What is a Fractional CFO?
A fractional CFO is a financial professional or service provider who works part-time, on a retainer, or a per-project basis. The role is also called an interim CFO, temp CFO, or outsourced CFO service. The main difference between a fractional CFO and a full-time CFO (as the name implies) is that a fractional CFO doesn’t work for a single company full-time and may have several clients they work with on a part-time basis.
You might ask yourself, why doesn’t a business just hire an accountant? The role of a fractional CFO and the role of an accountant are significantly different from each other. An accountant is focused on taxes and tax strategies, while a fractional CFO can also advise on other financial areas such as payroll, cash flow, and retirement planning.
Small businesses not yet large enough for a full-time CEO can significantly benefit from working with a fractional CFO. One main reason is that hiring a fractional CFO is much more cost-efficient than hiring a full-time CFO, but the business gains the same benefits.
Cost of a Fractional CFO versus a Full-Time CFO
According to Glassdoor, a full-time CFO’s annual salary ranges from $153,000 to $279,000. On the other hand, hiring a part-time, fractional CFO ranges from $125 to $400 an hour, and many businesses work 10 to 40 hours a week with them. Many fractional CFO services offer a flat monthly fee or package that translates to significant cost savings for the business.
Emerald Expectations Accounting is a fractional CFO providing outsourced CFO services to small businesses. We specialize in working with small businesses, helping them focus on their long-term goals and increasing profits, while we take care of Finance, HR, Payroll, and Bookkeeping needs.
Table of contents:
- What is a Fractional CFO
- Fractional CFO Services and Rates
- Comparing Full-Time CFO vs. Part-Time CFO
- Hourly vs. Monthly Fractional CFO Consulting Rates (CFO Pricing)
- How Fractional CFO Saves Your Business Money
Fractional CFO Services and Rates
A fractional CFO undertakes various tasks for their clients. Remember that not all businesses require or want the same level of service from their outsourced CFO. Some may want a consultant type of CFO, while others may need closer financial guidance, even during their daily activities.
Fortunately, a fractional CFO can offer different types and levels of services, depending on what you and your business need.
Below are several services typically offered by an outsourced CFO and how much the service would commonly cost if you were to hire a separate consultant per service:
- Financial strategy and business budgeting, such as creating a financial roadmap that will help you meet your business goals
Typical range: $40 to $48 an hour
- Tax-related services, such as tax strategy, tax compliance, tax planning, and assistance with filing taxes
Typical range: $100 to $191 an hour
- Payroll management
Typical range: $49 to $56 an hour
- Preparing financial projections and helping you understand them through financial reporting
Typical range: $34 to $48 an hour
- Bookkeeping and Accounting services
Typical range: $35 to $65 an hour
- Cash Flow Management, helping you create and meet your profit and cash flow targets
Typical range: $34 to $48 an hour
- Retirement planning
Typical range: $25 to $45 an hour
Comparing Full-Time CFO vs. Part-Time CFO Costs
As mentioned above, a full-time CFO’s salary ranges from $153,000 to $279,000. This figure means an additional monthly expense (at least) of $12,740 for a business. This is a large sum for a small business that may not even require a CFO to come in daily.
Hiring a fractional CFO typically costs anywhere from a low of $125 to a high of $400 an hour. Many businesses only require the services of an interim CFO for about two hours a day per week. If this sounds like you, there’s certainly no need to hire a full-time CFO.
Also, remember that a fractional CFO is a contractor, not a full-time employee, which means you don’t have to provide benefits to them, which also helps keep your monthly expenses low. Working with a fractional CFO offers a business more flexibility than hiring a full-time CFO. As your business needs change, you can adjust the hours you work with your part-time CFO or modify your monthly service package.
If your business is just starting or (like most businesses) you simply want to keep your operating expenses as low as possible, hiring a fractional CFO is one way to do this.
Hourly vs. Monthly Fractional CFO Consulting Rates (CFO Pricing)
Some fractional CFOs provide their services on a monthly, quarterly, or annual basis. Others bill hourly. The great thing about working with a fractional CFO is that you can choose which type of service fits your needs best. Generally, there are no fractional CFO tasks that need to be done specifically on an hourly basis. Part-time CFOs often customize their packages and recommend how many hours are required for your needs.
If your business’ immediate needs change, such as a major investment coming in, you can always consult with your fractional CFO if you can upgrade your contract for a few months to handle this change. Then you can go back to your original package after your requirements go back to normal.
Emerald Expectations offers three comprehensive and easy-to-understand packages to their clients. All of them include having access to Emerald Expectations’ extensive financial expertise. If you only have a specific need for a short amount of time, such as help onboarding a new bookkeeper, get in touch with us and let’s see how best we can help.
How a Fractional CFO Saves Your Business Money
Many people see hiring a fractional CFO as an added expense or cost. However, having a CFO you can trust is more of an investment, not an expense. In a sense, a fractional CFO “pays for itself.” The point of hiring one is to grow and improve our business finances and the future of the business, not simply go through the motions of accounting for tax purposes or business requirements. It will cost you more money in the long run if you continue to run your business with having a skilled CFO on board.
Of course, having the right fractional CFO can also help a business increase revenue. Thanks to the depth of knowledge a fractional CFO brings, they can help guide a company through challenging business planning and create projections that can increase revenues. Expert advice gives you a better idea of your business’s financial health, which can also help increase revenues and profits.
Working with Emerald Expectations can also reduce business expenses. Aside from the initial savings from hiring a part-time CFO instead of a full-time one, we can help you go through your finances and determine how to lower your business expenses.
For example, you may not be aware of the tax deductions you qualify for or didn’t realize you were spending a large amount on unnecessary office supplies. Fortunately, we are experts at what we do! Leave it to us, and we’ll help you find other ways to lower your expenses.
Take it from one of Emerald Expectations’ clients – “As a busy entrepreneur, I specialize in several things…Accounting is NOT one of them. She’s helped me save money in many areas and saved me from hours of hours of bookkeeping tasks that I frankly would normally put off until the taxman comes knocking!”
Remember that your time means money, too. Working on bookkeeping tasks outside your expertise means time away from doing your actual work as an entrepreneur. Emerald Expectations helps you take back that time and spend it on more business-centric and revenue-generating activities. So, whatever amount a fractional CFO will cost you in 2023, we guarantee it’s worth it!
Emerald Expectations offers HR, Bookkeeper, Payroll and CFO services in easy monthly packagers. We have several packages to choose from and you can select the package that best suits your needs and your budget. Send us a message today and learn more about our services.