What is a fractional CFO? A fractional Chief Financial Officer (CFO) is a highly experienced financial executive who provides strategic services at a high level on a part-time basis. Typically, fractional CFO services involve planning, financial modelling, and cash flow management, all of which are offered to help businesses financially succeed with expert leadership.
To find out more about what a fractional CFO does and when your business may require their services, continue reading.
What Does a Fractional CFO Do?
The responsibilities of a fractional CFO widely vary depending on the stage your business is at and the sector you work in. However, the general role remains the same, mainly based on strategic financial planning, cash flow control, and reporting.
Financial Strategy
A fractional CFO develops and oversees the long-term financial strategy to align with your business’s wider goals. They build financial models and forecasts to support better decision-making, benefiting your business both now and in the future.
Cash Flow Management
Cash flow is an important area for fractional CFOs to manage. They closely monitor cash flow to prevent issues and identify patterns before they become problems within your business.
Budgeting and Cost Control
One of the primary roles of a fractional CFO is often leading the annual budgeting process and reviewing performance through ongoing analysis to identify overspending in your business. The process also reveals where your business might not be using resources effectively, which benefits key departments.
Fundraising Support
If your business requires fundraising support, a fractional CFO will help prepare key financial documents required for investment rounds, bank loans, or grant applications. They can help support throughout the process, advising on capital structure and deal terms to ensure your business secures the right type of funding.
Financial Reporting
The role of a fractional CFO doesn’t end when they report numbers back to your business — part of their role is to translate that financial data into clear insights to help you make the right decisions. They also ensure important reports are provided on time and contain accurate information.
Mergers, Acquisitions, and Exit (M&A) Support
Supporting Mergers, Acquisitions, and Exits (M&A) by cleaning up financial reports, optimising metrics, and preparing post-transaction integration once your business has settled after the deal. Fractional CFOs can also ensure your company is exit-ready by strengthening your processes and overall financial health.
Fractional CFO vs Full-Time CFO
Both full-time and fractional CFOs work closely with businesses, either on an ongoing or short-term basis. While the roles often involve similar responsibilities, the main difference is how long support is required.
Fractional CFO | Full-Time CFO |
Recommended for startups, SMEs, or businesses working on short-term projects | Recommended for large or highly complex businesses |
Costs are lower than a full-time executive hire | Costs are higher with a full-time salary |
Focuses on strategy, fundraising, forecasting, and cash flow | Focuses on ongoing leadership across all financials |
Hired for specific projects, events, or funding rounds | Committed to a single business permanently |
Available for certain days or agreed project time | Available full-time as part of your business |
Is a Fractional CFO the Same as an Accountant?
A fractional CFO is not the same as an accountant, although both roles involve similar financial obligations.
Let’s take a look at some of the main duties for each position:
Fractional CFO
- Works on building financial models, forecasts, and budgets
- Looks at future data to shape strategy and plan ahead
- Key activities include supporting fundraising, investor readiness, and exit or acquisition planning
- Provides clear and actionable insight for business decisions
Accountant
- Works on compliance, taxes, and records
- Looks back at old data, such as annual tax filings
- Key activities include payroll, records, and tax returns
- Scorekeeping of business financials
- Preparation of management accounts and financial reports for decision-making
Fractional CFOs and accountants usually work as a team rather than compete with each other. Essentially, accountants record and organise your numbers while fractional CFOs use those numbers to guide your business in the right direction.
When Does a Business Need a Fractional CFO?: Checklist
A business often needs to hire a fractional CFO if it’s experiencing rapid growth, which requires expert financial strategy, high-level forecasting, or cash flow management.
Use our checklist to find out whether your business may require a fractional CFO:
- Preparing for an exit or acquisition
- Seeking funding
- Entering your business into a new market
- Requires strategic guidance, not just compliance and past reports
- Struggling to manage daily cash flow
- Can’t predict how your business’s future will look
- Relying on less accurate financial data
- Revenue is increasing, but profitability is staying the same or declining
- You need to make decisions without financial models or scenario planning
If you think your business may benefit from working with a fractional CFO, our team at LJS Accounting Services can help.
Finding the Right Fractional CFO for Your Business
Finding the right fractional CFO to help your business doesn’t need to be a difficult process. At LJS Accounting Services, we provide fractional CFO support you can trust.
Our team handles high-level financial tasks, such as improving your cash flow and guiding your business to make the best financial decisions for success. We provide expert leadership without you having to worry about making a full-time, in-house hire.
Get in touch with our team to find out how our fractional CFO services can support your business.
FAQs
How much does a fractional CFO cost?
There is no fixed cost for a fractional CFO, as it depends on your business type, sector, and how long you require the services. However, fractional CFOs cost significantly less than full-time CFOs, who gain annual salary, benefits, National Insurance (NI), and pensions.
To find out more accurate costs for our fractional CFO services, please contact us.
Do businesses legally need a fractional CFO?
No, your business doesn’t legally need a fractional CFO, but it is highly recommended if you would like senior-level financial expertise without hiring a full-time executive.
What are the main benefits of hiring a fractional CFO?
The main benefits of hiring a fractional CFO include:
- Access to financial leadership at a lower cost
- Flexible engagement
- Strategic support
- Assistance with cash flow, forecasting, and general financial planning
- Readiness for fundraising, acquisitions, or exits
Can my startup company benefit from a fractional CFO?
Yes, your startup company can benefit from fractional CFO services if you want to build cash flow forecasts, budgets, and financial models, improve reporting, and gain trusted financial guidance without paying someone a full-time salary, which could be a burden to a smaller business.
