A fractional CFO is a part-time Chief Financial Officer typically hired by startups and small businesses on a contractual basis to provide financial leadership and expertise. Unlike a full-time CFO who works exclusively for one company, a fractional CFO splits their time across multiple clients.
Fractional CFOs are experienced finance professionals who work on an outsourced, as-needed basis to handle the key financial and strategic needs of an organization. They are brought in for 10-30 hours per week to focus on high-level financial tasks like cash flow management, financial modeling, fundraising support, and financial strategy.
The fractional model allows small businesses to access CFO-level skills without the expense of hiring a full-time resource. Fractional CFOs offer the strategic guidance of a CFO to multiple companies at once by working with each client on a part-time, flexible basis. This provides financial oversight and leadership more affordably than a dedicated in-house CFO.
A fractional CFO takes on many of the same responsibilities as a full-time CFO, but on a part-time, contracted basis across multiple companies. Their core roles include:
In summary, fractional CFOs aim to maximize financial performance, mitigate risks, and support data-driven decision making for leadership teams and investors. Their financial expertise is broad and helps drive strategic growth.
Hiring a fractional CFO provides numerous benefits for companies of all sizes. Some of the key advantages include:
Cost Savings - Engaging a fractional CFO costs significantly less than hiring a full-time CFO. You only pay for the time you need, avoiding employee costs like benefits, payroll taxes, etc. This makes fractional CFOs affordable even for early stage startups.
Strategic Guidance - A fractional CFO brings financial strategy expertise to guide major business decisions. They can provide an objective outside perspective to identify growth opportunities and avoid pitfalls. This high-level guidance is invaluable for scaling companies.
Flexible Expert Support - Fractional CFOs work on-demand based on your current needs. You can flex their hours up or down as your business needs change. This provides access to financial expertise in a flexible, scalable way.
Fundraising Support - An experienced fractional CFO lends credibility for capital raising. Their involvement, financial models, and investor materials can increase the odds of securing funding and improve valuation.
Businesses may benefit from hiring a fractional CFO during certain situations or phases of growth. Here are some of the most common scenarios when engaging a fractional CFO can provide strategic value:
The flexible, on-demand nature of fractional CFOs allows businesses to benefit from their financial acumen during critical junctures or to fill expertise gaps, without the fixed cost of a full-time CFO.
A fractional CFO differs from a full-time CFO in several key ways:
The part-time, flexible nature of fractional CFOs allows small businesses to access financial leadership without the expense of hiring a dedicated full-time resource. The fractional model provides great value and savings.