Fractional CFO: A Different Approach for Corporate Leaders
What is the one thing that every company needs to do in order to succeed? The answer is a reliable and experienced Chief Financial Officer. But what if you don’t have enough capital or time to hire an outside CFO? Fractional CFO services can help! This article will discuss how fractional accounting works, why it’s so important, and how you can use this service for your business.
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What are Fractional Services? Some people may be wondering what fractional accounting services actually entail. The short answer to that question is that it’s an option where someone pays for part ownership in a company and they get access to various financial statements as well as other resources such as analytics data, advice from experts, etc., but without having full control over any specific operational decisions within the business. At its core though, this type of arrangement can allow you or your organization to gain some insight into key aspects of running a successful business by paying only for one service or something like just a percentage of the company.
This type of arrangement can be structured in many different ways, but typically it involves an agreement where you or your organization are purchasing something like 25% ownership in a business and then get access to all sorts of numbers that might have otherwise been blocked off from outsiders. The way this is done could involve some form of upfront payment for the right to purchase that share (like $500,000), as well as recurring payments each year ($250k). Alternatively, instead of buying into a full equity stake up front there would be more installments made over time with higher percentages purchased on a smaller scale (e.g., $25K per year for three years buys 33%).