542: What Is A Fractional CFO And How Can It Help Your Construction Business?

This Podcast Is Episode Number 542, And It's About What Is A Fractional CFO And How Can It Help Your Construction Business? A fractional CFO, or Chief Financial Officer, is a finance professional working part-time, retainer, or contract. They bring the experience and expertise of a high-level CFO to your business – without the cost of hiring a full-time, in-house employee.   Fractional CFOs service several clients simultaneously, typically on a part-time, retainer, or contract basis. Their specialty is providing outsourced CFO services to small and medium businesses.   Because their financial management skills are so well-developed, it's common to bring one on board to help navigate a challenge.   Every construction business can benefit from dedicated financial management expertise, but very few small companies have the means to hire someone full-time—particularly in the lean early years.   Unfortunately, it's those first few years when a company is just starting up that establishing good habits with managing financial resources is so important, and, over time, can even make or break a construction business.  

Outsourcing a CFO is affordable for business owners like you who recognize the need for a financial expert with construction business experience. CFOs provide top-level advice when needed, offering incredible value and cost savings to companies focused on growth and long-term success.

But what happens when you hire a CFO without a construction business experience? At the very least, you and your CFO would constantly struggle between having all the documents needed for data entry and providing the tools to the Bookkeeper to deliver the reports correctly.

As a construction business owner, you want answers to the following questions:

Am I making any money? Where am I making any money? Why isn't there a report that gives me all the answers at the push of the button?

Furthermore, a financial challenge sometimes comes beyond your team's skill or experience level. This is where a fractional construction CFO can be of great benefit. Some of the issues they assist with include:

Cash flow problems High expenses Existing systems that are no longer working Cost-cutting analysis Getting through an audit

Hopefully, these situations don't come up often, but when they do, it's beneficial to have an expert on your side to guide you through.

Your small construction business might want to consider the benefits of working with a fractional construction CFO.

Achieving goals

A fractional CFO can help you realize your dreams by deciphering the numbers. They will look at where you are now and help you plan where to go next. This includes:

Ensuring the books are in order Performing financial forecasts Helping with strategic relationships Overseeing due diligence

There are plenty of ways a fractional CFO improves your operations. The specific skills and experience they provide will clarify your situation and help you achieve what you want.

Managing growth

Taking your construction business to the next level can seem daunting. You want to grow but don't want to risk your success by taking on too much or making a damaging misstep.

A CFO will help you navigate the steps ahead. If you're already growing at a rate that makes you feel like losing control, they will help you retake the reins.

A fractional CFO will help by:

Breaking down large amounts of financial information into helpful data Making a plan to develop existing employees and their skills Identifying the need to hire new employees to manage growth Implementing systems that will work in the future Exploring causes of revenue loss and cost overruns and developing solutions to address them

Ultimately, a fractional CFO is helpful to guide you through the growth process so that you can feel confident as your business expands.

High-level decision making

A CFO can analyze your construction company finances and provide expert advice to help you make more informed, strategic decisions for ongoing profitability. That senior-level financial oversight can help you understand any risks or weak spots, identify opportunities, and create a realistic and actionable business plan that steers the company precisely where you want it to go.

Managing risk

Your business is an asset that needs protection from any potential risk that may threaten its ongoing success. A fire or flood, cyber attack, or employee theft can all cause long-term damage if you don't protect your business. A CFO can undertake a risk assessment and ensure that you invest wisely, have appropriate insurance, and secure sensitive data, equipment, and inventory.

Field tools are a given. The truck has a rack for ladders and lumber. Vans have shelves and bins; they are tall enough to stand in, saving wear and tear on employees' knees. Less strain on knees can keep or postpone possible Worker's Compensation claims. Worker Comp claims lead to increased premiums.

Once the Tools and Equipment are updated, it is much easier to see which employees are productive.

In the Field – Who is bringing their jobs in on time, under budget is reasonable. Jobs without warranty work and signing billable change orders add to the bottom line.

Simple Efficiency is a "Win-Win" for everyone:

The Contractor Owner receives the reports needed to make good, proactive decisions. The CFO has a smooth-running operation and can focus on the "Money Management" duties necessary to run the business. The Office Manager or Bookkeeper can efficiently enter the day-to-day paperwork into the QuickBooks file, answer the phones, and complete other daily tasks without frustration. The Field Staff know they have turned in all their paperwork (paper and digital) in a timely fashion with limited stress and are greeted warmly by the Office Manager or Bookkeeper. Everyone is ending their day on a "Happy Friendly Note" and looking forward to tomorrow.

Everyone Wins When:

1. The Contractor Owner knows the accounting records are accurate and can make decisions

2. The CFO can be confident that clients are billed, and no one is paid twice.

3. The Office Manager or Bookkeeper can easily track Job Costing and Timecards

4. The Field Staff stays on top of the job and gets signed Change Orders

5. The Customer is happy with an excellent job without any warranty work.

Final thoughts

When you hire a fractional CFO, you decide how often their services are required and only pay for the services you need. Hiring a financial expert on contract is a cost-effective solution for construction businesses that only need part-time support.

Staying on top of your company's financial management is a struggle for many small business owners, who spend much time attending to clients and profit-generating activities.

Working with a team of accountants, bookkeepers, and a CFO can help you better manage the most critical aspect of your business for ongoing growth: your bottom line.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com