Due to growing demand, corporations are looking for specialized financial professionals without hiring full-time employees.
A growing number of experienced CFOs are stepping away from the corporate grind and taking on freelance roles for multiple clients, either concurrently or on a sequential basis.
“The demand for (freelance) professional CFOs has roughly doubled in recent years,” says Eusebi Llensa, co-founder and CEO of Outvise, a Barcelona-based marketplace for high-end independent contractors.
There are two types of independent financial directors. Both are enjoying growing popularity. And both are different from old-school consultants because they become trusted members of company teams rather than external consultants.
Fractional CFOs work primarily with startups and growing mid-sized firms that need high-quality financial services but cannot afford or do not yet want to hire a full-time employee. They work long-term with a portfolio of clients, providing a full range of CFO services, albeit on a part-time basis.
Two years ago, only about 2,000 LinkedIn accounts contained people advertising fractional executive services. That number is currently around 114,000, according to Sarah Dow, CEO of The CFO Center and The Liberti Group and author of Strategy and Leadership as a Service.
Interim CFOs take on short-term project assignments that match their experience and interests; for example, an M&A specialist might sign on for a few months to oversee a deal. Once the deal is done, they move on.
According to the 2024 European survey conducted by the International Network of the Interim Managers Association (INIMA).
Intermediate work is growing across all relevant functions, but C-suite and board services are outpacing the rest, accounting for 55% of all jobs, the INIMA report says. Individuals with skills in “change management and process optimization” are in high demand.
To help fuel this trend, a new global industry of independent management platforms and marketplaces is emerging to help C-suite executives and other high-profile freelancers find potential clients. Some handle contracts, payments, back office tasks and other services. The most popular companies include Outvise, Malt, True Bridge, Talmix and Catalant. CFO Centre, Fintalent.com and iFinance Director are part of a subgroup that specializes in CFOs and leading financial professionals.
These companies are reporting impressive revenue growth rates such as: 180% growth over the past two years; a threefold jump in monthly recurring income over the past 11 months; and growth of 15-20% last year.
Chelsea Williams, founder and chief financial officer of US-based Money Management, a financial coaching company, and Core Solutions Group, which works with law firms in the US, says she recently had to “stop growing” to keep things from getting out of control.
The eldest of these, The CFO Centre, has grown into a £60 million ($78 million) multinational organization since its founding in 2001.
The industry has come a long way since Sarah Dow co-founded the firm. Descriptive terms had not yet been coined. “Most people didn’t understand what we were talking about,” she recalls.
Despite recent growth, this phenomenon still remains under the radar of many business circles. “I spent a lot of time over coffee with people explaining the model,” says John Frank, CFO and founder and CEO of Third Road Management, a business he has gradually grown over the past decade.
Frank echoes fellow industry leaders when he says, “The sky is the limit” for the future of CFOs as independent contractors. Traveling around the world, she says, “People ask when we will come to their country.”
Sometimes people don’t wait. Take Rafael Estrela and his partner in Sao Paulo; seven years ago they launched the company that became BR Experts for the Brazilian market.
This trend is fueled by a number of developments, including supply and demand, as well as the evolution of the CFO profession in the corporate world.
The first became obvious. We’re living in the “take that job and quit it” zeitgeist, with many people adopting the lyrics of Johnny Paycheck’s country song to achieve better work-life balance, more flexibility and new, more interesting professional challenges.
Take Phil Christmas for example. As a UK finance director based in Spain, Christmas builds his client portfolio through platforms such as Outvise.
“I can help with my two small children. I can take my six-year-old to school,” he says. “I don’t work full-time as a part-time CFO, but I don’t want to be one.”
But it can get complicated. For example, freelancing is often temporary. Aspiring entrepreneurs take jobs to stay afloat and grow their companies.
“They need to finance their lives,” says Matthew Horrocks, head of private equity for the British Isles and North America at Malt, a platform for temporary workers. “It allows them to spend time doing what they want to do.”
This is the selling side. On the buyer side, there are two groups: SMEs and startups combined; then there are corporations. In the latter case, the use of freelancers is linked to the changing role of CFOs.
As SMEs and start-ups begin to grow, they increasingly need sophisticated financial services. But they can’t afford to hire a top-notch CFO. What should an entrepreneur do? Hire the fractional part.
Demand for startups often arises in the early stages of funding. “When they need to provide financial data and data storage facilities, startups tend to hire part-time CFOs,” says Omer F. Güven, founder and CEO of Fintalent.com, an M&A platform and post-acquisition integration experts. .
And it’s flexible. “It might be two days a week, but during peak fundraising periods it could be 60 hours a week,” Güven says.
Frank notes that for smaller companies, whether they’re looking for investors or not, a part-time CFO “really serves as a trusted advisor” to the entrepreneur. Christmas says: “I’m 62 years old. My clients are often over 20. They are CEOs. They are very smart but have no idea about the financial side of the business world.
While smaller companies fuel the fractional world, corporations dominate the in-between world. Sometimes this is as simple as hiring a temporary replacement to fill a vacant position or someone on maternity leave.
But corporate leaders are also beginning to realize that they can increase productivity by hiring experts for specific tasks and projects, such as mergers and acquisitions, spin-offs and post-acquisition integration. This is due to the increasing complexity of the CFO role, moving from computing to strategic and operational functions; thereby opening up a variety of specialized tasks that are better performed by temporary or part-time workers. The best financial people now have to be “strategic,” says Llensa. “They need to ensure proper return on investment.”
As individuals, fractional and interim CFOs can be the same thing, depending on the circumstances. They typically build a portfolio of clients, sometimes using old contacts, sometimes platforms, and sometimes other networking tools.
Almost everyone agrees on one thing: to be a successful freelance CFO, you need to be good at self-promotion. In other words, introverts don’t need to apply.
“You have to find clients every day through marketing and networking,” Christmas says. “The person who is usually an accountant does not have that experience.”
To be considered for The CFO Center, applicants must pass a BBQ test. Everyone is invited to a picnic. The team consists of those who help grill the sausages and talk to everyone. Those who “stand in the corner” are cut.