Fractional CFO Explained: What They Do & What to Expect

Doing so, however, is essential if you’d like to make smart decisions that steer your business toward success. One notable trend we have identified in finance projects at Toptal is the increasing popularity of fractional CFOs. A fractional CFO is an experienced finance professional (usually with at least three previous CFO roles) who brings extensive financial and business management expertise to companies on a part-time or project basis. A fractional Chief Financial Officer (CFO) is a part-time resource with extensive industry experience that is contracted or retained for strategic financial services.

His first venture was CMR Technologies, a FinTech company based in San Francisco serving the investment management consulting space. From CMR, Mr. Lieberman formed Xtiva Financial Systems, a software company specializing in sales compensation solutions for the financial services industry. Mr. Lieberman served as Xtiva’s CEO, building the company to over $10 million in revenues and 100+ clients.

Ask for an estimate of hours per project, task, and monthly responsibility they will handle.

Generally speaking, the knowledge, skills and expertise provided by either one don’t change drastically between the two, but there are some notable distinctions to point out. At smaller organizations, a full-time CFO might be pressed to fill a full 40-hour week with the traditional responsibilities of this job alone. That’s why CFOs in this sort of situation sometimes take on additional tasks outside law firm bookkeeping the usual scope of financial planning, analyses and management. It might mean that the company is paying a CFO-level salary for someone spending a significant portion of their job on less expensive functions, like bookkeeping, accounting, office management or IT. The role of Chief Financial Officer (CFO) is an undeniably integral one in any type of organization—large, medium or small.

• Usually, fractional CFOs are hired by small and medium-sized businesses when they are beginning to grow and get more traction.
• To become a fractional CFO, you’ll need a strong educational background in finance, accounting, or a related field.
• CFOs are tasked with overseeing all the financial activities of a company, which includes everything from financial planning and forecasting to compliance and risk management.
• It’s important to work with an attorney who can help you navigate the legal complexities and tailor the agreement to your specific needs.
• But, a fractional CFO can bring the necessary expertise to make it easier.
• Candidates should have a proven track record of success, strong communication, leadership, and analytical skills.

This is when you get to focus on growing your business to the next level. As the term suggests, a fractional CFO provides companies with the knowledge, skills, and guidance a CFO brings, but on a part-time, rather than full-time basis. Seeing the bigger picture and providing strategic advice to help clients achieve their business goals is a must-have skill. Not to mention making informed decisions that align with the client’s long-term vision. “If you can get a highly experienced CFO on your team for just a day or two a week, they can really move the needle,” he says. When your business is growing quickly but you do not have a budget to hire a full time CFO, a fractional CFO might be what you need.

Fractional CFO Services

The projects a fractional CFO can assist with are multi-disciplined and split between financial and non-financial duties. The role of the CFO is complex and can be unbundled into specific pain points and influence areas. In most cases, the business using the CFO service will not also have an in-house CFO.

While a part-time CFO has a regular office schedule, a fractional CFO may not spend much time at your place of business except as necessary to achieve the goal(s) of their engagement with you. Because they work with a variety of companies, they may have valuable insights from that experience that can benefit your business. You can leverage their expertise according to what you need right now, without paying them to spend time in areas where you do not need help. To learn how fractional CFO services could be the right solution for your company, contact G-Squared Partners. There’s a good chance our part-time CFO services have worked for a number of businesses with needs very much like yours.

Should I Outsource a CFO or Controller Role?

Chief Financial Officers are the most senior finance position of the organization, they oversee the finance department, and often are considered a trusted advisor to the Chief Executive Officer (CEO). You can expect to pay between $175 to $300 an hour for fractional CFOs depending on your location. They are often less expensive than other iterations of CFOs, but companies need the right infrastructure to bring one on board. Remote CFOs are a good fit for organizations willing to implement the technology, who do not need immediate, physical access to a CFO in-house.

However, you also need to multiply the FTE CFO by an expected percentage for payroll taxes (usually 6-8%), contractual bonus (potentially 15-20%), benefits (5-10%), and other benefits or stock incentives (varies). These costs may mean you end up overpaying for a full-time CFO instead of hiring a fractional CFO. Hiring a contracted, fractional CFO puts the burden of taxes and benefits on the contractor themselves. You may also find that you save money with a contracted CFO, as you only pay them for the hours you need.

Of course, developing a solid services agreement isn’t something you should do alone. It’s important to work with an attorney who can help you navigate the legal complexities and tailor the agreement to your specific needs. With their guidance, you can create a document that not only protects your interests but also helps to set the stage for a successful and productive engagement.