Growth of the Fractional and Interim CFO Markets in Scotland

Rutherford Cross recently ran the next in its series of Interim CFO Roundtables. There were 14 FDs / CFOs in attendance from across the country, with a mix of very high calibre Interim and Portfolio / Fractional Finance Directors. There was also a broad range of sectors represented: Financial Services, Charity, Technology, Professional Services, FMCG, Fintech, Energy, SME, Healthcare, Media and Manufacturing.

Below, Director of Interim and Contract services at Rutherford Cross, Derek Lauder, shares some key insights from the event regarding the Fractional and Interim CFO markets in Scotland.

 

Key Reasons for Hiring a Fractional CFO

After initial introductions, the event discussion started with the question – what is driving the growth of the Fractional CFO market in Scotland?

Fractional CFO are typically hired by startups on a contractual basis, and there were were 38,000 new start-up companies in Scotland in 2023: a 12% rise on 2022. The Fractional market has long been in existence, particularly down south, and it appears that Scotland is now catching up.

During the discussion, the following key reasons for making a Fractional CFO hire were highlighted:

  • Cashflow pressures, and a link to Covid loans for some businesses, may be a contributing factor in the need to hire an experienced Finance Director for the first time
  • With the cost of debt being higher, and securing funding from the banks being more difficult, having an experienced and credible Finance Director as part of your business gives the banks and funders confidence which can be influential in the raising of funds
  • Engaging a Fractional CFO / FD can be very cost effective, and they are also a flexible resource, allowing you to hire ahead of the curve for a high growth potential company
  • Business owners and founders often focus more on top line revenue rather than the balance sheet, so having the expertise of a highly experienced and skilled Finance Director – even for only one day per week – can be hugely beneficial
  • Another factor driving the growth of the Fractional market is the desire for flexibility and variety from within a section of experienced CFOs/FDs across the country

 

Strategic vs Hands-on Finance Directors

Discussion then moved onto the differences between strategic and hands-on Finance Director roles. A lot of full-time Interim Finance Director roles typically have a very hands-on aspect to the role. In the Fractional space there will also be many hands-on roles, but there also appears to be a number that are more advisory led/strategic focused, where the Fractional CFO will review and advise on what the business requires and often be central to the recruitment of the longer-term solution for the company. A further benefit of hiring a Fractional FD is that they will bring in a fresh perspective, providing independent advice and challenge to the Board and also to their teams.

 

How to Source Fractional/Interim Finance Opportunities

The group then chatted about using a multi-channel approach when sourcing both Fractional and Interim CFO/FD roles. The successful Fractional and Interim CFOs tend to commit to what they are trying to achieve and have the confidence to back themselves, so a lot of opportunities come through personal networks and recommendations on the back of delivering other assignments. The biggest challenge can often be securing your first Fractional or Interim assignment.

Other sources of opportunity include a range of channels including Scottish Enterprise, LinkedIn, Investment Houses, and interestingly, other Fractional FD’s who are too busy to take on any more work. Recruiters, of course, are very much part of this multi-channel approach for interim opportunities, and we are now seeing some requests for Fractional roles which is encouraging.

 

Closing Comments

The discussion closed with the sharing of insights on how Interim can lead to Fractional, and also how there is still a level of scepticism to overcome from business owners regarding the merits of hiring either an Interim or Fractional CFO. Convincing them that this method may be the best solution can be challenging, and often only once in the role, can they evidence this directly to the team. We often encourage CEOs to have an informal coffee chat with an Interim FD which can help break down any preconceptions and lead to a fruitful engagement.

The level of talent and ability (at this event) and available on the Scottish Interim and Fractional markets is extremely high, and there are huge benefits on offer for companies who take the leap and engage with these CFO/FDs.

 

Rutherford Cross is totally committed to servicing and helping drive the growth of the Interim and Fractional CFO/FD market in Scotland and beyond. If you want to have an informal chat as someone thinking of this as a career route, or as a Business Owner looking to engage a new FD, please get in touch with [email protected] or [email protected].