Every business has a simple model, which is to create, invest, and earn. Businesses invest resources and capital to create value-added procedures or receive payments in return. If you closely look at the system, you will see a simple cash-in and cash-out cycle. It’s only a matter of time before the entire cycle is destabilized. The Chief Financial Officer or CFO is a very important part of the business. The CFO keeps the finances in line and helps achieve great things. Startups in UAE usually do not have full-time CFOs. Low starting revenue can be the major reason for not hiring a CFO full-time. However, when things in business become stable and profitable, a fractional CFO becomes inevitable.
Many startups can be hesitant to take any additional costs of a C-suite colleague. Especially, when there is a necessary need to keep a CFO on board. Moreover, the CFO brings valuable skills to the table and expects fair compensation in return.
In this article, we will discuss how a fractional CFO is the best solution for many startups.
What is a fractional CFO?
A fractional CFO is someone who offers his financial expertise to a startup on a contractual basis. Part-time or fractional CFOs have extensive CFO-level experience but generally help startups manage their finances. In any case, fractional CFOs are involved with more than one startup to manage more businesses. This is not like the full-time CFOs, who remain the full-time employees of the company with all the responsibilities and the benefits. ebs provides one of the best CFO services to all sizes of businesses in UAE.
Responsibility of the Fractional CFO
A fractional CFO handles many functions for a startup, including:
Finance
This is the primary role of the CFO in a company. As the startup starts growing, its financial process becomes complex for the owner and the accountant to handle alone. They need someone good enough and capable of seeing the broader picture through the bolts and nuts of financial accounting and reporting. This is where a fractional CFO can clear the path through the statistics and numbers.
Optimizing Strategy
Businesses operate on money, which means that CFOs are essential to strategy optimization and formulation. CFOs bring in a perspective based on the numbers and weigh in on the financial side of strategy. Moreover, a fractional CFO can test your strategy and inform you if it’s viable financially. If the strategy is suitable, then he suggests what can be done to optimize it.
Implement systems
As startups start growing, they need to put better systems in place to meet their changing requirements. This requires the guidance and supervision of someone who has already implemented various systems in different scenarios.
Someone who has enough experience can predict the things that can go wrong and take action on it beforehand. A fractional CFO can field his experience to ensure that the implementation of new systems is glitch-free and is done without any disruption to your workflow.
Raise capital
Business expansion needs the infusion of new capital. CFO becomes important to the process of raising capital. Moreover, CFO tasks include the company valuing, speaking with potential investors, taking care of the paperwork and due diligence.
Navigate a transaction or audit
As a business grows, an internal audit becomes important to get a measure of the financial health of the company. Audits are mandatory by the law in the UAE, and an audit always requires a microscopic inspection. Also, the inspection includes the company’s cash flow and purchasing and procurement systems, taxation, and every transaction involving the exchange of money. Due to changes and the complex nature of the audits, owners may not have the experience to proceed with them.
Having a fractional CFO on board can help the founders to take responsibility for the audits.
Benefits of hiring a fractional CFO
Cost
Start-ups must be mindful of spending only on indispensable necessities. All other requirements are either handled without additional expenditure or managed internally.
Experience
A fractional CFO is not simply a freelance finance or accounting professional. They are seasoned executives with years of experience. They guide organizations through diverse business challenges.
Flexibility
A common hurdle faced by startups is being tied to individuals in leadership positions whose ethics, vision, or business philosophy clash with owners. A qualified fractional CFO allows owners to part ways more easily if the working relationship is not a good fit.
Focus
A fractional CFO steps in to address the immediate needs of the startups. This enables you to concentrate more effectively on the task at hand. Whether it involves a merger, an audit, or an acquisition.
Conclusion
A fractional CFO is not just another consultant or freelancer; the procedure of hiring one is similar. In this blog, we discussed that a fractional CFO brings a wealth of experience across different domains. Moreover, hiring the best fractional CFO is the only way a young startup can progress and excel in the business market.
After the startups scale and achieve their set targets, they may come to realize that having a full-time CFO makes better business sense. ebs is the best accounting and bookkeeping firm in Dubai that caters to its clients efficiently. You should elevate your financial strategy with ebs CFO services in the UAE. Our fractional CFO brings expertise and on-demand support to optimize your financial management. From a wealth of experience to cost-effective solutions, we offer flexibility, commitment, and focus to your financial success.
Moreover, we provide other services such as accounting and bookkeeping services, Auditing, Due Diligence audit services, and many more. So, you should get in touch with our experts to discuss our services and contact us today.
FAQ’s
What specific services do CFOs provide in the UAE?
CFOs offer a good range of financial services catered to the needs of companies in the UAE. They provide strategic financial planning, risk management, budgeting, financial analysis, and advice on optimizing financial processes.
How much does it cost to get your CFO?
For a finance professional who has experience in your business, you should expect to pay from minimum to maximum to the CFOs. This depends on the experience of the CFO; the average salary for a CFO is AED 5,500. The estimated range of CFO is AED 1,000 and AED 10,750.
What are the qualifications for a CFO?
The majority of CFOs will have a good educational background in business, finance, management, or economics. A typical path would be a master’s degree in finance or accounting alongside the ACCA qualification.