Thought Leadership Article by Colin J McNally February 2025
“I want to break the myth that fractional means less impactful.
How does the time you spend on your business finances truly equate to value…? This question started me thinking when I was asked to get involved in the Shell Live Wire growth programme in Aberdeen to help businesses hoping to scale up. They were a high achieving cohort, with several businesses reaching a point of exit through venture capital, high net worth investment and debt or equity conversations.
I was invited to speak on a Q&A panel with several other experts in IP, valuation, investment and funding. Following that, each client was given dedicated time via a one-on-one session with each of the panel members to raise a specific problem they were having where an immediate answer was required. I could see those attending left with truly business changing impacts,
My area of expertise for the purposes of the session was about how the business owners could use cloud accounting to truly drive their business forward by using built in AI and advanced reporting tools. I also found myself discussing exit strategy with two owners who were wishing to grow but who were at an age where a succession and exit should ideally have been planned for.
I quickly provided them with a strategy and equipped them with an understanding of really getting to know their accounts, which sadly had been badly managed by a previous employee. I taught them not to just look at the profit and loss account, but also the balance sheet and how to learn to read that well – because essentially a balance sheet will tell you more in 30 seconds than a profit and loss will do in 30 minutes.
This is an example of just one thing that a fractional financial director (FD) can do for your business. To be an FD you need not just a great knowledge of accountancy and financial management, but also an ability to very quickly understand what a business is, what it does and how, and then feed that understanding into optimising processing transactions, and then turning that into reportable data, put in front of the right people.
I passed that on in 60 seconds, the other 420 seconds of the discussion were to understand the single issue and present the initial seeds of a solution.If you have someone who can grasp the key aspects of your business quickly, but is willing to be guided by those within the organisation, then that individual can within a few days per month truly reach into the heart of your numbers and start to develop highly strategic and outcome-driven results. This is not about getting to know every supplier, every customer, every journal, it’s about looking at the business with a skilled eye and a strong delivery focus, separate from office politics or incentives and there only to invest the time you pay for into measurable outcomes for the business owner.
I believe that most scale up and enterprise companies would benefit from is an embedded fractional model, something that can gain deep involvement but without the full-time cost. A source of knowledge and insight where the tap can be switched on and off as needed to save money. This requires a different type of individual who has the ability to integrate in your business for the few days a month, and has the ability to adapt if and when you need it. Compressing the time we spend means you get deep engagement during those few days.
A fractional FD can make a huge difference to growth through impactful reporting, detailed analysis, targeted insights and profit and or cash driven strategy. However, the ripple effect can be very difficult to quantify. It comes from improved external investor confidence, if accurate and robust information is available that pre-empts the questions asked backed up by solid growth projections and interpretation of numbers. Overall, it shows your business as one which has clarity of governance, clearer KPIs and sharper accountability. That becomes a highly attractive package to investors.
The reality is that the quality of insight matters more than the quantity of hours. At the heart of any business is the finance function who will spend those hours ensuring bookkeeping is correct and accurate, meets all compliance and is delivered on time. However, after all those hours to get the figures right, there is probably very little insight delivered unless there is a level of senior experience able to spot gaps in a skilled way. So, for me, fractional does not mean fractionally committed, it means being fully committed to deliver outcomes in a very short period for cost-effective clarity.”
Your thoughts on this topic are most welcome – please comment below!
Or if you want to see how a Fractional FD can support your organisation, email hello@luminafd.co.uk