What does a fractional controller do?

In a more flexible and technology-driven business environment, start-ups and well-established organizations can easily expand customer reach with the help of various online platforms, such as social media.

With increasing demand for high-level services and products, the need for specialized financial expertise is becoming more crucial in running a business. 

It challenges some ventures, as not all businesses have the right resources to avail of such a service or do not have the capability to hire a full-time financial expert.

This is where the role of a fractional controller comes in. Some organizations hire a non-full-time employee who works between bookkeeping services and the Chief Financial Officer (CFO). 

This article will guide you on the role of a fractional controller, providing strategic guidance in business while collaborating with a firm’s permanent or senior-level employees.

What is a fractional controller?

A fractional controller is a financial expert who provides part-time or seasonal services for financial oversight and management, typically guided by a contract or retainer agreement with the company.

It is one of the financial backbones that ensures the integrity of an organization’s financial transactions and provides comprehensive knowledge as a basis for strategic decision-making.

The role of a fractional controller encompasses both basic and critical functions in financial management and can be easily tailored to meet the specific needs and requirements of its clients.

Some of its key duties and responsibilities center on the following functions:

• Financial operation oversight 
• Financial analysis and reporting 
• Internal control and compliance 
• Cashflow management 
• Budgeting and forecasting

With technology, a fractional controller is also hired to provide expertise in Financial Technology (fintech) and process optimization.

Fractional vs in-house controller: What’s the difference?

Selecting between a fractional and in-house controller may be determined using various considerations, specifically with the current capability of the business to support its services.

As mentioned above, a fractional controller can be hired on a part-time basis, which is more applicable to growing or expanding businesses that need strategic financial guidance without incurring full expenses. 

A full-time controller, on the other hand, performs a comprehensive financial management role and has a significant involvement in the daily operations of the organization. 

It is more suitable for larger and well-established firms that aim to achieve comprehensive and hands-on control over their financial activities.

3 Qualities of an effective fractional controller

A fractional controller, despite working in a non-full-time position, can be a strategic partner for any growing business.

They can offer a unique blend of industry expertise and adaptability, leveraging their years of experience in handling the complexities of financial management. 

Here are the key qualities that can guide you in choosing an effective fractional controller:

1. Financial expertise and industry experience

This quality is indeed non-negotiable. A fractional controller needs to be well-versed in Generally Accepted Accounting Principles (GAAP). 

They should also have a deep understanding of finance and accounting areas, backed by practical experience in the industry.

This includes the following:

• Financial reporting 
• Financial forecasting
• Cash flow management 
• Internal control

Compared to an in-house controller that usually specializes in a specific industry, an effective fractional controller often collaborates with multiple clients across different industry verticals. 

This type of exposure allows them to impart best practices, practical and innovative solutions, as well as fact-based insights into the business.

2. Analytical thinking and business acumen skills

Beyond just numbers and financial transactions, an ideal fractional controller can thoroughly analyze economic data to identify opportunities and trends, while also preventing potential business risks. 

They should have the ability to translate available financial information and data into innovative actions, providing direction for overall business strategies and helping leaders make more informed decisions.

3. Exceptional communication skill and tech-savvy

Due to its nature, a fractional controller also communicates with top leaders and executives of the company, conveying complex and critical financial transactions. 

Their communication skills should go beyond the ability to simplify complex concepts, listen, and convey guidance clearly and concisely so that everyone understands the current financial status of the business.

In addition, being tech-savvy is a prerequisite for becoming an effective fractional controller. This is due to the increasing use of financial technology and the services offered by outsourcing companies to their clients. 

Some of them perform duties outside the physical office and use communication platforms to keep their client updated on their accomplishments and ongoing projects.

The lasting impact of a fractional controller on financial agility

The lasting impact of a fractional controller lies in empowering the agility of a business and transforming it to adapt with progress and thrive despite the challenges in operation. 

These professionals enable the organization to have high-level financial expertise within its resource capabilities, allowing it to optimize internal control, improve cash flow, and make more informed financial decisions.

The role of a fractional controller significantly empowers firms of all sizes. Business leaders were able to navigate dynamic market settings with greater confidence.

To sustain growth and build resilience in daily operations, financial management must be a core business priority.