Every business seeks to excel, expand, and remain ahead of the competition in their industry. One of the factors that is critical to this goal is the role and influence of financial leadership in the business. While companies desire to grow, overcome challenges, and leverage opportunities, hiring a Tactical or Strategic Fractional CFO becomes a critical decision.
In this blog post, you will learn the differences between Tactical vs Strategic Fractional CFOs, and which professional you should hire depending on your business needs.
A Fractional CFO is a financial professional who provides CFO-level leadership on a part-time or project basis. Hiring a fractional CFO is a good option for small and medium-sized enterprises that don't have the time, energy, capacity, and resources to hire a full-time CFO but still need access to financial leadership and financial expertise.
Tactical CFOs focus on the day-to-day operations of the business. One of the most significant pillars is that they have heavy accounting experience. They will focus on how you manage cash, and other accounting needs.
Also, they will provide hands-on support around some of these tactical areas like cash management.
A Tactical Fractional CFO manages different responsibilities to boost the company’s financial health and improve its decision-making. Here are some of the roles they handle.
A Tactical Fractional CFO is always involved in the daily business operations to ensure that the company’s financial features align with its overall strategic goals. Even though they might not be involved in all operational details, their guidance and expertise are crucial for financial health maintenance and informed decision-making.
A Tactical Fractional CFO often has heavy accounting experience, with some of them being in public accounting for a long time. Therefore, their expertise is handy for the business’s finances like cash flow management, financial monitoring and analysis, financial reporting, risk management, etc.
When it comes to getting trusted and informed recommendations on a broad range of financial and strategic matters, you can rely on the Tactical Fractional CFO. They are adept at providing custom-made recommendations to the business's specific needs.
A Strategic Fractional CFO is a financial executive who serves as the Chief Financial Officer for an organization on a part-time or project basis. They often provide a holistic focus on strategic planning, financial leadership, operational insights, etc.
A Strategic Fractional CFO actively contributes to the company’s strategic direction, they are involved in making financial decisions that will create value and positively impact the company’s long-term goals.
Here are some of the key roles of a Strategic Fractional CFO:
Even though a Strategic Fractional CFO does not belong to the executive leadership team of an organization, their insights can help finesse the company’s strategic plans and direction. They evaluate the vision, strategy, tactics, execution, metrics, and milestones of the organization.
A Strategic Fractional CFO provides organizations with advisory benefits as they leverage their strategic mindset and expertise to help the company drive growth. If a company is looking to expand into a new market and doesn’t know where to begin, a Fractional CFO can contribute positively to their expansion efforts. The Strategic Fractional CFO will conduct market analysis, financial feasibility study, business case development, funding strategy, risk assessment, etc.
Many businesses seeking to grow and scale are often saddled with doubt, uncertainty, and sometimes, lack of strategic insights and experience. A Strategic Fractional CFO provides the business leadership with detailed growth strategies that align with their strategic goals.
Tactical Fractional CFO |
Strategic Fractional CFO |
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1. Focus primarily on daily financial operations, processes optimization and cash flow management |
1. Suggest financial decisions based on the company’s long-term goals |
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2. They operate within the short- to medium-term |
2. They operate with a long-term perspective |
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3. They handle operational financial tasks like financial reporting, cash flow management, etc |
3. They oversee financial strategy, risk management, capital allocation, etc |
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4. They handle operational decision-making |
4. They collaborate with top leadership to carry out strategic decision-making |
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5. Improves internal financial operations and processes |
5. They identify new opportunities and business growth |
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6. Focuses on metrics like working capital, operational efficiency, and cash flow |
6. Works with metrics connected to profitability, growth, market share, etc |
The cost of hiring a Fractional CFO, either for tactical or strategic purposes, depends on several factors. First, a Fractional CFO with a broad range of experience and specialized expertise is likely to have higher rates. Some of them who are thought leaders in specific industries may have higher charges.
The scope of their responsibilities also determines the cost. A Strategic Fractional CFO may earn more than a Tactical Fractional CFO because they handle strategic planning, mergers and acquisitions, and other complex tasks.
With the modern business world constantly evolving, the role of financial leadership is also changing. While the functions of a Tactical Fractional CFO cannot be understated, a Strategic Fractional CFO is a visionary strategist who serves as the master architect of the future.
They can spot prospective pathways of revenue generation, establish strategic partnerships, and provide expert guidance. Your business success story starts with the right partner. Visit our website to learn more about how our Fractional CFO and advisory services can unlock the full potential of your organization.
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