Any organization’s Chief Financial Officer (CFO) plays an essential role in company operations. As a highly influential role, the CFO works closely with other C-level executives to lead financial-related decisions and initiatives, such as capital structure, income and expense management, fundraising, financial planning, compliance, and more. Despite the importance of having a CFO, many companies–especially smaller or early-stage organizations–lack an experienced professional to serve this role as it is considered a cost-prohibitive decision. As a result, more companies are turning to fractional CFO services to access the financial expertise they need.

fractional cfo
What is a Fractional CFO?

A fractional CFO, also sometimes referred to as a part-time CFO, is a financial expert that multiple companies hire on a contract or project basis to provide valuable financial expertise without a cost-prohibitive price tag. Like a full-time CFO, fractional ones also typically have prior experience serving in this capacity, so companies don’t need to worry about sacrificing experience to control costs. Additionally, since fractional CFOs may work with companies in a wide variety of industries, they may be better equipped to face a wide range of different financial challenges and situations.

Fractional CFO services are a great alternative to a full-time professional because these services can be requested as needed and can easily scale as an organization grows. With a fractional CFO, companies don’t need to worry about making a long-term commitment and can leverage a fractional CFO’s expertise in transitory periods, like if the company is undergoing a merger, acquisition, or capital raise.

CFO and HRO: A Winning Combination

After a fractional CFO has been contracted, their first order of business is to likely identify ways to control operational costs within the organization. For many organizations, HR functions are a major cost center. For example, payroll expenses typically range between fifteen and thirty percent of an organization’s annual revenue, although this figure can be higher for extremely labor-intensive industries. While this is an unavoidable reality, HR departments may often be stretched thin trying to balance these time-intensive tasks with more strategic priorities. As a result, HR departments may be forced to grow to keep up with payroll, benefits administration, compliance, employee engagement, and more.

Fortunately, a fractional CFO can control costs quickly by introducing an HR outsourcer. A full-service HRO can replace HR administrative staff to manage a wide range of HR functions, while also delivering a significant financial benefit. On average, companies that choose to outsource HR functions can reduce HR costs by as much as 22%. However, controlling costs isn’t the only benefit companies obtain from an HRO.

Much like a fractional CFO allows companies to leverage the expertise of a seasoned, financial executive, an HRO allows organizations to tap into the knowledge of veteran HR professionals, while also avoiding the costly hiring process or expanding headcount. When fractional CFO services recommend utilizing a full-service HRO, it’s because they’re looking to make a big splash and get costs under control quickly and efficiently.

How Can an HRO Help Control Costs?

Companies can get the most value out of their partnership with an HRO by leveraging them for more than just payroll-related tasks. An experienced HRO partner can help companies navigate the complexities facing HR departments by providing comprehensive support for:

  • Benefits Administration: For many employees, benefits are an important part of their compensation packages and can influence their decisions to join a company or start looking for another job. Thus, providing attractive benefits is an important component of employee recruitment and retention. Leveraging an HRO can help companies minimize the costs associated with benefits because the HRO often can negotiate better rates with the carrier since they represent a larger volume of employees that a single employer might not be able to meet on their own.
  • Payroll: Payroll-related tasks often take up a majority of time for HR professionals, leaving them little time to focus on more strategic initiatives. By outsourcing this responsibility to an HRO, HR teams have more time to focus on what they do best and prioritize strategic initiatives that deliver greater value to the overall business. In addition, an experienced HRO can significantly reduce errors in payroll processes, which can ensure the right amount is being paid out and avoid any potential fines that could result from inaccuracies.
  • Regulatory Compliance: Laws and regulations that govern HR and employment are often changing and can vary greatly between different jurisdictions. As a result, it can be difficult for companies with operations in multiple states to keep up with these changing requirements. An experienced HRO can ensure organizations are compliant with the evolving regulatory landscape.
  • Employee Engagement: Companies can even improve employee engagement by working with an HRO, which in turn reduces turnover and can reduce hiring costs. When companies can streamline payroll and offer better benefits, employees will be more satisfied with their employment. In addition, an HRO can help companies implement best practices for onboarding, training, and more that will inspire engagement among employees.

There are many reasons why a fractional CFO would recommend leveraging an HRO to control costs for organizations with 75 to 6,000 employees. An HRO brings valuable HR expertise to organizations that lack the internal HR talent they need.

Turning to an HRO like Corban OneSource can help companies boost efficiency and control HR costs. With nearly three decades of experience, Corban OneSource provides US-based HR support to companies with 75 to 6,000 employees. To learn more about how Corban OneSource can help your organization streamline HR operations, contact our experienced team today.