What size business should hire a fractional CFO?
There is no turnover line that settles it, because the seat is bought for decisions rather than for volume. The pattern is a business where the decisions have become expensive enough that getting one wrong costs more than a year of the seat.
- You are past about £1M revenue and still running the business off a spreadsheet.
- A raise is coming and your numbers would not survive diligence.
- You cannot answer what a customer costs you or what one is worth.
- Your accountant tells you what happened, and nobody tells you what to do next.
- More than one product line or customer segment, and nobody can say which one makes the money.
- Borrowing, a covenant, or a lender asking for forecasts the business has never produced.
The break-even arithmetic
At the middle of the band, £1,150 a day, one day a week costs £52,900 a year, or £4,408 a month. A full-time CFO on a £140,000 base costs £189,571 in year one once employer National Insurance, pension and a recruitment fee are counted. The two meet at about 3.6 days a week, far more than most owner-managed businesses need.
So the honest comparison is not against a full-time hire you were never going to make. It is against the decisions being made without one. On a business turning over £3,000,000, used here as an example, the seat pays for itself if it moves margin by about 1.8 percentage points, or brings forward cash the business would otherwise have borrowed.
A pricing change sitting unmade for two years, one quietly unprofitable customer, or a cash gap found in March rather than June will usually clear that on its own.
When it is not worth it
- The numbers arrive late or wrong. That is a bookkeeping and systems problem, and a CFO will only tell you to fix it.
- There is no decision in front of the business that the numbers would change. A stable, profitable business with no borrowing and no plans to grow or sell may simply not need the seat.
- The budget only stretches to a day a month from the start. That buys advice, which can be useful, but it should be priced and described as advice.
- The owner will not act on what the numbers say. The seat is only worth what gets decided because of it.
Fractional CFO or a good accountant?
An accountant files, complies and reports on what already happened. A CFO decides what should happen next: pricing, margin, whether you can afford the hire, whether the growth is worth the cash it consumes. If your problem is filing, payroll, VAT or getting accurate management accounts out on time, the answer is the accountant.
Most owner-managed businesses that hire the seat keep both: an accountant producing reliable numbers and filing, and a CFO for far fewer days deciding what to do about what the numbers say.
The pattern that works
Start heavier and taper. A sensible shape is one day a week for the first quarter while they fix the reporting, understand the margins and build the forecast, then drop to a day or two a month to keep it current and be there for decisions.
That taper is a good test of who you are dealing with. An operator who proposes it is thinking about your business. One who proposes an indefinite retainer at the same level is thinking about theirs.
What to be careful of
- A minimum term on a seat you may only need for two quarters.
- Anybody who recommends a finance team before looking at whether your bookkeeper and your software can carry the load.
- Somebody whose experience is entirely venture-backed. The disciplines differ, and a startup CFO in an owner-managed business often optimises for the wrong thing.
- A package that bundles the CFO with bookkeeping from the same provider. It can work, and it also removes the person best placed to tell you the bookkeeping is not good enough.
Common questions
Is a fractional CFO worth it?
For a small business, when the numbers are reliable and the decisions on them are not. One day a week costs £36,800 to £69,000 a year, and it earns that back when it fixes pricing, margin or cash timing. If the numbers themselves are late or wrong, fix the bookkeeping first; a CFO will only tell you to.
How many days does a small business need?
Less than most people assume. A common shape is one day a week for the first quarter to fix reporting and build a forecast, then one or two days a month to keep it current and be available for decisions.
Is a fractional CFO cheaper than an accountant?
No, the day rate is considerably higher, and they do different jobs. Most owner-managed businesses need both: an accountant to produce reliable numbers and file, and a CFO for far fewer days to decide what to do about what the numbers say.
More of them, on hiring, contracts and what a fractional engagement costs, on the fractional executive FAQ.