What is a (Fractional) CFO?

Growing a business can be challenging. 

“More businesses die from indigestion than starvation” - David Packard, co-founder of Hewlett Packard

Growing, in a sustainable way, demands strategic oversight, financial acumen, and the ability to foresee and mitigate risks. This is where a Chief Financial Officer (CFO) comes into play. They become your financial thought-partner and help you keep your business on track.

What is a CFO, and How Do They Differ from Controllers?

A Chief Financial Officer (CFO), by definition, is a senior executive responsible for managing the financial strategy of a company. They are your financial thought-partner. The best Chief Financial Officers take “ownership” of the entire finance function.

While both CFOs and controllers handle financial management, their roles differ significantly. Controllers focus on maintaining accurate financial records, managing accounting functions, and ensuring compliance with financial regulations. In contrast, CFOs provide strategic oversight, financial planning, risk management, and decision-making support to drive the company’s growth and profitability.

Another way to oversimplify - Controllers look backwards (to ensure accuracy); CFOs look forward (and try to plan for the future).

What Do CFOs Typically Do?

CFOs have a broad range of responsibilities that go beyond accounting and financial reporting. Key responsibilities of a CFO include:

• Financial Strategy and Planning

• Managing Financial Risks

• Financial Reporting and Analysis

• Cash Flow Management

• Investor Relations

• Mergers and Acquisitions (M&A)

• Cost Management and Profitability Analysis

• Tax Strategy and Compliance

• Enhancing Financial Systems

In practice, this means building financial models and forecasts, preparing board and investor reporting packages, upgrading your finance systems and tools, and helping you make decisions about hiring, pricing, expansion, and capital structure with numbers, not just gut feel. A good CFO connects what’s happening in the business to what is showing up in the financials and uses that information to help you decide “what next?”.

Signs You Need a CFO and How CFOs Address Those Problems

Here are some signs that you need some help from a (Fractional CFO):

• Persistent Cash Flow Issues

• Lack of a Long-Term Financial Plan

• Preparing for Investment or Financing

• Frequent Internal Conflicts

• Inadequate Financial Metrics and KPIs

• Rapid Growth

These show up differently depending on your stage. For example, a growing services business might constantly be surprised by tax bills and payroll, while a SaaS company may not understand churn, runway, and how growth is impacting cash. A CFO helps you connect all of this into a clear picture and a practical plan.

Typical stages where a Fractional CFO starts to make sense are:

• You’re moving past “survival mode” and want to grow more intentionally.

• You’re approaching or past seven figures in revenue and decisions feel heavier.

• You’re thinking about raising capital, getting a loan, or preparing for a sale.

• You’re spending more and more time worrying about money instead of running the business.

What is a Fractional CFO and How Do They Add Value on a Part-Time Basis?

A Fractional CFO or Outsourced CFO is a part-time financial executive who provides high-level financial management without the full-time cost. They bring the same expertise and strategic insight as a full-time CFO but work on a part-time or project basis. This flexibility allows businesses to access critical financial leadership as needed, making it a cost-effective solution for growing companies.

Some Fractional CFOs work with you on an ongoing basis (for example, a set number of days or hours per month). Others come in for specific projects such as raising capital, implementing better financial systems, preparing for a sale, or building a robust forecasting model. The structure depends on what your business actually needs.

The cost of a Fractional CFO varies based on their experience, the complexity of the work, and the number of hours required. Typically, a Fractional CFO charges between $250 and $500 per hour, with an average hourly rate around $300. Businesses may also negotiate a fixed monthly retainer ranging from $3,000 to $12,000 for a few hours of work per week. This arrangement provides significant cost savings compared to hiring a full-time CFO, whose salary can range from $250,000 to $450,000 annually, plus benefits.

There are a few common engagement models:

• Hourly or day-rate work for shorter-term projects.

• Monthly retainers for ongoing strategic support and regular meetings.

• Project-based fees for well-defined outcomes (for example, “build a three-year forecast” or “prepare us for a financing round”).

  
  

Rather than focusing only on the hourly rate, it’s often more helpful to think in terms of outcomes: what decisions will this help you make, what risks will it help you avoid, and what opportunities will it help you capture?

Fractional CFOs are also known as Outsourced CFO, Virtual CFO, Part-time CFO, and Interim CFO. Each has its nuances, but they generally serve the overall function of a Chief Financial Officer of a business who doesn't need a full-time financial partner.

While titles vary, there is an important difference between a true Fractional CFO and a firm that primarily offers bookkeeping or basic accounting. A Fractional CFO focuses on strategy, forward-looking planning, and higher-level decision support. Bookkeepers and controllers focus more on accurate records and historical reporting. Both are important, but they are not the same thing.

What Does a Fractional CFO Actually Do?

A Fractional CFO can handle many of the same responsibilities as a full-time CFO, but in a more focused and flexible way. Some examples include:

• Building financial forecasts and models so you can see different growth and “what if” scenarios.

• Helping you understand your cash runway, funding needs, and when you may need outside capital.

• Setting up and refining financial reporting, dashboards, and KPIs that actually help you run the business.

• Supporting fundraising by preparing financials, answering investor questions, and helping you understand term sheets.

• Upgrading your financial systems and tools so your numbers are reliable and easier to access.

• Acting as a thought-partner for major decisions such as pricing changes, hiring plans, new products, or expansion.

  
  

In other words, a Fractional CFO helps you move from “reacting to numbers” to using your financials as a tool to drive the business forward.

What Qualifications Do Fractional CFOs Have?

Chief Financial Officers are seasoned financial professionals with extensive experience in senior financial roles. Of course, they understand bookkeeping, accounting and tax, but over and above, some qualifications include:

CFO Experience:

Many have served as full-time Finance Leaders.

Strong Educational Background:

Typically, they hold advanced degrees such as, a CPA, an accounting degree and/or an MBA.

Diverse Industry Experience:

They bring expertise from various industries, enhancing their ability to address diverse business challenges.

Strategic and Analytical Skills:

They are adept at strategic financial planning, risk management, and decision support.

Board Experience:

They have either been on a board of directors or have coordinately directly with one

Systems and Tools Experience: 

They are comfortable implementing and working with modern finance systems (for example, ERP, reporting tools, cash flow tools) so that your financial data is reliable and actionable.

Capital Markets or Transaction Experience

Many have supported fundraising, loans, or M&A, which is valuable if you are planning any major transactions.

You can use these points as you write a Job Description when hiring a CFO.

What Do You Actually Get When You Work With a Fractional CFO?

Beyond “time” and meetings, you should expect tangible outputs from a Fractional CFO engagement, such as:

• A clear financial forecast (short-term and long-term) that reflects how your business really works.

• Regular financial reporting that you can actually read and use (monthly or quarterly).

• A simple set of KPIs that help you see if you’re on track.

• Cash flow projections so you’re not surprised by crunches.

• Help preparing information for banks, investors, or other stakeholders.

• Recommendations on systems, tools, and processes that will help you scale.

  
  

These deliverables become the foundation for better decisions and more confident growth.

How Do I Select the Right Fractional CFO for Me?

Hiring the right Fractional CFO involves evaluating your business’s specific needs and finding a professional whose expertise aligns with those needs. Here are steps to help you hire the right Fractional CFO:

Define Your Needs:

Identify the key financial challenges and goals your business faces. Ask the Fractional CFO if they’ve address these issues before and/or how they would approach it.

Research and Referrals:

Seek recommendations from trusted advisors, such as accountants (CPAs) and attorneys, and research potential candidates.

Interview Candidates:

Assess their experience, qualifications, and approach to financial management. Ensure they understand your industry and business model.

Check References:

Contact previous clients to gauge their satisfaction and the CFO’s impact on their business.

Evaluate Fit:

Ensure the candidate’s working style and values align with your company culture and goals. You foresee the CFO being a thought-partner that you can bounce ideas off.

Some questions you might ask a potential Fractional CFO include:

• “What kinds of businesses and stages do you typically work with?”

• “Can you share examples of situations similar to mine that you’ve helped with?”

• “How do you usually structure engagements and communicate with clients?”

• “What would success look like after 6–12 months of working together?”

Common Red Flags to Watch Out For:

As you evaluate options, here are some warning signs:

• The provider primarily talks about bookkeeping and data entry, but still calls themselves a “Fractional CFO”.

• They cannot clearly explain how they would help with your specific goals (for example, growth, cash flow, fundraising).

• Their experience is limited to compliance and basic accounting, with little exposure to strategy or leadership roles.

• Their pricing is very low compared to typical CFO rates, which may indicate the work is not truly CFO-level.

  
  

A Fractional CFO is someone you will trust with sensitive information and strategic decisions. It’s worth taking your time to find the right fit.

Conclusion

A CFO plays a pivotal role in steering a company’s financial strategy and ensuring its long-term success. Whether full-time or fractional, having a Outsourced CFO on board can provide the expertise and strategic insight needed to navigate the complexities of financial management. If your business is ready to take the next step, consider the benefits of engaging a Chief Financial Officer or a Fractional CFO to help achieve your financial goals.

In recent years, the Fractional CFO model has become more common as businesses look for flexible access to senior financial leadership without taking on a full-time executive. This can be a powerful way to “right-size” your finance function as you grow.

Ready to elevate your business? Reach out today for a consultation and discover how an Outsourced CFO can help you achieve your financial goals.