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Every business operates on a simple model – invest, create, earn. Organisations invest capital and resources to create value-added products or provide services and receive payments in return. At its heart, every business is a simple cash-in, cash-out cycle. If any part of this cycle falters, the entire operation risks destabilisation.
The CFO, or the Chief Financial Officer, can then be thought of as the beating heart of every business, maintaining the vital flow of finances through the organisation's operations so it can grow, evolve and achieve its goals.
Startups and scaling businesses, especially in their early phases, usually operate without full-time CFOs, as they may not generate sufficient revenue to justify the cost of an additional C-suite member. However, during periods of rapid scaling, fundraising rounds, or potential mergers and acquisitions, CFO expertise becomes essential.
Many growing companies remain hesitant to take on the significant cost of a C-suite colleague, particularly when the need might be temporary. CFOs bring highly valuable skills and command commensurate compensation.
Hiring a fractional CFO represents an innovative solution to this challenge that many companies face.
What is a fractional CFO?
As the name suggests, a fractional CFO is a financial expert who provides CFO-level services to companies on a part-time, contractual basis. Fractional CFOs typically have extensive previous experience at the CFO level but work with multiple organisations simultaneously rather than dedicating themselves to a single company.
Unlike full-time CFOs who are employees with all associated benefits and responsibilities, fractional CFOs operate as independent consultants or through specialised firms, offering flexible engagement models that scale with a company's needs.
What does a fractional CFO do for growing businesses?
A fractional CFO handles a range of critical functions for growing companies, including:
1. Finance oversight and management
This is the CFO's bread-and-butter role. As startups expand, their financial processes become too complex for the founders to manage with the help of an accountant alone. They need someone capable of seeing the bigger picture through the nuts and bolts of financial reporting and accounting.
A fractional CFO can navigate the web of numbers and statistics, ensuring proper financial controls, reporting accuracy, and compliance requirements are met without the overhead of a full-time executive.
2. Strategy optimisation
Businesses run on money, which means that CFOs, as the financial gatekeepers, are essential to strategy formulation and optimisation. A fractional CFO can weigh in on the financial viability of business strategies by bringing an objective, numbers-based perspective.
Your fractional CFO can test your strategy and determine if it's financially viable, and if not, recommend optimisations to align with business goals and financial reality.
3. Systems implementation
Growth requires more sophisticated financial systems and processes. This necessitates the guidance of someone who has implemented multiple systems across different scenarios and can anticipate potential issues.
A fractional CFO brings this experience to ensure the smooth implementation of new financial systems without disrupting existing workflows, helping companies scale their operations efficiently.
4. Capital raising
Business expansion typically requires fresh capital. From company valuation to investor discussions and managing post-deal due diligence, a fractional CFO becomes indispensable to the fundraising process.
Their experience with multiple funding rounds across different companies provides valuable insights that first-time founders typically lack.
5. Audit and transaction navigation
As businesses grow, internal audits become necessary to assess financial health. In many cases, audits may also be legally required. These processes involve detailed examination of not just cash flow but also procurement systems, taxation, and financial transactions.
Due to the complex nature of audits, first-time entrepreneurs often lack the experience to navigate them successfully. A fractional CFO brings the expertise needed to manage these critical processes.
Types of fractional CFOs
According to Joe Newbold, fractional CFOs typically fall into two distinct categories.
The hard-hitting CFO
"There's a type where clients need immediate outcomes or a project-based approach. These CFOs fix stuff fast, get it done and deliver. On time, on budget, no questions," Newbold explains.
This type of CFO is execution-focused — driving results, solving problems, and delivering clearly defined outputs. They excel at system implementations, financial modelling, and process improvements with speed and efficiency.
The hand-holding CFO
"There are some founders who want the security of stability and longevity. All CFOs provide these factors, but some give a softer approach that gives clients confidence and a calmer mindset," notes Newbold.
This type provides strategic guidance plus reassurance to clients. Their value comes from being a steady presence, giving founders confidence beyond just deliverables. They've typically accumulated significant industry experience and offer a more measured approach.
Understanding which type best suits your business needs is crucial when hiring a fractional CFO. Some companies require a hands-on finance leader who can execute quickly, while others benefit more from strategic guidance and stability.
It's worth noting that businesses may require both types at different stages in their evolution or simultaneously if there are distinct requirements across the organisation.
Key advantages of hiring a fractional CFO
1. Cost-effectiveness
Unlike traditional businesses, startups need to remain conscious about paying only for what they absolutely cannot function without. Everything else is either handled in-house or postponed.
Fractional CFOs represent the next evolution in this approach. Think of a fractional CFO as financial leadership on-demand. Your business benefits from the expertise of an experienced CFO when needed most, without the significant overhead of another C-suite salary, benefits, and equity compensation.
2. Diverse experience
A fractional CFO isn't simply a freelance finance professional. They're typically seasoned executives who have spent years leading organisations through various business challenges across multiple companies and industries.
Moreover, since fractional CFOs usually work with multiple companies simultaneously, they bring diverse experience from tackling a wide variety of challenges across different domains and business models.
As Newbold emphasises, "Fractional CFOs offer professional experience that is valuable not only for its depth but also for its breadth."
3. Flexibility and reduced commitment
A major challenge that can hinder growing companies is becoming stuck with leaders whose vision, ethics, or business philosophy conflicts with the founders'. Constant friction at the top can sap energy and disrupt focus.
With a qualified fractional CFO, companies can adjust the relationship more easily if it isn't working out, avoiding the potentially bitter and financially damaging separation that might occur with a full-time executive.
4. Focused expertise
A fractional CFO, like an external consultant, helps your company address specific needs. This means you can focus better on immediate priorities — whether that's preparing for an audit, navigating a merger or acquisition, or raising capital.
How to hire the right fractional CFO
Although a fractional CFO operates differently from a typical freelancer or consultant, the hiring approach shares similarities:
Look for CFOs who have worked in your industry niche and with companies at a similar stage to yours.
Find someone who demonstrates genuine enthusiasm for your mission. As Newbold advises, "Startups are built by people who are passionate about their work, and this should extend to your fractional CFO."
Consider partnering with specialised recruitment firms that understand the fractional executive landscape.
Evaluate their specific expertise areas — whether it's financial modelling, fundraising, systems implementation or operational efficiency to ensure alignment with your needs.
Check references thoroughly and look for a track record of delivering measurable results for similar businesses.
The challenges of fractional CFO work
While the benefits for companies are clear, professionals considering the transition to fractional work should be aware of the challenges, as Newbold candidly shares:
The always-on mentality
"If you think fractional CFO work is a way to get more work-life balance, you're in for a surprise. Startups don't sleep. If a founder is dealing with a cash flow crisis on a Wednesday, but you're scheduled to work for them on Thursday, do you ignore them? If you're serious about this career, you need to be always-on."
Unlike traditional employment, fractional CFOs often find themselves addressing urgent issues outside scheduled hours, sometimes switching between multiple clients in a single day.
Finding the right clients
Getting started as a fractional CFO requires selective client acquisition:
"If you don't believe in the founder or the product, you're not going to be engaged. And if you take on a low-paying client, you'll dislike it when you have to prioritise them over others," Newbold advises.
He recommends maintaining pricing parity across clients to ensure fair value for services and avoid resentment.
Financial stability
Fractional work comes with inherent instability — clients can terminate engagements with minimal notice. Newbold recommends having financial runway before transitioning:
"You need to be comfortable not knowing where your next paycheck is coming from. Have savings, plan your cash flow, and don't assume you'll replace your full-time income overnight. It can sometimes take 2 years to build a reputation and solid pipeline of leads."
The future of fractional CFOs
With the rise of remote work and lean operational models, the demand for fractional finance leadership continues to grow. Companies benefit from the flexibility and expertise of experienced CFOs without the long-term commitment of a full-time hire.
As businesses increasingly prioritise financial discipline while maintaining operational agility, the fractional CFO model offers a compelling solution that bridges the gap between basic accounting support and executive-level financial leadership.
For companies looking to scale efficiently, a fractional CFO represents not just a cost-saving measure but a strategic advantage — bringing seasoned financial leadership precisely when and where it's needed most.
Final thoughts
A fractional CFO brings a wealth of experience across different domains without burdening a growing business with unsustainable costs. For many companies, it represents the only viable way to access best-in-class financial expertise without premium compensation packages.
Like all effective business models, it's an arrangement that benefits both parties. The company gains sophisticated financial leadership scaled to their needs, while CFOs can build diverse experience across multiple organisations.
Of course, once businesses scale beyond a certain size, they may determine that transitioning to a full-time CFO makes better business sense. For those still establishing themselves or navigating specific growth phases, however, the fractional CFO model offers an ideal solution that combines expertise, flexibility, and cost-effectiveness.
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