Fractional CFO vs. Full-Time CFO: Which Is Right for Your Business?
Compare fractional and full-time CFOs: costs, benefits, when to hire each. Make the right decision for your business stage and budget.
ByJumpstart Partners, CPA, QuickBooks ProAdvisor
··9 min read
Key Takeaway
Fractional CFOs cost $5,000-$15,000/month for part-time strategic financial leadership, while full-time CFOs require $200,000-$500,000+ annually. Choose fractional for growing businesses needing executive-level strategy without full-time commitment. Transition to full-time when you need 40+ hours/week of dedicated financial leadership or are preparing for major capital events.
The CFO Gap Problem
Can your business afford $200,000+ per year for a full-time Chief Financial Officer? Most growing businesses can't—yet they desperately need the strategic financial leadership a CFO provides.
You're caught in the middle: too large to operate without sophisticated financial planning, but too small to justify a full-time executive salary. Your controller handles the books, but strategic decisions about cash flow, growth financing, and financial systems fall into a gap.
This is where the fractional CFO vs. full-time CFO decision becomes critical. Understanding the differences, costs, and ideal use cases for each model can save your business hundreds of thousands of dollars while ensuring you have the right financial leadership at the right time.
What Is a Fractional CFO?
Fractional CFO
A senior financial executive who provides part-time CFO-level services to multiple clients. Also called a part-time CFO, outsourced CFO, or virtual CFO, they deliver strategic financial leadership on a flexible engagement basis—typically 10-30 hours per month.
What Fractional CFOs Do
Fractional CFOs provide the same strategic services as full-time CFOs, just on a part-time basis:
Financial strategy and planning - Multi-year strategic plans, scenario modeling, capital allocation
Cash flow management and forecasting - 13-week cash flow forecasts, working capital optimization
Financial reporting and KPI development - Executive dashboards, board reporting packages, key performance metrics
Fundraising and investor relations - Pitch deck financial sections, due diligence support, investor communications
M&A support - Buy-side and sell-side transaction support, financial due diligence
Process improvement - Financial systems selection, workflow optimization, team development
The key difference: they deliver these services in concentrated bursts rather than being available 40+ hours per week.
How Fractional CFO Engagements Work
Most fractional CFO relationships follow one of three models:
Retainer-based - Fixed monthly fee for a set number of hours (most common)
Project-based - Defined scope and timeline for specific initiatives (fundraising, system implementation)
Hybrid - Base retainer plus additional hours for special projects
Typical engagement structures:
10-15 hours/month - $5,000-$8,000 for basic strategic oversight
20-30 hours/month - $10,000-$15,000 for active financial leadership
Project work - $15,000-$50,000+ for major initiatives (fundraising, M&A, system implementations)
Who Provides Fractional CFO Services
Fractional CFOs typically come from three sources:
Independent consultants - Former F500 CFOs, Big 4 alumni, experienced financial executives
CFO service firms - Specialized firms providing vetted fractional executives
What Is a Full-Time CFO?
A full-time CFO is a permanent executive employee dedicated exclusively to your business. They're typically the third or fourth executive hire (after CEO, COO, potentially CTO) and become part of your core leadership team.
What Full-Time CFOs Do
Everything a fractional CFO does, plus:
Daily operational oversight - Real-time cash monitoring, daily decision support
Team leadership - Building and managing accounting, FP&A, and treasury teams
Deep institutional knowledge - Understanding every nuance of your business model, systems, and history
Strategic partnership - Full-time thought partner to CEO on all major decisions
Crisis management - Immediate availability for urgent financial issues
The key advantage: depth of involvement and institutional knowledge that comes from exclusive focus.
When Companies Typically Hire Full-Time CFOs
Most businesses hire their first full-time CFO at one of these inflection points:
$20M-$50M in revenue - Complexity requires dedicated financial leadership
Pre-IPO or major fundraise - 6-12 months before going public or raising $20M+ rounds
Post-acquisition integration - Managing multiple entities and complex consolidations
High-growth scaling - Doubling revenue year-over-year with complex unit economics
Regulatory requirements - SOX compliance, public company reporting, industry-specific regulations
Total Cost of a Full-Time CFO
The true cost extends far beyond base salary:
Cost Component
Range
Base salary
$150,000 - $350,000
Bonus (20-40% of base)
$30,000 - $140,000
Equity compensation
0.5% - 2.5% (valued at $50,000-$500,000+ over time)
Benefits (30% of base)
$45,000 - $105,000
Recruiting fees (20-30% of base)
$30,000 - $105,000
Onboarding and training
$10,000 - $25,000
Total first-year cost
$315,000 - $825,000
Ongoing annual cost
$225,000 - $595,000
These numbers assume a mid-market company. Add $100,000-$300,000 for major metros (SF, NYC) or pre-IPO companies.
Side-by-Side Comparison
Cost Comparison
Factor
Fractional CFO
Full-Time CFO
Monthly cost
$5,000 - $15,000
$19,000 - $50,000+
Annual cost
$60,000 - $180,000
$225,000 - $600,000+
First-year cost
$60,000 - $180,000
$315,000 - $825,000
Equity dilution
None
0.5% - 2.5%
Benefits/taxes
None (contractor)
$45,000 - $105,000/year
Recruiting fees
None
$30,000 - $105,000
Contract flexibility
30-90 days notice
Severance, hiring challenges
Cost savings: Fractional CFOs cost 30-50% of a full-time equivalent while delivering similar strategic value for businesses that don't need 40+ hours/week.
Fractional CFO Advantages
Why Choose Fractional
Immediate expertise - No 3-6 month search process, start within days
Cost-effective - Pay only for hours needed, no benefits or equity
Broad experience - Exposure to dozens of companies across industries
Scalable engagement - Increase or decrease hours as needs change
No long-term commitment - 30-90 day termination clauses typical
Fresh perspective - Objective outsider view on financial strategy
Proven processes - Bring best practices from multiple companies
Fractional CFO Limitations
Fractional Constraints
Limited availability - 10-30 hours/month vs. 40+ hours/week
Shared attention - Working with multiple clients simultaneously
Less institutional knowledge - Takes time to understand your unique business
Not a daily presence - May miss nuances that emerge from daily operations
Limited team leadership - Can't directly manage your accounting staff full-time
Investor perception - Some VCs prefer full-time CFOs for major raises
Full-Time CFO Advantages
Why Choose Full-Time
Exclusive focus - 100% dedicated to your business success
Deep knowledge - Understands every detail of your financial operations
Team leadership - Builds and manages entire finance organization
Daily availability - Real-time support for urgent decisions
Long-term strategic partner - Multi-year relationship building
Investor confidence - Full-time CFO signals maturity to investors
Cultural integration - Part of executive team culture and dynamics
Full-Time CFO Limitations
Full-Time Constraints
High fixed cost - $225K-$600K+ annual commitment regardless of need
Recruiting challenge - 3-6 month search for quality candidates
Narrow experience - May only know one industry or business model
Potential mismatch - Hard to assess fit until 6-12 months in
Separation costs - Severance, replacement recruiting if wrong fit
Opportunity cost - Could that $300K+ create more value elsewhere?
When to Choose a Fractional CFO
Ideal Scenarios for Fractional CFO Services
1. Growing businesses ($2M-$25M revenue)
You've outgrown your bookkeeper or controller, but don't yet need daily CFO oversight. You need strategic financial planning, cash flow forecasting, and KPI development—but not 40 hours per week.
2. Preparing for a major milestone
You're raising your Series A in 6 months, exploring acquisition targets, or preparing for a potential sale. You need expert guidance through the process but don't want to commit to a permanent hire before the transaction completes.
3. Recovering from financial chaos
Your financial systems are broken, reporting is unreliable, and you need experienced leadership to fix it fast. A fractional CFO can diagnose issues, implement solutions, and train your team—then transition to ongoing oversight.
4. Bridging a gap
Your CFO departed unexpectedly, or you need coverage during a search for a permanent hire. A fractional CFO maintains continuity while you find the right long-term fit.
5. Specialized project needs
You need expert help with a specific initiative: implementing a new ERP system, preparing for a financial audit, or building a three-year strategic plan. Project-based fractional CFO support delivers expertise without ongoing overhead.
Pro Tip
Project-based fractional CFO work is often the best entry point. Start with a defined project (e.g., "Build a 13-week cash flow forecasting model and implement quarterly KPI reporting"). If the relationship works well, transition to ongoing retainer-based support.
Real-World Example
SaaS company, $8M ARR, 45 employees:
Problem: CEO was making strategic decisions based on lagging financial data. Controller was overwhelmed with month-end close and couldn't provide forward-looking analysis.
Implemented rolling 13-week cash flow forecast (updated weekly)
Built executive dashboard with key SaaS metrics (CAC, LTV, churn, runway)
Led annual budgeting and quarterly forecast updates
Provided strategic guidance on pricing model changes
Supported Series A fundraising (financial model, due diligence)
Result: $144,000 annual investment delivered CFO-level strategic leadership. Company successfully raised $15M Series A 18 months later, then transitioned to full-time CFO at $25M ARR.
Cost avoided: Hiring full-time CFO 18 months early would have cost $450,000-$600,000 with limited value during slower-growth period.
When to Choose a Full-Time CFO
Ideal Scenarios for Full-Time CFO
1. You need 40+ hours per week of financial leadership
Important
The 40-hour threshold is the clearest indicator. If you're consistently needing more than 30-35 hours per month of CFO-level attention, the math starts favoring full-time. At 40+ hours/month, fractional costs approach full-time costs without the benefits of dedicated focus.
Calculate your true need:
Strategic planning and board reporting: 8-10 hours/month
Fundraising and investor relations: 10-15 hours/month
Financial operations oversight: 15-20 hours/month
Team leadership and development: 10-15 hours/month
Daily decision support: 20+ hours/month
Total: 60-80+ hours/month = Full-time hire makes sense
2. Preparing for IPO or major liquidity event (12+ months out)
The complexity and regulatory requirements of going public or executing a major sale require dedicated, full-time financial leadership. Hire your CFO 12-18 months before the target event.
3. Managing complex, multi-entity operations
If you're operating in multiple countries, managing multiple subsidiaries, or dealing with complex consolidations, you need a full-time CFO to navigate the operational complexity.
4. Building a finance organization
When you need to hire FP&A analysts, treasury specialists, or expand your accounting team, a full-time CFO provides the leadership and institutional knowledge to build effectively.
5. Investor or board requirement
Some institutional investors and boards require full-time CFOs as a condition of investment or governance requirements.
The Transition Path from Fractional to Full-Time
Many businesses follow this evolution:
Stage 1: Controller-led ($0-$3M) → Your controller or outsourced accounting firm handles day-to-day financials
Stage 3: Fractional CFO expanded ($10M-$25M) → 25-35 hours/month, more involved in operations
Stage 4: Full-time CFO ($20M-$50M+) → Dedicated executive, building finance team
This staged approach allows you to:
Test working with CFO-level expertise before committing long-term
Potentially convert your fractional CFO to full-time (if they're interested and a good fit)
Use the fractional CFO to help recruit and onboard their full-time replacement
Avoid premature hiring that strains cash flow
How to Make the Decision
Work through these five questions to determine which model fits your business:
1. How many hours per month do you genuinely need CFO-level financial leadership?
Under 30 hours/month: Fractional. 30-40 hours/month: Could go either way. 40+ hours/month: Full-time makes more financial sense.
2. What's your current revenue and growth trajectory?
Under $10M with <50% growth: Fractional. $10M-$25M with steady growth: Fractional with eventual transition plan. $25M+ or high-growth: Strongly consider full-time.
3. Are you fundraising, selling, or going public in the next 12 months?
Major capital event within 12 months: Full-time CFO. Planning for event 12-24 months out: Fractional now, transition to full-time 6-12 months before event. No major event planned: Fractional is likely sufficient.
4. Do you need to build a finance team (FP&A, treasury, accounting expansion)?
Need to hire and manage multiple finance roles: Full-time CFO provides better leadership. Current team is adequate: Fractional CFO can provide oversight and strategic direction.
5. Can you afford $300K-$600K in annual fully-loaded costs without straining cash flow?
If the CFO salary would represent >5% of revenue or strain your cash runway below 18 months, start with fractional and transition later.
Red Flags You've Made the Wrong Choice
Signs you need to upgrade from fractional to full-time:
Consistently using all contracted hours and wanting more
Missing opportunities due to CFO unavailability
Finance team needs more hands-on daily leadership
Investors asking about full-time CFO timeline
Strategic financial projects getting delayed
Signs you hired full-time too early:
CFO spending <30 hours/week on meaningful work
Scope of responsibility doesn't justify the cost
Cash flow strain from the salary
CFO asks "What should I work on?" regularly
Could have used those funds for growth initiatives
This combination can provide CFO-level strategy at fractional costs while maintaining daily financial operations oversight. The fractional CFO guides strategy and complex decisions while the controller handles day-to-day operations.
Designed for businesses with $10M-$50M in revenue or those preparing for major milestones:
Everything in Growth tier
Fundraising support (financial modeling, due diligence, investor presentations)
M&A advisory (buy-side and sell-side)
Financial system selection and implementation support
Board reporting and presentation
Advanced scenario modeling and strategic planning
Transition Support
When you're ready to hire a full-time CFO, we help with:
Recruiting support - Help define role requirements and assess candidates
Onboarding assistance - Transfer institutional knowledge smoothly
Interim overlap - Continue fractional support during the transition
Ongoing advisory - Remain available for specialized projects
Many of our fractional CFO clients transition to full-time CFOs at $20M-$50M in revenue. We help ensure the transition is smooth and the new hire is set up for success.
Making Your Decision
The fractional vs. full-time CFO decision isn't permanent. Most businesses evolve through multiple stages:
Start with fractional when strategic needs emerge but don't justify full-time costs
Scale the engagement as your business grows and needs increase
Transition to full-time when you cross the 40-hour threshold or face major milestones
Maintain fractional support for specialized projects even after hiring full-time
The key is matching your financial leadership model to your current stage, needs, and resources—not what you think you "should" have based on peer companies or investor expectations.
Ready to explore fractional CFO services? Contact us for a complimentary financial assessment. We'll help you determine the right level of CFO support for your business stage and goals—whether that's fractional, full-time, or a hybrid approach.
Frequently Asked Questions
Frequently Asked Questions
Can a fractional CFO help with fundraising?
Absolutely. Fractional CFOs regularly support fundraising efforts by building financial models, preparing due diligence materials, creating pitch deck financials, and representing the company in investor conversations. Many have raised hundreds of millions across their careers. For seed through Series B rounds, a skilled fractional CFO is usually sufficient. Series C+ or IPO preparation typically requires full-time CFO leadership.
How long do fractional CFO engagements typically last?
Fractional CFO relationships average 18-36 months. Short-term engagements (3-6 months) work for specific projects like fundraising or system implementations. Long-term relationships (2-4+ years) are common for ongoing strategic support. Many end when the company grows large enough to hire full-time or completes a major milestone (sale, IPO). Some continue indefinitely if the scope remains under 30 hours/month.
Will investors or boards accept a fractional CFO instead of full-time?
It depends on stage and situation. Most VCs are comfortable with fractional CFOs through Series A, some through Series B. By Series C or when preparing for IPO, they typically expect full-time CFO leadership. Boards evaluate based on complexity and needs rather than title—if a fractional CFO is delivering the required strategic oversight, most boards support it. Be transparent with investors about your financial leadership model and transition plans.
What's the difference between a fractional CFO and a bookkeeper or controller?
Bookkeepers record transactions and maintain books. Controllers manage accounting operations, close the books, and produce financial statements. CFOs (fractional or full-time) provide strategic financial leadership: fundraising, cash flow strategy, scenario planning, M&A, board reporting, and executive decision support. You need all three roles as you scale—just at different times. Most businesses need bookkeeping first, controller at $2M-$5M, and CFO leadership at $3M-$10M.
Can I convert my fractional CFO to full-time when ready?
Sometimes, but don't count on it. Many fractional CFOs prefer the variety and flexibility of working with multiple clients and won't convert to full-time roles. Others are open to it if the company, role, and compensation align with their goals. Discuss this possibility upfront, but also use your fractional CFO to help recruit their eventual full-time replacement—they can help define the role, assess candidates, and ensure a smooth transition.
What if I can't afford even a fractional CFO?
If $5,000-$10,000/month is beyond your budget, consider these alternatives: (1) Project-based CFO support for specific initiatives only, (2) Upgrade your controller to a finance manager with some strategic responsibilities, (3) Join a CFO or finance peer group for guidance, (4) Use financial planning software and templates to DIY some strategic planning. Plan to engage fractional CFO support once you reach $2M-$3M in revenue or when facing a specific milestone (fundraising, major hiring, system change).