Can a Fractional Controller Save Your Business? Spoiler: Yes
Let’s tell you a story about two business owners, Jane and Joe. Both started their businesses with a great passion and wanted to grow them. The ventures did grow, but so did the financial responsibilities.
Jane handled everything herself, from bookkeeping to marketing; she is a DIY-er. On the other hand, Joe decided to hire a fractional controller.
Jane’s days were filled with spreadsheets, receipts, marketing, advertising, and headaches, as her business didn’t grow as she would have liked. However, with the financial controller on his side, Joe could focus more on growing his business.
You might be wondering how? So, let’s talk about how a financial controller can save your business.
What is a Fractional Controller?
Think of a fractional controller as a finance expert who does all the finance and accounting things without a full-time commitment. It’s in the name, “fractional (fraction of the time and cost).”
These pros manage your day-to-day financial operations and guide your business financial strategy. Unlike a full-time CFO or a controller, you can hire a fractional controller on a part-time and needed basis. If you are a small business owner, you may not have the budget for a full-time professional, so a financial controller can fit right in.
A common question we sometimes get from our readers is, “Hey Tangent, isn’t bookkeeping the same as financial controller”? Let’s answer this question.
Difference Between a Bookkeeper and a Fractional Controller
Bookkeepers and financial controllers can seem similar professionals but have different purposes.
A bookkeeper is responsible for managing the business’s financial records. They perform functions like:
- Keeping track of financial transactions
- Reconciling bank statements
- Managing accounts payable and receivable.
- Preparing financial statements like income statements and balance sheets.
We have an interesting guide on 10 bookkeeper functions, so if you want to learn more, you can check it out.
A fractional controller analyzes the financial data and strategically plans the overall business financial operations. Their tasks can include:
- Analyzing financial data
- Overseeing bookkeepers’ work
- Managing budgeting and forecasting
- Ensuring compliance and financial regulations
- Preparing financial reports
Fun fact: A financial controller relies on accurate data from a bookkeeper.
Why Hire a Fractional Controller?
Now that we have understood what a fractional controller is, let’s talk about how it can be helpful for your growing business. If you want a short answer, it makes sense. Let’s talk about some of the points for a longer answer.
Cost-effective
Perhaps this is the most obvious reason to hire a fractional controller. Hiring a full-time CFO (which we aren’t against 😊) can significantly dent your budget. If you are a small business owner and lack the funds to hire a full-time CFO, a fractional controller can offer most services without a full-time cost and commitment.
For instance, if a small manufacturing company struggles with cash flow management, it can hire a fractional controller to manage its cash flow at a specific cost rather than a full-time salary.
Improved Financial Health
When you have a pro on your team, your financial data becomes insightful and actionable. A fractional controller analyzes financial statements such as balance sheets, income statements, and cash flow statements to give you an overall financial picture.
This lets you have a better understanding of how things are going and what you need to do better. For example, let’s say you are a tech startup owner, and are experiencing rapid growth, but you lack the financial infrastructure to support the rapid growth.
Here, a financial controller will look into your income statements and come up with a strategy that can increase cash reserves and profit margins.
Scalability
During a survey of US small businesses by Statista, 25% of respondents said inflation is their biggest problem.
Find more statistics at Statista
Inflation and interest rates are unpredictable, and when you want to scale your business, it’s important to have someone who can manage.
A financial controller can manage multiple revenue streams, inventory accounting, and tax compliance to smooth the scaling process even when the outside business environment may not seem good.
Compliance and Reporting
If you open the IRS or CRA’s website, what rules do you need to follow as a small business owner? Your head may start spinning. It’s a challenge that every business owner faces. However, a fractional controller reports finances according to GAAP principles and relevant laws.
For instance, if you ever face penalties due to non-compliance with tax regulations, you know the grind. A fractional controller makes sure you don’t get any penalties in the future and can receive a refund for overpaid taxes.
Strategic Financial Planning
Strategic financial planning is about managing the business with the intention of success—that is, obtaining the company’s long-term targets. A fractional controller identifies and plans to create long-term profits for the business.
For example, if you own a retail chain, you may struggle to understand why, despite increasing sales, your profits are not increasing. A fractional controller can identify inefficiencies like supply chain issues or vendor contracts to reduce costs and increase profitability.
Talking about strategic financial planning, Tangent Consulting’s fractional accounting services include strategic financial planning that not only manages your finances but also makes them work harder for you.
Fractional Controller vs. CFO: Which One Fits Your Business?
There’s a lot of debate on fractional controller vs. CFO; which one should you hire?
A CFO consulting service provider involves a complete financial strategy, investor relations, and long-term financial planning. We are talking about becoming your business’s financial department. They are a must-have for any growing business.
A fractional controller focuses on day-to-day financial operations. They ensure the accuracy of your books, identify areas for improvement, provide financial reporting, and ensure compliance.
If your business is growing and you want someone to manage the nuts and bolts of your financial operations, a fractional controller can be a perfect fit. However, if you want to drive the company’s strategic direction, a part-time or full-time CFO is what you need.
The good thing is you don’t need to go to the bottom of the Pacific to find a service provider that can offer both. Tangent Consulting offers fractional accounting and CFO consulting services, providing flexible options.
Final thoughts
The world is growing fast, and staying on top of your finances is more important than ever. A fractional controller offers a combination of experience, flexibility, and cost-effectiveness. They can change the overall financial picture of our business at a fraction of the cost.
So, that’s how a fractional controller can save your business. And with the right partner, like Tangent Consulting, you save your business and put it on a long-term success path.
FAQs
Is the controller higher than the CFO?
In an organization’s hierarchy, the CFO comes before the financial controller. The CFO reports directly to the CEO, while the controller reports to the CFO.
How much does a fractional controller cost?
Fractional controllers can charge between $200 and $300 per hour, depending on your required services.
Is a fractional controller worth it?
If your business is growing and you don’t want to hire a full-time CFO, a fractional controller can provide most of the services.
