What is a Fractional Finance Director?

The last 12 months have seen the rise of the fractional finance director, a highly experienced finance professional who will work with your business on a short term basis; likely part time. We've seen them pop up predominantly in SME environments. Unlike your traditional finance director, who are usually employed full time and tend to come with a high salary, a fractional FD offers their expertise to more than one business, working flexibly and at a fraction of the cost.

The emergence of the fractional finance director role can be traced back to the evolving needs of SMEs and the broader economic landscape. Traditionally, financial leadership was seen within larger corporations who had the resources to support full-time executive positions and hire an experienced finance director or financial controller. As we've seen the business environment become more complex and competitive, SMEs began to recognize the need for strategic financial guidance from experienced finance professionals. The rise of the gig economy and the increasing acceptance of remote and flexible work arrangements have further driven the growth of fractional roles that provide flexibility.

Whilst of course, any business can benefit from hiring an experienced finance professional, there’s certain situations where a fractional FD can be particularly useful; if your business is experiencing rapid growth, raising capital, going through a restructure, a merger or an exit, a fractional finance director will be of huge benefit. We’ve detailed some of the other benefits they’ll bring to your business below:

Whilst you can see the obvious benefits, you also have to take a few things into consideration if you're going to engage a fractional finance director. One of these challengesis definitely going to be whether someone part-time and remote will be able to align with your culture, and your long-term goals - there's no doubt your fractional FD will likely not be as embedded in your business as your full time staff. Business leaders must also make sure they keep on top of the scope and ongoing expectations of the fractional finance director's role to to ensure that their contributions are effectively integrated into the business. Clear communication and a well-defined contract are essential to maximizing the value of this arrangement.

For a growing business, a fractional finance director could be a good idea. Often well connected, they will come with existing contacts and experience to help assist with securing funding, managing investor relations, and preparing for venture capital or bank loans - a strong addition to a driven team.