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Why Fractional CFOs Must Embrace FP&A Automation During this Market Downturn

With a recession looming, many Fractional CFOs (FCFOs) are worried that they will lose their customers due to budget cuts. However, by implementing FP&A automation, their customers will be provided a more in-depth analysis that will set them up for any scenario that can occur in the coming months. In addition, it will create a far more efficient process that will allow FCFOs to take on more customers and add value.


The past few years have created the perfect growth environment for Fractional CFOs . Even before the pandemic, business was booming for FCFOs, as between 2019-2020 there was a 27% increase in CFO resignations creating a CFO talent shortage that has only gotten worse in 2020 and 2021. This is where Fractional CFOs come into play.


The increase in startups (who don’t have the funding or the need for a full time CFO) combined with the fallout from the pandemic, has created a huge increase in demand. In addition, solid financial guidance is one of the keys to scaling a startup, and a Fractional CFO provides cost effective experience with a low level of commitment- exactly what young startups are looking for.


To top it all off, the current market downturn and continued inflation is putting additional strains on companies’ forecasting and planning efforts. Scenario planning is becoming increasingly critical for companies survival, but many FCFOs struggle with providing their customers with an efficient strategy for this.


But overall, FCFOs are not taking full advantage of all of the tools at their disposal. This is causing them to miss out on in-depth, long term engagement with existing customers, as well as the inability to increase the number of customers they are able to take on.


New Customers, Same Repetitive Process


No two companies have the same finances, yet FCFOs find themselves doing much of the same, repetitive processes time after time. Whether the company that hired you is a young startup with a large cash burn and little revenue, or a well established organization on the verge of making the move to a full time CFO, chances are the outline for the P&L income statements and financial reports have very similar formats and repetitive processes. Although each company has its own unique KPIs and goals, there tends to be many similarities in the work.


Even when companies request a more unique or in depth analysis, many Fractional CFOs struggle with juggling the amount of work and time the manual processes take. Reports take up so much resources that by the time they are finally completed, there is little time or energy left to provide the customers with the extra valuable analysis they crave so much.


The two-pronged solution


Fractional CFOs, like any other business service, want to maximize their revenue in two ways:

  • The first one is by providing more bang for their buck to their customers. This makes FCFOs’ time more valuable and their services worth more.

  • The second way is by creating more efficient services. This means they have extra time for additional customers, and therefore an increase in revenue.

Due to all of the manual processes involved and the timely, repetitive tasks, most Fractional CFOs struggle with upscaling their services in either of these ways, much less both. With FP&A software solutions such as Datarails or Vena, FCFOs can rather easily both provide more value to their customers and free up time by standardizing manual processes.

FP&A software providing value to Fractional CFOs
The value that an FP&A tool adds- Integrating software solutions and providing in-depth reports to each customer

More value to customers


Organizations hire Fractional CFOs because they believe that their experience and value for money is well worth it. But the difference between just giving customers enough to get by, and giving them strategic insights to help them grow their business is the difference of night and day.


Instead of emailing the customer multiple monthly Excel files, in which the FCFO doesn’t know when or if they opened it or understood the content, some FP&A software solutions provide audit control which makes the entire sending, receiving, and version control process far simpler. In fact, Datarails offers an online archive specifically for those with multiple reports (such as FCFOs) where both the FCFO internal team and their customers can access and view all their reports in one place.


Fractional CFO reports
All the detailed reports and analytics in one place

In addition, the Datarails and Vena dashboards provide customers with the ability to drill down into their data and understand it analytically on their own- inspiring customer confidence in the data. While the Fractional CFO is still the one creating the reports and numbers, customers can be on the same page and ask specific questions, instead of the time consuming process of the FCFO explaining everything from A-Z to the customer.


Allowing customers to drill down and analyze their data gives them the incredibly important power of scenario planning. Organizations are craving this with today’s market volatility, and giving them the opportunity to conduct scenario planning on their own with simple, yet analytical dashboards and an FCFO’s knowledge behind it all, will greatly increase the value of FCFO services.


Lastly, what ties it all together is that in the case of Datarails, the solution is Excel based. This means that for both the Fractional CFO and the customer, the amount of time it takes to learn to navigate the system is extremely minimal. Datarails minimizes the impact on the Fractional CFO team to learn a new platform by keeping them within Excel. For their customers, the value lies in the immense upgrade to their experience with an online archive. Here they can view and download all their reports, access their dashboards, view their KPI's and drill down into the data to gain more valuable insights.


By implementing FP&A automation, FCFOs will be able to provide these organizations with something beyond the limitations of Excel. They will be able to understand more about how growth and sales align with headcount and how to plan for the future accordingly.

FP&A headcount scenario charts
Example of how customers can break down headcount scenarios and see how it influences outcomes over time

More Efficient Time Management


The second benefit is for the FCFOs themselves. Most of the work that Fractional CFOs complete is manual and repetitive. Therefore, by creating a standard platform that fits the vast majority of the manual work, an FCFO can already complete most of the time consuming manual processes just by having a standardized workflow.


There is no longer a need to recreate a whole process for each individual client, yet it’s extremely simple to make adjustments to that existing process when needed. By eliminating all of the manual work, FCFOs will have a significantly more amount of time on their hands.


FCFOs can then choose either to provide more value to existing clients by going in-depth, use their newly freed up time to take on new customers, or even do both. No matter what the choice is, with the newly acquired time, the value and efficiency of the FCFO’s work skyrockets overnight.


Additional Benefits


Fractional CFOs are being hired not only for their expertise in areas directly related to finance but also due to their experience and leadership that is needed significantly more during this time period of uncertainty.


Companies are realizing that they need to plan for the future. Scenario planning, forecasting, budgeting, headcount, and sales planning are no longer just part of a monthly checklist, rather they are the company blueprints for the short and long term survival of the organization. With the additional challenge of an economic downturn, many startups and small businesses are realizing that it may be well into 2023, or even 2024, before they are able to secure new funding.


Fractional CFOs are playing an ever increasing important role in companies’ growth versus cashburn strategy and helping them navigate the long term through their existing, sometimes limited, cashflow. By having all of the data in one dashboard, customers can dig deeper and let the data tell the story. As the saying goes, “a dashboard is worth a thousand rows.”