You know a CFO’s expertise can be valuable, but without a finance background, it may be tough to know whether your company’s circumstances call for their help, whether part-time, full-time, or at all.
In this article, we’ll explore the differences between a fractional CFO vs full time CFO to help you understand their roles, costs, and benefits so you can decide which option is best for your unique circumstances.
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What Does a CFO Do?
The Chief Financial Officer (CFO) is the most senior member of your finance team. They oversee accountants and bookkeepers while providing high-level financial planning and analysis (FP&A). If your bookkeeper is a tactician focused on the day-to-day, the CFO is a general planning for the future.
A CFO could help with any number of things, and we’ll briefly detail those in a moment. But after over a decade in business working with startups and small businesses, we’ve found that the first order of business is often building a three-statement financial model.
Combining the balance sheet, income, and cash flow statements into a single easy-to-understand dashboard is crucial. It lets us visualize company finances, identify data points that inform strategic decisions, and communicate with prospective investors or lenders using their preferred language.
In addition to foundational financial modeling, a CFO’s work may include some or all of the following:
- Creating accounts payable and receivable systems that ensure clients pay on time and paychecks are always accurate.
- Anticipating cash flow needs by forecasting revenue and expenses.
- Improving margins with prudent cost analyses.
- Producing and analyzing key financial reports.
- Helping raise capital by guiding owners through funding rounds, maintaining investor relationships, and liaising with banks.
- Maintaining regulatory and GAAP compliance standards.
- Preparing for tax season with proactive record-keeping systems.
- Developing financial plans that align with core business strengths and goals.
Preparing for tax season with proactive record-keeping systems.
Fractional CFO vs Full Time CFO
A fractional CFO provides the same services, but works part-time. This allows companies to access top-tier expertise without the commitment or cost. Contract-based relationships can be scaled up or down, the scope of work narrowed to your specific needs, and don’t come with “make work” projects that sometimes fill an employee’s non-busy time.
| Aspect | Fractional CFO | Full Time CFO |
|---|---|---|
| Cost | $250 – $500 / hour $5-10k / monthly |
The 2025 median annual compensation is $456,000 |
| Scope of Work | Targeted to specific needs | Comprehensive oversight of all operations |
| Scalability | Easily adjustable | Fixed |
| Availability | Quickly, with minimal onboarding | Requires a lengthy recruitment process |
| Culture | Limited due to part-time presence | Embedded and committed to long-term |
| Ideal Stage | Small to medium | Large |
| Best Use | Navigating a transition or need expertise for one-off projects | Mature companies or those pursuing an IPO or acquisition |
Depending on your growth stage or industry, a CFO might have more or less work to do. Some businesses need part-time help, and others full-time.
For instance, a SaaS company has only a few key metrics to monitor; they’re less likely to need full-time help. On the other hand, an ecommerce company or trade business may be more involved. They’ll have considerable money tied up in inventory and may need more thought around marketing or logistics.
One of indinero’s fractional CFOs, Brian Johnson, shared his thoughts on how big a company should be before hiring fractional or full-time CFOs.
The sweet spot for a fractional CFO is probably Series A or Series B startups. That’s the general point where you’re earning revenue. Clients sometimes come to us before that point asking about CFO help, but in reality, they just need some foundational bookkeeping or accounting systems.
What Can a Fractional CFO Do for Your Business?
The specifics of what a fractional CFO can do depends on your business. At the highest level, they help formalize processes, establish key performance indicators, and navigate critical growth stages.
Beyond the technical details, indinero clients often share that we give them confidence in their business strategy. Most business owners aren’t finance experts, but they do know their products and customers. With some guidance, they get the peace of mind to know their finances are handled and can better focus on where it makes sense for the business.
A common motivation for hiring a CFO is to help with a difficult transition period or crisis. Perhaps a key employee suddenly left, or the company is facing falling cash flow and needs to become profitable to survive.
For instance, Brian once helped a founder who was afraid they couldn’t stay in business. He had bootstrapped his company and, when they came to us, were only breaking even. But after we took a deep look at their variable costs, fixed costs, and gross margins, we discovered that many of his projects weren’t profitable. Armed with that information, they made changes. Over six months, we helped cut his cost structure in half and right-size the business; he’s operating profitably now.
Bootstrapped business owners sometimes grow without keeping a close eye on their numbers. For instance, a meal kit subscription service found quite a bit of success during Covid. But after the pandemic ended, demand declined and they weren’t consistently profiting anymore. A CFO stepped in and helped build systems for tracking churn, cost of goods sold margins, and retention strategies. With those processes in place, they were able to make crucial adjustments and improve profitability considerably.
Quality CFOs communicate complex financial concepts in a clear and actionable manner. By distilling data into its essential pieces, they empower leadership teams to make confident decisions.
When Is a Full Time CFO a Good Idea?
The value of a full-time CFO is most evident in larger, more complex businesses. These companies need a financial leader to manage multiple product lines, diverse markets, and larger teams. They’ll also have multiple stakeholders who expect timely and accurate financial reporting.
For companies with a global presence, demands are even greater. Managing compliance across different legal systems, foreign exchange risks, and overseeing financial teams in multiple offices requires a CFO who can dedicate their full attention to a single company.
When Not to Hire a Fractional CFO
While fractional CFOs are flexible solutions at a fraction of the cost of their full-time counterparts, they aren’t the solution for every business. Avoid hiring one if:
- You’re Pre-Revenue: Startups focusing on product-market fit and go-to-market strategies may not need a CFO. Foundational bookkeeping systems and some tax help from an accountant are plenty in the early stages.
- You Need Full-Time Support: Companies nearing an IPO or acquisition may need the dedicated focus of an in-house CFO. Additionally, multinational businesses or those with particularly complex operations may benefit from full-time help.
- Cultural Alignment Is Critical: A fractional CFO may fall short for businesses with a strong emphasis on integration. Part-time engagements limit the time one spends with a team and may preclude forming deep working relationships.
Is a Fractional CFO Worth It?
Every business has unique needs, and we’re here to help you find the best solution. So why don’t you reach out for a complimentary consultation and find out? We’ve been in business for over a decade and have a reputation to uphold; if you don’t need a CFO, we’ll tell you.
Contact us today and discover how strategic financial guidance can transform your business.
