Strategic Financial Leadership Without the Full-Time Cost: The Benefits of Fractional CFO Services
An interview with Eric W. Neumann, Fractional CFO at New Life CFO Services
Q: What services does New Life CFO Services provide, and who are your typical clients?
We provide accounting and CFO services. Our clients are companies that don’t need full-time help but want expertise for a lower annual cost. Our value proposition is leadership and strategic thinking at a price commensurate with company size.
We solve math problems that require experience and expertise that you can’t get without bringing in full-time people at market rates, which are too high for a business with less than $200M of revenue.
Q: Could you share a bit about your professional journey? Why did you decide to transition into the role of a Fractional CFO?
It’s been a road that was exciting in the early years to be a bit more staid in the years since. However, there have been many adventures or skin-on-the-wall stories that make my journey less than boring.
Many people perceive accounting and the professions in that discipline as boring jobs. I disagree. It can be as interesting as you make it. The key is to become an expert in your skills and push the boundaries of how to serve others (e.g., the stakeholders of your company/client).
You will find it interesting, and the opportunities will be interesting, too, but you have to push to be the best you can be and apply your specific expertise where possible.
I got this role as a natural extension of my career path. It is something that, in my graying years, makes sense for me. I can do what I do best: serve others with my knowledge.
Q: Do you think fractional roles are a good alternative to traditional employment? What types of professionals are well-suited for fractional roles?
Yes, it provides a low-cost solution to getting better information and useful insight into a business's tactics and strategy. Smaller to medium-sized companies usually don’t need a full-time CFO. The additional sounding board, with mastery of the metrics or KPIs, will simply lead to better decision-making.
The fractional role is best suited to people with diverse experiences across many years.
Having seen numerous scenarios and outcomes across industries and people allows for the development of expertise that is transportable to nearly any type of small- to medium-sized business in the $20M to $200M range.
At the lower end, it is a role that occupies a few hours a month. At the upper end, it could be approaching full-time hours, which means that the company needs to pivot to a full-time executive. But every situation is different, so this is just a range for consideration of a fractional role.
Q: How has AI impacted the accounting profession? Have you noticed significant changes? How do you see AI shaping the future of the field?
I haven’t seen it yet. It may be useful in bookkeeping, e.g., posting invoices to the proper accounts for daily, weekly, or monthly routine activities. However, it still takes an accountant to know how to inform the AI.
All I have seen or heard of is simply the correlation of a limited set of rules to a defined data set to lay out the output for approval by an accountant. This will evolve, of course, but AI is not as useful as experience and the depth the human mind can comprehend. There is no advantage to humans in pushing for AI in the field of business - it will eliminate far more than it can create.
Opportunity is found, which is universal, in locating the disconnect in human activities that only intelligence can resolve. That is how fortunes are made. Every rags-to-riches story that isn’t about inheritance or lotto is the same theme.
Jobs come from solving other people’s (business’s) problems. If robots do it, the robot companies succeed wildly while humans find nothing productive to do - that means death and an undignified existence in poverty.
I don’t buy into that Jetsons-Utopia silliness. People are better at solving problems than machines. Machines are tools to be under the yoke of humans, and the AI progenitors know this—they will control AI and, therefore, have power over millions of people's lives, the pursuit of happiness, freedom of speech, and freedom of action if we let them.
Why would we abdicate the power we humans have to a limited group of people? Even with good intentions, the power that AI can potentially wield will eventually be too intoxicating not to evolve into nefarious intentions. History shows this pattern over and over again.
This is why we must learn history in greater detail than what is taught in schools and colleges. “Power tends to corrupt; absolute power corrupts absolutely.” (Lord Acton) Therefore, power spread out to the individual and kept there in perpetuity is always the best answer for human flourishing.
There is no upside to consolidating power to the few, whether it's politicians, corporate CEOs, or AI Mavericks.
Q: With fewer students pursuing accounting degrees, do you think accounting is still a strong career option for young people? What advice would you give someone considering a major in accounting versus other business degrees?
Yes, Accounting is the language of business. It is universally needed. Fewer students means higher salaries for those who pursue accounting.
I frequently see a lack of understanding in the language of business. Much of that is due to inadequate accounting knowledge. Accounting is a building block or base for what is more important to find success in a business.
You need to know where the numbers play out, and then you can focus on tactics and strategy. The numbers, organized through accounting rules via financial statements, analysis, and forecast, keep the score on progress.
Accounting knowledge is essential. AI may take over bookkeeping, but the accounting rules and application of understanding to find answers to the best tactics and strategies still require human understanding.
