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Posted On 2025-05-10
Author Arpita Kulkarni
Decades of observation across industries make one thing clear: no business fails overnight.
It fails in small, invisible ways,
These are not compliance issues. These are internal control issues.
The good news? They're preventable.
The better news? You don't need a full-time CFO to prevent them.
You need clarity, accountability, and practical systems, and this is where a Fractional CFO steps in.
Most people switch off when they hear the term "internal control", assuming it's nothing more than audit terminology or something that only large companies need. That's a myth.
Here's the real, grounded definition:
Internal Controls are the set of rules, practices, systems, and roles within a business that ensure work is done accurately, ethically, and in a manner that protects people, profit, and purpose.
It's everything that makes your business run responsibly, whether it's billing, banking, procurement, stock, approvals, or reporting.
In a growing business, founders wear many hats. The team is lean. Everyone multitasks. That's the beauty and the danger.
Without controls:
In short, internal control gaps quietly leak money, time, and trust.
For example, a service company that appeared profitable on paper but consistently struggled with cash flow. Within a few weeks, it was discovered that invoices were raised, but collections were delayed by 30-45 days simply because no one was accountable for follow-up.
A straightforward fix, and cash flow improved without raising a rupee.
A Fractional CFO is a part-time strategic finance leader, focused on clarity and system building, not just compliance. Think of them as a "Financial COO", someone who doesn't just advise, but implements.
Here's how they typically approach internal control:
A Fractional CFO doesn't create complex SOP manuals that no one reads. Instead, they map how work is actually happening,
And then they simplify, not complicate.
Even if you're a small/Mid Size Entity, it's dangerous if the same person raises invoices, receives cheques, and performs reconciliations.
A Fractional CFO helps you build a Maker-Checker structure:
One person does it. Another verifies. A third approves.
Even if it's merely approval via WhatsApp or email, clarity triumphs over chaos.
Control doesn't require a new ERP; it requires clever use of existing tools. This looks like:
Control doesn't have to be costly. It has to be clever.
Most leaks occur because issues are left unchecked for too long.
A Fractional CFO builds a routine:
And most importantly, they facilitate discussions to ensure key issues are visible and addressed proactively.
"We trust our people."
Great, internal controls are not about mistrust. They protect good people from bad systems.
"We're too small for this."
A small size means a higher risk; you can't afford even a minor setback.
"My CA handles this."
Your CA handles filings. Internal control is a business leadership function, not a tax one.
"We'll fix it when we grow."
By then, the cracks may be too deep or too expensive, to fix easily.
And in most cases, these weren't fraud. There were gaps. Fixable, avoidable gaps.
Consider a fractional CFO as an alternative to a full-time hire when:
A Fractional CFO serves as a CFO, part-time, but with full-time ownership and accountability. They align finance, operations, and people.
And when it comes to internal controls, they:
"You don't implement internal controls because you expect fraud. You do it so that you can sleep well, delegate confidently, and grow with peace of mind."
Whether you're a service business, tech firm, or retail brand, internal controls are your insurance policy.
And with a Fractional CFO, you don't have to figure it out alone.
Put simply, your business deserves better than "we'll look into it later."
Internal controls are systems and practices that ensure business operations are accurate, ethical, and secure. A Fractional CFO helps implement these controls so founders can prevent financial leaks and operate with clarity.
Key components include process mapping, role segregation, technology integration, and regular reporting. A Fractional CFO builds these internal controls to protect assets and streamline operations.
Dividing financial responsibilities ensures no one person handles all steps of a transaction, preventing mistakes and cash leaks. A Fractional CFO implements this practical Maker-Checker system even in small teams to maintain clarity and accountability.
Internal controls create checks and balances that prevent fraud and safeguard resources like cash, inventory, and receivables. A Fractional CFO ensures these controls are practical, monitored, and aligned with your business needs.
Challenges include small teams, perceived complexity, lack of accountability, and resistance to new processes. A Fractional CFO simplifies internal controls and makes them easy to follow, ensuring long-term effectiveness.
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