studies have shown that for SMEs at critical growth stages, hiring fractional CFO services to meet evolving needs has significantly improved financial health without the burden of high costs. The advantages they bring are:
- Cost-effectiveness: SMEs need to remain vigilant about budgets, so hiring a full-time CFO may not be viable given the compensation required for that level of experience. Fractional CFO services can offer the same level of expertise on an on-demand basis, helping businesses address complex financial challenges more cost-effectively.
- Flexibility: Fractional CFO services offer more relationship flexibility than hiring a full-time executive. Should there be a misalignment in the business vision with the founders, it’s easier to adjust the relationship with a service provider than with a permanent CFO.
- Expertise and experience: Fractional CFOs can offer services specific to your company’s unique challenges, helping address immediate priorities. Providers often have seasoned executives with extensive financial experience to help build a sustainable growth model for an SME.
- Scaling: Operations will inevitably become more complex as the business grows, presenting challenges for an organisation’s limited resources. Fractional CFOs can help navigate past the scalability obstacles as a company enters a new chapter of growth.
- Capital raising: Securing funding in the early stages of business can be a leading challenge for growing SMEs. Organisations can bring in fractional CFOs to provide expert insight into attracting and managing investment.
- Financial visibility: Fractional CFO services can help implement a forward-facing financial visibility strategy. They can analyse your business objectives, laying the groundwork on how you will achieve them over a defined period of time.
Top 5 accounting firms offering fractional CFO services for SMEs
Based on the benefits that using a fractional CFO can bring to an SME, there are accounting firms in the UK that excel in providing services tailored to unique needs. Below are five leading companies that can help tackle challenges without requiring a C-suite hire.
1. Accounts and Legal
SMEs seeking to improve financial visibility and make sense of performance can benefit most from the services of Accounts and Legal. The service, with offices in London, Manchester and Liverpool offers seasoned fractional CFOs who put your rapidly evolving financial picture into perspective and help drive confident decisions that put you on the right path to your business objectives.
The main reason Accounts and Legal ranks as a top accounting firm for these services is that it’s dedicated to UK SMEs, which means it already understands the challenges these businesses face. From financial strategy to forecasting, the firm has an excellent reputation among its clients for helping growing businesses succeed.
2. The Finance People
If building a sustainable, scalable growth strategy is your company’s priority, The Finance People can provide growth-focused services to help achieve it. Their team of seasoned CFOs can help raise capital, manage cash flow or provide expert consulting on obstacles impeding your business’s ability to move forward.
3. FD Capital
FD Capital specialises in providing fractional CFO services to startups and scaling businesses, offering high project flexibility and personnel with experience in private equity-backed businesses. Their team can help with projects with specific parameters, such as fundraising, cash flow, turnarounds and FCA-regulated firms.
4. The CFO Centre
The CFO Centre has been ranked among the UK’s leading fractional CFO service providers, leveraging a broad client base to deliver real-world results for businesses. The service prides itself on matching the right fractional CFO to the business, helping drive everything from strategic growth planning to exit.
5. BKL
With over four decades of experience, BKL offers specialist fractional CFO services to support high-growth businesses through critical phases of development. While their expertise is in businesses in the financial services, property and music sectors, the tools and experience at their disposal can help any SME get to where they need to be.
Enterprise-level growth with a modest budget
These five accounting firms offer services built on decades of experience and expertise across diverse business sectors. SMEs looking to hit ambitious growth targets can benefit from choosing one of these fractional CFO services to help navigate through the financial complexities that come with such objectives.
Until an SME can justify bringing a full-time CFO on board, fractional services make the most sense to address the specific challenges of a particular organisation. They are the ideal solution for driving a company forward during its most critical growth phases.
