Fractional CFO: What It Is and How to Hire One

If you’re a startup or growing business that needs experienced financial leadership — but aren’t ready to hire a chief financial officer (CFO) — you might consider working with a fractional CFO. Fractional CFOs offer strategic expertise tailored to your needs, without the financial burden of hiring a full-time executive.

A fractional CFO is a financial expert who provides CFO services to businesses that don’t require — or can’t afford — a full-time CFO. These professionals offer strategic financial guidance on a part-time, contractual or project basis.

Fractional CFOs provide many of the same services as a full-time chief financial officer, including financial management, strategic planning, fundraising and more. These experts may offer different skills based on their experience and background, as well as your business’s specific needs.

Here are some of the functions a fractional CFO might handle:

• Financial strategy and forecasting. Develop a long-term financial plan to achieve your business goals; create financial forecasts to predict future results and guide strategy.

• Budgeting and cash flow management. Create and manage your business budget, implement systems to monitor your cash flow; make sure your cash flow is sufficient to meet current needs, while also planning for future expenses.

• Financial reporting and compliance. Set up or optimize financial reporting; ensure you’re in compliance with accounting standards and regulatory requirements.

• Financial systems improvement. Review existing financial processes and offer suggestions to improve efficiency; recommend ways to upgrade your systems, such as adding new accounting software or introducing automation.

• Performance analysis and risk management. Evaluate current performance through financial metrics and identify potential risks or opportunities; sort through data and provide actionable recommendations for your business.

• Fundraising and investor relations. Build and carry out a fundraising strategy to raise business capital; value your business, create an investor pitch, manage investor discussions and answer due diligence questions.

• Merger and acquisition navigation. Provide financial guidance as you go through the process of a merger or acquisition; prepare financial statements and forecasts, assist with company valuation, restructure potential deals and oversee due diligence.

• Audit preparation. Prepare for an internal or external audit; make sure your financial documents are organized and up to date, as well as serve as a point of contact for auditors during the process.

Here are some instances where hiring a fractional CFO may be worth it for your company:

• You’re growing quickly, but don’t have any financial leadership.

• You need help with strategic financial planning, but can’t afford or aren’t ready for a full-time CFO.

• You’re facing financial challenges and need assistance working through them.

• You’re preparing for fundraising, a merger or acquisition or an initial public offering (IPO).

Hiring a fractional CFO has several advantages for startups and growing businesses, including:

Whereas hiring a full-time CFO likely requires a six-figure salary, benefits and equity compensation, working with a fractional CFO can be a more cost-effective alternative — especially for startups with a tight budget. With a fractional CFO, your business can access the same financial skills that you’d get from a full-time hire, but at a fraction of the cost.

Whether you need assistance raising capital, preparing for tax season or navigating financial challenges, a fractional CFO can provide the specific type and level of support your business needs. These professionals can scale as your company develops or changes — ensuring that your financial strategy evolves with your business.

Fractional CFOs typically have extensive experience in finance — holding a variety of senior positions across different industries and business stages before working in a fractional capacity. Instead of committing to a full-time executive who may not be the right fit, a fractional CFO can provide strategic insight on your schedule — whether you need part-time, contract or project-based.

As an external advisor, fractional CFOs can bring an objective perspective to your business’s finances. Pulling from their outside experience, these professionals may be able to identify financial issues and suggest system improvements without the influence of internal politics or biases.

The cost of a fractional CFO will vary largely based on the individual’s experience, the hours they’ll work, the services you need and your company’s size, among other factors. Here’s a breakdown of common rate structures and what they typically cost:

• Monthly retainer: $3,000 to $10,000.

• Project based (e.g. fundraising, resource planning implementation): $10,000 to $50,000+.

Use these steps to find and hire the right fractional CFO for your business.

Before you start searching for a fractional CFO, it’s important to evaluate your business’s financial needs. Think about where you need the most assistance (e.g. budgeting, forecasting, risk management) and how a fractional CFO will be able to help you in those areas. Based on your needs and budget, you should also consider what type of fractional CFO arrangement will serve you best. If you’re looking for long-term strategy and support, for example, you might prefer a monthly retainer agreement as opposed to an hourly, as-needed arrangement.

There are several places you can find fractional CFO candidates, including:

• Fractional CFO firms. These companies, such as Preferred CFO, Hire CFO and Focus CFO, are dedicated to providing fractional CFO services or connecting businesses with qualified fractional CFO professionals.

• Online marketplaces. These platforms, like Toptal, Paro and Upwork, allow you to browse profiles of experienced financial professionals and connect with those who align with your specific needs. 

• Professional referrals. You can talk to professionals in your network, such as certified public accountants, bookkeepers, business attorneys or other similar advisors, to see if they know any trustworthy candidates for a fractional CFO. 

• Industry and professional associations. Many of these organizations, like the CFO Leadership Council and Financial Executives International (FEI) maintain directories of financial professionals and offer networking opportunities. You might also search for contacts through your local chamber of commerce, business associations or industry-specific organizations.

The right CFO candidate will be able to provide the financial services your business needs. As you compare candidates, you’ll want to look for someone who has:

• A finance or business educational background.

• Relevant professional certifications.

• Extensive financial experience and a track record of success.

• Worked in your industry and with businesses at a similar stage to yours.

• Experience using financial tools and business software (e.g. financial management software, enterprise resource planning (ERP) software, data analytics tools).

• Effective leadership and communication skills.