Good morning. CFO turnover is continuing with finance chiefs getting promoted, retiring, or even selecting other lines of work altogether. Given this exodus, will fractional CFOs—highly experienced financial experts who work contractually to provide CFO services—become an attractive option for more companies?
A fractional CFO could stay with a company for a couple of months or even years, and even choose to work with multiple companies. It may be an opportunity to become more strategic instead of just crunching numbers. I asked Hardik Sheth, partner and director, and leader of BCG’s Center for CFO Excellence, what he’s seeing. Fractional CFOs are “an interesting concept and there has been some traction for it, but mainly among smaller companies,” Sheth said.
Someone who works as a finance executive or CFO may transition to a fractional role after retiring, he said. A person may also choose this type of role if they are mid-career, have spent all their time in a single industry, and need a more diverse set of industry experiences, Sheth said.
In some cases, a CFO may choose to transition to a fractional role in order to improve work-life balance. “The role of CFO can be particularly taxing, and people may take advantage of certain events like mergers and acquisitions to transition to a more friendly schedule for a bit, before deciding their next permanent step,” he added.
Some may also choose a fractional CFO role at a smaller company to “bring about more impact and influence,” or to feel empowered to “speak their mind more easily and more often,” Sheth said.
A fork in the road
I recently had a conversation with Chris E. Ortega, the CEO and founder of the company Fresh FP&A, based in Indiana, which offers fractional CFO services for small to medium-sized businesses (SMBs) ranging from $1 million to about $70 million in annual revenue.
“This has been our best year so far,” Ortega told me. For starters, it's cost-effective for SMBs to bring on the right fractional CFO, and they’re “getting access to talent that they never thought they could get access to before” without having to pay a full-time yearly salary, he said. If you’ve had a conversation with Ortega, or watched his videos on LinkedIn, his enthusiasm for finance is evident.
Ortega himself spent close to 20 years in finance, accounting, and financial planning—as well as helping to analyze leadership roles while growing and scaling businesses. But then he wanted something different. “I had this fork in the road moment,” Ortega told me.
He decided to leave Emarsys, an SAP software development company, where he was VP of finance, to join a series B artificial intelligence company. But Ortega was part of layoffs before even starting his position. “This was the first time in my career I ever got laid off," he said.
It was a combination of that experience and feeling there was a need for a fresh perspective on finance, which led to him creating Fresh FP&A in 2022, where he also serves as a fractional CFO. Fresh FP&A has operations and clients in the Americas, EMEA and APAC regions. Over the past 24 months the company has experienced triple-digit revenue growth and doubled global clients, he said.
Ortega also pointed out that when expanding his team, the people who sought him out were "tired of corporate politics, not having an opportunity to leverage their skills, passions, talents and experiences." Also, they were seeking flexibility, the ability to make an impact, and provide value, he said.
Awareness and acceptance
I first talked with Dan DeGolier, founder of Ascent CFO Solutions, a fractional CFO firm based in Boulder, CO, in February 2023. After a more than 20-year career as a full-time CFO and in other financial leadership positions, he pivoted to a career as a fractional CFO in 2011 and founded his business. I asked him what he and his team are experiencing this year.
"There is an increasing awareness and acceptance of fractional professionals in all types of companies this year,” DeGolier said. A couple of years ago, he would need to explain the job of a fractional CFO. But now, “nearly everyone I meet now does understand the concept of a fractional professional,” he said.
More companies are realizing that hiring a fractional CFO, or other fractional professionals, is cost-effective, he added. “I estimate that the number of opportunities for fractional CFO engagements is up 20% over last year,” DeGolier said.
Sheryl Estrada
sheryl.estrada@fortune.com
