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What does a fractional CFO actually do?

I should say up front that I am one, so you are reading an interested party. Dublin-born, based on the Isle of Wight, working with startups since 2010, and my week is split across a handful of businesses rather than spent inside one.

The job, day to day: plan, report, manage the cash

Strip the title off and there are three things. I plan: what the money will do over the next few months, so a hire, a lease or a tax bill is a decision rather than a surprise. I report: the numbers as they actually are, in language that means something to a founder whose leading skill is product or sales. And I manage the cash: what is in the bank, what customers owe you, what is genuinely yours once VAT, PAYE, suppliers and anything else you owe are settled, and how many months of running costs that leaves. That last figure is the cash cushion, and I look at it before anything else.

Day to day it is less glamorous than the title suggests. A call about whether to take the bigger unit. A debtor list that has gone quiet. A year-end chat with your accountant early, so nobody discovers anything late.

Not the bookkeeping. A fractional FD is not there to post your bills, and if that is the gap, a good bookkeeper is the right person for it.

"So what?" The Dublin question that decides whether any of it lands

Years ago the writer Roddy Doyle was standing outside Tara Street station, right in the centre of Dublin, waiting for a friend. A group of lads came down the quays in tracksuits. One broke away, walked straight up to his face and said, "Are you Roddy Doyle?" He said, "I am, yeah." And your man goes, "So what?", turns around and walks back to his mates.

I have always loved that story. The aggression, the humour, and the perfect Dublin putdown. Say anything about yourself at home and somebody will put you back in your place.

Andrea Piccini, a presentation coach I have had the pleasure of working with, gave me a better use for it. "So what?" is not an attack. It is an invitation to add the value you left out of the first answer.

So try it on me. What do I do? I am a freelance finance director working with startup companies. So what? Well, I work with founders who might not have finance as a leading skill set, so I help them plan, report and manage their finances and their cash flow, to maximise their chances of success. It is as simple as that. The job description only exists in the second answer. The title is not the value; what the title lets me do for you is.

The same goes for credentials, mine included. FD/CFO of the Year 2019 reads well on a page. So what? It is worth nothing to you until a number I put in front of you changes a decision you were about to make. Hold any fractional FD to that from the start.

Now try it on a number of your own. How much cash is in your business bank account? Say ten thousand pounds. So what? If your cost base is a thousand pounds a month, you have plenty of cushion and you can breathe. If your cost base is a hundred thousand pounds a month, I am instantly feeling that the business is running with not enough cash, and things are going to get stressful, or already are. Same ten thousand pounds. Two different businesses. Putting the second number next to the first is most of what I am paid for.

Fractional CFO vs FD vs accountant: who does what

• Bookkeeper. Keeps the record straight as it happens: bills, receipts, bank reconciliation, a Xero file you can trust. Everything else on this list depends on this being done properly.
• Accountant. Statutory and historic: year-end accounts, corporation tax, VAT, filings, keeping you the right side of HMRC and Companies House. Much of that work looks backwards by its nature, and that is not a criticism, it is the job.
• Finance director / CFO. Forward-looking. Sits with you in the decisions: what the numbers mean, what happens to cash if you hire, what to do this quarter. In UK small businesses the two titles overlap so much that it is worth checking the responsibilities rather than the title.
• Fractional. The same finance director for an agreed part of their time, often working with a handful of other businesses too.

Plenty of accountants do forward-looking work too, and some do it very well. If yours already sits down with you about next quarter, your gap may be smaller than you think.

What does a fractional CFO cost?

I am not going to print a day rate here. Fractional finance is priced by scope: how many days, what state the numbers are in when I arrive, whether there is a fundraise in the middle of it. Without knowing your scope, any figure I put on this page would be a guess, and a wrong number is worse than none.

You will see "a fraction of a full-time salary" everywhere. I have no honest figure for that comparison, so I will not give you one. Ask what arrives each month instead: which reports, which meetings, who is watching the cash between them. A day rate on its own tells you nothing. So what, exactly.

When do you actually need one?

You need a finance director when the decisions get bigger than the gut can carry.

• You cannot answer "how many months of cover have we got" off the top of your head.
• Cash keeps surprising you, in either direction.
• You are about to hire several people, sign a lease, or take on a big customer with slow payment terms.
• You are raising money, being bought, or borrowing, and somebody is about to ask you questions about your own numbers that you cannot answer.
• Your accounts arrive nine months after the period they describe, and every conversation about them is archaeology.

Any one of those can be reason enough to talk to somebody senior. How urgent it is depends on the decision in front of you and your cash position, not on how many boxes you tick.

When you don't need one yet, and what to do instead

Plenty of businesses do not need a fractional FD yet. I would rather say that than sell you one, because the day you do need me, you will remember which way I answered.

If you run a straightforward business, with a bookkeeper keeping Xero clean and an accountant doing your year end, the gap usually is not seniority. It is frequency. Nobody is reading the cash weekly, so things get found at month end, or at year end, which is later still.

So do the bit an FD would do, yourself, every week. Take your net cash (the money in the bank, plus what customers and others owe you, less everything you owe) and divide it by what a month of running the business costs, averaged over the last two months. That is your cushion, in months. Under a month, the next shock chooses for you; on our scale, with the cushion rounded to one decimal place, 1.0 to 1.9 months is still high risk and 3.0 or more is low. One number, tracked every Monday, will tell you a lot between meetings with anybody expensive.

How I work as one

My week is a portfolio: several founders, each with their own numbers. The aim is a steady rhythm rather than a heroic rescue: cash first, then the plan, then the one or two things worth doing next. Boring is the goal.

The weekly read is also the part that should not need me. In the film I ask what it would be worth if it took only thirty seconds to drop your data into something that gives you a clear risk position, because if you can see it and understand it, you are far more likely to do something about it. That question is why Own Your Numbers exists. It connects to your Xero read-only, works out cash, net cash, cost base and cushion, and sends the answer every Monday with a risk rating and the few things to do about it. It cannot change anything in your Xero, and it does not replace a finance director. It does the weekly arithmetic one would do, whether or not you have hired anybody.

My favourite "so what?" is the last one. If you know all this, you stop guessing, and you start owning.

If you are in the "not yet" group, the next step is not hiring anybody. It is seeing your own cushion once, then watching it every Monday.