What is a portfolio CFO and when should you get one?
For a young, growing company the cost of a full-time Chief Financial Officer (CFO) often isn’t an option.
But the skills, knowledge, and expertise they bring can really benefit businesses in their crucial early days.
So, you might want and need one. But not all of one. All the time.
Enter the portfolio CFO
Many fast-growth businesses are choosing to take on a portfolio (or fractional) CFO.
A portfolio CFO works for several businesses at the same time on a part-time basis with involvement ranging from a few hours a month to a few days a week on specific projects.
You get the best of both worlds - their experience working with businesses at a similar stage to yours, dealing with the types of financial challenges you’re also facing - but not full-time cost.
They leave you to get on with what you’re good at - running and growing the business – reassured that the financial side of the business is in safe hands.
What can you hand over to a portfolio CFO?
Lots! Including management reporting, cashflow forecasting, long-term planning, investor relations and so much more. And, let’s face it, these activities are not typically the forte of a creative entrepreneur and often detract from other priorities.
Dave's a Portfolio CFO at flinder. Here’s what he and his colleagues do and how they help fast-growth businesses.
"As an experienced and qualified CFO, we quickly get under the skin of the business," says Dave Eaton, Portfolio CFO at flinder.
For very new businesses in their infancy, CFOs will introduce the right structures for the finance function, reporting and forecasting to make sure the organisation is well-positioned to scale in a controlled way.
"We’re also a pretty good sounding board and can act as a critical friend, challenging views and developing ideas. We know that being the founder of a young company can be a pretty lonely place, especially when things get tough. Having someone experienced to bounce ideas off can make things a lot less lonely.
CFOs are also pretty good at saying ‘no’ when needed. We can decide not to pay a certain supplier in a payment run, pause services if a customer hasn’t paid or decline a purchase request from a team member. Having someone on your team to make those calls (and be blamed for those calls!), can really take the pressure off the founder and allow you to maintain relationships as you want to."
Portfolio CFOs and fundraising
Your portfolio CFO will also be at your side when it comes to fundraising. They can help prepare financial plans and provide support when it comes to pitch decks and presentations.
Investors take comfort from the fact there is an experienced person overseeing the financial plan and having someone on, and at, your side with solid experience of the funding process will help relieve your stress and provide reassurance.
Portfolio CFOs and scaling businesses
As your business scales, the portfolio CFO’s role broadens, and their involvement normally increases to reflect the growing demands of the business.
When is a good time to get yourself a portfolio CFO?
We recommend bringing someone in as early as possible, even if that’s just for a few hours a month. They will be a great sounding board for you and having access to someone with experience in supporting similar companies’ growth is invaluable.
It can be a modest investment early on and can scale up and down as the business dictates.
Who makes a good portfolio CFO?
Remember that old saying, been there, done that? That’s what you want in a CFO. Someone who’s seen it all before and has the t-shirt.
Look for someone who has led finance functions at similar businesses to yours – and at a similar stage to the one you’re at - within your specific sector and industry. You want all the experience, and all the learning.
You’re looking for someone who has ideas, who can lead, challenge and support you to grow safely, bringing credibility and gravitas to your Board.
Finding the right CFO for fundraising
If you’re looking for investment soon, your CFO should have recent experience of supporting businesses through the fundraising process. They will be able to predict the questions investors will ask and prepare for due diligence, so you can be as ready as possible and give investors comfort in the numbers and other contents of the data room.