What a fractional CFO actually does, and when a small business is ready for one

"Fractional CFO" is a term that gets thrown around a lot right now, and a lot of what gets sold under it is just bookkeeping with a nicer name. So let me be specific about what the work is, who it is for, and when it is a waste of money.

The short answer

A fractional CFO is a finance leader who works with your business part time, usually a set number of hours a month, to do the job a full time CFO would do: forecast cash, plan for growth, build budgets, price your work correctly, prepare you for a loan or an investor, and tell you the truth about your numbers before a decision, not after. It makes sense once your business has clean books and real decisions to make. It does not make sense if the books are still a mess, because every forecast built on bad data is fiction.

Bookkeeper, accountant, CFO: three different jobs

A bookkeeper records what happened. An accountant makes sure it was recorded correctly and handles the tax side. A CFO uses that record to decide what should happen next. I covered the first two in bookkeeper vs. accountant vs. CPA. The CFO layer is forward looking. Instead of "here is your profit for last quarter," it is "here is what your cash looks like in March if you hire in January, and here is what it looks like if you wait."

What the work actually looks like

• Cash flow forecasting. A rolling 13 week view of what is coming in and going out, so you see a crunch six weeks before it happens.
• Budgets and scenarios. What happens to profit if you raise prices 8%, add a second truck, or lose your biggest customer.
• Pricing and margins. Figuring out which services or products actually make money and which ones feel busy but do not.
• Lender and investor readiness. Clean financial packages, projections, and the ability to answer a banker's questions with confidence.
• Monthly review meetings. A real conversation about the numbers, with the owner, every month. This is where most of the value lives.
• Entity and tax strategy. Working with your tax preparer on things like S corporation elections, owner compensation, and timing of purchases.

Signals you are ready

• Revenue is somewhere north of a few hundred thousand a year and you are making decisions that involve real money: hiring, equipment, a second location, a loan.
• You have profit on paper but never seem to have cash, and you do not know why.
• You are about to talk to a bank or an investor.
• You are pricing by gut and suspect you are leaving money on the table.
• Your books are reconciled and current. This one is not optional.

Signals you are not ready yet

If reconciliations are months behind, if personal and business spending are mixed, or if you cannot produce an accurate profit and loss for last month, start with cleanup and monthly bookkeeping. I would rather tell you that than sell you a forecast built on numbers neither of us trusts. The catch up bookkeeping guide explains that process.

What it costs

A full time CFO in Utah is a six figure salary plus benefits, which is out of reach for most businesses under a few million in revenue. Fractional engagements are typically quoted monthly, and published ranges run from around $1,000 to $5,000 a month depending on hours and complexity. Aurora's fractional CFO service starts at $1,500 a month, bundled with the bookkeeping so the data and the analysis come from the same person. Full details are on the services and pricing page.

Why it matters that one person does both

At a lot of firms the bookkeeper and the "CFO" never talk, and the forecast is built by someone who has never seen your actual transactions. When the same person closes your books and builds your forecast, there is no handoff and nothing gets lost in translation. It is also why I keep the client list small enough that I know every business on it.

Questions people ask

How many hours a month does a fractional CFO work?

It varies with the engagement, but a common structure is a set block of hours each month that covers the close review, a forecast update, and a monthly meeting with the owner, with more time around big decisions like a loan application or a hire.

Is a fractional CFO the same as an outsourced accountant?

No. An outsourced accountant keeps the books accurate and handles compliance. A fractional CFO uses those books to plan, forecast, and advise on decisions. Many small businesses get the most value from one firm doing both, as long as the bookkeeping side is solid first.

Can a business with messy books hire a fractional CFO?

It can, but it should not. A forecast is only as good as the data under it. Cleanup comes first, then monthly bookkeeping, then CFO level planning once the numbers are trustworthy.

What does a fractional CFO cost for a small business?

Published ranges commonly run $1,000 to $5,000 a month. Aurora Accounting starts at $1,500 a month with bookkeeping included, quoted after a short intake.

Sources

• U.S. Small Business Administration, Manage your finances
• Aurora Accounting, Services and pricing