Why Your Fractional CFO Should NOT Be Doing Your Accounting | Ep 12

📊 Why Your Fractional CFO Should NOT Be Doing Your Accounting | Full Send CFO Podcast

👉 Are you using a Ferrari to deliver DoorDash? That’s what it’s like when your fractional CFO is stuck doing bookkeeping and reconciliations instead of strategic financial planning.

In this episode of Full Send CFO, we break down:

• What a CFO should actually be doing
• Why mixing accounting and CFO work can hold your business back
• How to build the right financial team stack for scale
• How to tell if you’re wasting money on the wrong financial setup

⏱️ Chapters

01:10 – CFO as Strategic Partner, Not Bookkeeper

01:45 – What a Fractional CFO Should Focus On

02:15 – What a Fractional CFO Should Not Be Doing

04:15 – Bookkeeping, Controllers, and CFOs: Defined

05:30 – Who Should Be Steering the Financial Ship?

07:10 – Real Example: Margins Drop, Who Solves It?

08:00 – Mistakes to Avoid: Don’t Hire One Person for Everything

09:10 – The Finance Lane vs The Accounting Lane

09:40 – Speed of Hire vs Smart Financial Structure

🧠 Ask Yourself:

• Is my CFO focused on strategy or in the weeds?
• Who’s really owning the financial systems in my business?
• Am I paying top dollar for tasks that could be delegated?

📌 Subscribe to Full Send CFO for more financial leadership insights that help your business grow with clarity and confidence.

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Full Send | Accounting & Data

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Transcript

[00:00:00] If your fractional CFO is reconciling bank accounts, cleaning up QuickBooks, you're probably overpaying and underutilizing the value that a fractional CFO can bring. Earlier this week I had a conversation with a business owner who's been doing pretty well, running a great business, and I asked them how are they managing their finances?

[00:00:21] How are they managing their accounting? And they said, well, we got introduced to ex CFO of blah, blah, blah company, and they're handling it all for us. And, and I dug a [00:00:30] little bit further. So the fractional CFO that you brought on is actually handling the accounting. Yeah, yeah, yeah. They've got it all taken care of and.

[00:00:38] The reflection of that caused for me is that when you think about bringing on a fractional CFO, you should be thinking about it through the lens of strategic value add. How are they helping us grow and evolve and change as a business towards our goals, not handle the accounting work? If you think about it, it's kind of like using a Ferrari to deliver DoorDash.

[00:00:59] [00:01:00] Like that's not the purpose of A CFO. So it led me down the path of why should your CFO, your fractional CFO not be doing your accounting work? So today we're gonna dive into that, why strategic finance and operational accounting are separate lanes and how do we build the right team to support both functions.

[00:01:21] So what is a fractional CFO actually good for? As an early stage business, if you're one to 10 million in revenue, oftentimes fractionalizing the role of A [00:01:30] CFO is a great move. The fractional CFO should be really focused on pricing and margin strategy, capital raising and investor relationships, financial modeling and demand planning, dashboard development, KPI focused meetings to help you understand what moves to make in order to see success towards your.

[00:01:50] Desired outcomes. What this fractional CFO is not good for is categorizing transactions, filing sales tax, managing your payroll, [00:02:00] closing the books on a month to month basis. All of these items fall within the rhythms.

[00:02:04] Of your bookkeeping function, your accounting function, the controllership, ultimately the controller should be owning the accounting function, not the CFO. That's not the best use of their time or your money. The typical fractional CFO hourly rates are between 200 to $400 an hour. And when you think about the hourly cost required to do these types of tasks, you are likely overpaying for [00:02:30] that type of work.

[00:02:31] So we wanna make sure that we're resourcing ourselves correctly. You have the right people in the right seats performing the right tasks. So if you currently have a CFO handling accounting, it's really just a bad use of your budget. I'll caveat that by saying there are great teams out there that offer CFO level advisory services alongside of a proper accounting department, an accounting team.

[00:02:55] I. That said, one thing that you need to look out for in that type of relationship is [00:03:00] that if you are being billed hourly for that work, oftentimes you're getting billed for the time that it takes the CFO to review and train the team below them. Now, that's not necessarily a bad use of their time because.

[00:03:13] Review is required, quality control is required. However, if you are paying an hourly rate for the CFO to do that task, I'd argue that you should be paying the hourly rate for the strategic advice that they're capable of providing and that the firm's responsibility should be on. [00:03:30] Quality control and the review of the work before it hits your desk or the CFO's desk, because ultimately we want to make sure that we're resourcing budgets appropriately for the right roles and their skillsets.

[00:03:42] In a fixed fee environment, you're probably gonna have a better value proposition relative to how that CFO, how that controller, that accounting team is using their time. The accounting tasks are so important, but they need to be at the right cost and right level resource to provide value. [00:04:00] Same with the CFO work.

[00:04:01] You wanna ensure that they are elevating their perspective on your business and not focused on the journal entries, the month end close process. So if you have a fractional CFO managing both areas, you're creating a gap. The CFO's being pulled into accounting and they're not focused on strategic Decisions where they need to be focused. So most CFOs aren't really capable of keeping up with the accounting like they should be. Not even to mention, the [00:04:30] accounting software changes the processes, the infrastructure required to, to grow in an evolving market. CFOs that are very experienced oftentimes are, are several layers removed from that once they get to the point of fractionalizing, their time and their efforts.

[00:04:45] So I worry that the perspective being recommended to your business in the, like accounting and bookkeeping rhythms may not actually be the best scenario for you in today's market relative to what offerings are [00:05:00] available. The other thing here is that if that fractional CFO is managing accounting, like who's actually steering the ship?

[00:05:06] Is it, is it actually the CFO or are they just really doing the work? You, you, you're starting to blur accountability here when you have one individual servicing multiple roles. So ideally you have a CFO that is providing oversight of a team, but the controller. Or senior accountant are leading the processes, leading the systems, managing the accuracy and quality control of the accounting that is [00:05:30] required for correct analysis for the CFO.

[00:05:33] So we wanna start thinking about the, the difference between the roles of A CFO, A controller and accounting team, and the bookkeeping within the, the growth trajectory of your business. that will evolve over time, but even businesses as small as. 500,000 or a million dollars do have distinction within these roles.

[00:05:52] Even if at that level they are kind of rolled into different titles. I would still contest that the fractional CFO should not be [00:06:00] taking items within the month end close process. So how do we build the right financial team stack to be able to manage a growing and evolving business? We've got the bookkeeper and staff accountant that are really owning the transactional entry, the reconciliations, vendor payments, ar, ap, things like that.

[00:06:15] The controller or manager level oversight is owning the entire accounting process. They're owning how the systems are being integrated, and also owning the reporting and potentially audit preparation. So. In addition to [00:06:30] managing the team and the transactional activity, the controller's really the one that's overseeing the entire accounting function where the CFO really should be focused, like I mentioned, on strategic initiatives, the capital planning, the financial clarity, I.

[00:06:43] So he, he, here's an example of how that can work in, in action. So the CFO is analyzing why margins may be slightly decreased. Well, the controller's job is then to confirm, Hey, we've got our cost of goods sold that are actually spiking because of, oh, tariffs. Who knew? [00:07:00] And then. Once the controller identifies why cogs are spiking, the bookkeeper now can tag new vendor costs, new fees that weren't previously accounted for.

[00:07:10] So there's this chain of command that allows the right people in the right seats to take the right actions. Ultimately, we need to be allocating about 80% of a CFO time to the strategic and maybe 20% to the oversight of the rest of the team.

[00:07:26] Here are a few things to avoid in this process. If you're currently evaluating how [00:07:30] to think about this. You can't just hire one person to do it all. It's not a good use of their time. You can't let your CFO get stuck in the weeds because there is no controller in the picture. If the CFO's sucked down too far into transactional accounting, again, not a good use of their time.

[00:07:46] Make sure you have a good stack there. The other thing here is that. Most people assume that if you've got a CFO title, they're an accounting expert. Sorry, but that's just not the case. CFOs come from one or two [00:08:00] lanes. Oftentimes the the finance lane or the accounting lane, the finance lane is really good at financial modeling, understanding.

[00:08:08] Mergers and acquisitions, um, understanding high level how to apply financial principles to the underlying accounting. However, the, the CFO from the finance lane is not always gonna be the best accounting expert, nor the best individual to make recommendations on how to construct the right accounting tech stack.

[00:08:27] So make sure that when you're looking at this. [00:08:30] Opportunity. Which lane does that fractional CFO come from? The other thing here is that a lot of times companies will start to prioritize speed of hire over structuring the right. Stack for your finance department. And so speed oftentimes can be inhibitor to designing the right roles in the right seats, whether that's fractionalized or full time.

[00:08:51] So make sure that, that you, you use this moniker that I like to bring in from the Navy Seals is that slow is smooth and smooth is fast. So if you take [00:09:00] your time and you slowly make sure that you've got the right. Finance stack the right people in the right seats. That smoothness in managing that process will actually yield greater speed than making a quicker decision on the front end.

[00:09:13] So let's just take a look at where the, your fractional CFO is spending their time. Is it strategic or is it operational? If you're accounting function is actually kind of weak, take a look at a resource to help you. Design the right stack for your team. We wanna build our [00:09:30] financial team for scale and not just patchwork, solve a problem, solve a pain point, and move on.

[00:09:36] Like we want to architect the systems, the processes, the technology, the team for achieving the outcomes that you want. So if you can write down the last five tasks that your CFO did, how many of those were strategic? If it's less than three, we gotta start resetting expectations here. So I, I hope that's a whole helpful breakdown on, on a, why your fractional CFO shouldn't be doing your accounting work, and also how to [00:10:00] think about architecting the right team to help you reach those desirable outcomes to continue building a profitable and sustainable business in 2025.