A fractional CFO for an Australian small business: what one does, and when you need one 

A fractional CFO is a senior finance lead who works for your business part time, often a few days a month. For an Australian small business, the role covers cash forecasting, pricing, funding, the budget and the questions a bank or investor will ask. Your bookkeeper still keeps the books and your accountant still handles tax. The CFO uses their work to look ahead.

Most owners reach this point the same way. Sales are up, the team is bigger, and yet the bank balance still manages to surprise you every few weeks. You know the business is doing well. You just cannot prove it with figures you trust.

What does a fractional CFO actually do?

A full-time CFO in a large company runs the finance team, the planning, the funding and the reporting to the board. A small business needs the same thinking, but not every day. A fractional CFO gives you that thinking in the amount you need.

In a typical month the work includes some of the following:

• A cash forecast for the next three to six months, updated as bills and receipts change.
• A monthly review of the management accounts, with the owner, in plain words.
• A budget for the year and a check each month on whether you are on track.
• Pricing and margin work: which products, services or customers earn money and which do not.
• Funding: what to borrow, from whom, and what the lender will ask to see.
• Decisions with a big price tag, such as a new site, a key hire or buying equipment.
• Being in the room when the bank, an investor or a buyer asks hard questions about the numbers.

The common thread is that the work looks forward. Bookkeeping records what happened. Tax work reports it to the ATO. The CFO asks what happens next, and what you should do about it.

When does an Australian small business need a fractional CFO?

There is no turnover figure that says yes. Watch for these signs instead.

• Cash keeps surprising you, even in months when sales were good.
• You set prices by feel and are not sure which jobs or products make money.
• A bank, investor or buyer has asked for a forecast and you do not have one.
• You are about to make a decision you cannot easily undo, such as a new site, a large contract or a big hire.
• Your accountant does good work, but you only hear from them at tax time.
• You are the person who knows the numbers, and you have no time left to look at them.

If two or three of these sound familiar, a few days a month of senior finance help will probably pay for itself in better decisions. If none do, a clean set of monthly management accounts may be all you need for now.

Fractional CFO, virtual CFO, bookkeeper or accountant: who does what?

Owners often mix these roles up, and some firms blur them on purpose. The simplest way to keep them apart is to ask what each one looks at: the past, the law or the future.

Fractional and virtual mean much the same in Australia. Some firms use virtual for fully remote work and fractional for a person who spends set days with you. The label matters less than what lands on your desk each month.

One point of law is worth knowing. BAS and tax work done for a fee must be done by someone registered with the Tax Practitioners Board as a BAS agent or tax agent. A fractional CFO who is not registered should not be lodging those for you, and most will not offer to.

What should you hand over first?

A new fractional CFO spends the first few weeks learning how the business makes and spends money. Give them a head start.

1. Read access to your accounting software, such as Xero or MYOB, with the bank feeds connected.
2. The last twelve months of management accounts, or whatever monthly reports you have.
3. Bank, loan, lease and overdraft details, including repayment dates and any conditions the lender has set.
4. Your list of customers who owe you money and suppliers you owe, with the age of each amount.
5. Payroll costs and planned hires for the next year.
6. Your plan, even a rough one: what you want the business to look like in one and three years.
7. The questions that keep you up at night. Write them down. They become the first month's agenda.

Introduce the CFO to your bookkeeper and accountant in the first week. The three of them will work from the same figures, and agreeing early on who does what saves a lot of polite confusion later.

Fix the monthly close before you hire

A fractional CFO is only as good as the books underneath. If the bank is reconciled three months late and receipts sit in a shoebox, the first several months of CFO time will go on catching up. That is expensive cleaning.

Get the monthly close done on time first. The books should be reconciled and a simple management pack ready within the first week or two of each month. Our guide to management accounts explains what that pack should contain and why it usually runs late. Once the figures arrive on time, a CFO can spend every hour on the future.

How to judge whether it is working

After three months, ask yourself a few plain questions. Do you know your cash position for the next quarter? Has a decision been made differently because of something the CFO showed you? Do you walk into a bank meeting with more confidence than before?

If the answers are yes, keep going. If you are mainly receiving longer reports, say so. The job is better decisions, not more paper.

Tell us what is giving you headaches. If we are not the right people, we will try our best to find who is, and connect you to them.