Fractional CFOs Explained: What They Do & How to Hire One

As startups and growing businesses scale, they often struggle to manage their finances effectively without the budget for a full-time Chief Financial Officer (CFO).

In these situations, a fractional CFO can be an invaluable asset, providing high-level financial expertise on a part-time, contract, or temporary basis, allowing businesses to tap into their skills without the financial burden of a full-time hire.

Few people understand this role better than Lauren Pearl, a seasoned fractional CFO who has helped countless founders move from financial chaos to clarity. In this guide, featuring Lauren’s expert insights, we’ll explore:

• What Is a Fractional CFO?

• What a Fractional CFO Actually Does

• Do You Need a Fractional CFO?

• How to Hire a Fractional CFO

• How Much Does a Fractional CFO Cost?

• Laying the Foundation for a Fractional CFO

If you're starting to feel that finance is becoming a bottleneck, now’s the time to explore smarter systems that lay the groundwork, before you bring in a fractional CFO.

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What Is a Fractional CFO?

A fractional CFO is a finance expert who offers part-time or temporary CFO services to businesses that need strategic financial leadership but don’t require a full-time, in-house CFO. Typically, fractional CFOs work with companies on a contract or hourly basis, dedicating a certain number of hours per week or month to overseeing the company's financial strategy and operations.

However, not all fractional CFOs are created equal, and as Lauren points out, the term has evolved:

"The term ‘fractional CFO’ has changed a little bit over the past, say, four years. It used to be a strategic role to come in part-time throughout the week to do CFO-only stuff… but now it's a much more fragmented industry with many different service models."

Some fractional CFOs focus strictly on strategic financial planning, while others offer more operational or even bookkeeping-related services. Lauren cautions that some firms label themselves as "fractional CFO providers" but primarily offer bookkeeping, financial controller services, or accounting rather than true CFO-level strategic insight:

"Some firms just call themselves fractional CFO firms to ride the wave and charge more. Accounting firms and bookkeeping firms are incredibly helpful to startups, but they shouldn’t be charging fractional CFO prices. Some claim to offer fractional CFO services, but many aren’t actually qualified to do so.”

“The way to know the difference is to look at the experience of the providers. But true strategic financial planning depends on industry experience and years of running companies. Look for experience as a full-time CFO at a company in your industry, experience as an investor or banker, or in management consulting. These are all signs that they’re capable of being a great fractional CFO. A CPA isn’t enough - that’s just an accounting certification."

When hiring a fractional CFO, it’s essential to clarify what services are being offered and whether they align with your business needs. Some companies require high-level advisory services, while others may need hands-on financial management. Understanding these distinctions can help businesses avoid paying for the wrong type of expertise.

“If you need bookkeeping services, just hire a bookkeeping firm - not a bookkeeping firm that claims to offer fractional CFO. My recommendation to most companies is to start by hiring a very good fractional CFO as an advisor, then get their help to hire the rest of the team. They’ll help you get what you actually need with the best quality for the best price.”

What a Fractional CFO Actually Does

Fractional CFOs can handle many of the same tasks as a full-time CFO, providing strategic insight and operational guidance. Some of the key areas they help with include:

1. Financial Strategy and Forecasting

A fractional CFO helps businesses set realistic financial goals and create long-term strategies to achieve them. They work closely with leadership teams to develop detailed forecasts, ensuring the business can handle future challenges while achieving growth targets.

But for founders, especially first-time CEOs, this process shouldn't feel like outsourcing a spreadsheet. Lauren believes that the best fractional support doesn’t just work from a template or build the model for you, it integrates your thinking into the model itself.

"If this is your first model as a founder, you need a CFO who will involve you in the process. The model should reflect how you think about your business. When founders skip that step, they miss the chance to understand their own economics, and that disconnect can be incredibly costly at scale."

2. Cash Flow Management

One of the primary concerns for startups and small businesses is cash flow. Even profitable companies can face financial distress if cash flow is not managed properly. A fractional CFO can develop systems to monitor and manage cash flow, ensuring that the business has the liquidity needed to meet obligations while also planning for future needs. Cash flow mismanagement is one of the top reasons startups fail, making it a critical focus area for any growing business.

Lauren highlights the importance of building strong cash flow practices early on:

"So many businesses don't realize they're running into a cash crunch until it's too late. The best thing you can do is get ahead of the problem, forecast, set up proper systems, and ensure you always have visibility into your liquidity."

This is where Upflow plays a vital role. Upflow helps businesses streamline and automate accounts receivable (AR) processes, ensuring timely payments, reducing outstanding invoices, and improving overall cash flow predictability.

By implementing Upflow’s solutions, businesses can minimize manual work, avoid unnecessary financial strain, and create a cash-positive environment that supports long-term growth.

A well-managed cash flow system allows a fractional CFO to focus on high-level strategic decisions rather than firefighting liquidity issues. When your cash flow is stable and predictable, your CFO can dedicate their expertise to scaling operations, optimizing financial performance, and driving sustainable profitability.

3. Financial Reporting and Metrics

Fractional CFOs help set up and refine a company’s financial reporting from building dashboards to establishing KPIs and monthly reporting cycles. Clear reporting helps founders and leadership teams make decisions based on data rather than gut feel.

But reporting isn’t just about building a dashboard, it’s about building discipline. Lauren’s approach emphasizes simplicity and strategic focus.

“Founders don’t need a 50-slide board deck every month. They need a handful of metrics that actually reflect how they’re doing, and that they’ll actually use.”

A strong CFO ensures the right people are looking at the right numbers, on the right cadence, turning reporting into a habit that keeps everyone focused on hitting your goals.

4. Scenario Planning and Decision Support

Fractional CFOs act as strategic sounding boards, helping founders think through critical business decisions, from hiring plans and product bets to pricing shifts or new customer segments.

This support often comes in the form of scenario planning, modeling “what if” situations to help leadership assess tradeoffs and make smarter calls. Whether you’re wondering if you can afford your next hire, building a new product, or wondering if a new market is worth entering, fractional CFOs can use scenario planning to help you make the call.

Lauren adds value by embedding herself in the way founders think, rather than just plugging variables into a spreadsheet.

“Some decisions require some sophisticated math to work through, and we can get into advanced modelling if that's needed. But the best CFOs I know can work much more quickly just by listening to the CEO extremely carefully and knowing where to go find the answer in the data you already have. I've really optimized for this in my own CFO work since I focus on startups. We don't always have time or budget for deep analysis - we need to work with the limited data we have, move fast, and make some very good bets.”

5. Fundraising and Investor Communications

Fractional CFOs often play a key role in fundraising, preparing financial models, refining the pitch, and answering due diligence questions. For startups without in-house finance teams, this support is essential to running a smooth process.

Lauren’s approach goes beyond deck support - she helps founders connect the financials to their strategic story.

“Investors don’t just want to see a model, they want to know that you understand it. I help founders build that confidence so they can stand behind the numbers in the room.”

That might mean helping articulate the strategy behind the numbers or sitting in on calls to field investor questions. Every raise is different, and the best CFOs are the ones who can flex to support the founder, not just the financials.

6. Building Your FinStack: Tools, Team, and Workflow

As companies grow, finance needs shift from scrappy survival to scalable systems. Fractional CFOs often take the lead in building out what Lauren calls a company’s FinStack - the right mix of people, tools, and workflows that support sustainable growth.

This includes evaluating and implementing financial operations software (like AP/AR automation, ERP software, benefits & payroll management, etc) and hiring or managing outsourced and in-house finance support from bookkeepers and accountants to internal finance analysts.

“Your FinStack is the engine under the hood for the finance function. Founders are often unpleasantly surprised how much software and how many different types of people are needed to run a finance function at scale. So, guiding them with best practice on how to invest here is super helpful. You need to know what’s important now and what can wait until the next stage.”

Lauren works with founders to right-size their finance function: automating where it makes sense, hiring when necessary, and building lightweight systems that won’t break when the company doubles in size.

Do You Need a Fractional CFO?

Not all businesses need a fractional CFO, but many fast-growing companies can benefit significantly. Here are some scenarios where hiring a fractional CFO makes sense:

• Scaling rapidly but lacking financial leadership.

• Navigating fundraising or acquisitions.

• Needing strategic insights but not ready for a full-time hire.

• Facing inefficiencies in financial operations.

As Lauren puts it:

"You’re really going to know within your own business when there are just so many questions that you don’t have answers to... That’s the emotion you’ll feel when you need to consider a fractional CFO, this lost and frustrated feeling."

How to Hire a Fractional CFO

Fractional CFOs can be found through:

• CFO Search Firms specializing in placing fractional CFOs.

• Online Platforms like Upwork, Toptal, or LinkedIn.

• Referrals from industry peers.

Lauren advises caution when choosing a fractional CFO:

"There is a lot of variability on what you get when you hire a fractional CFO. It’s not like you have one and then you’re just set. The process should be much more similar to hiring an executive employee or finding a co-founder; This is someone you are essentially trusting with your entire company. They will see and hear everything. They are an Officer of your company. They will speak to your board. Pick someone you trust. "

How Much Does a Fractional CFO Cost?

Costs vary based on experience, scope of work, and industry but here are some general benchmarks:

• Hourly Rates: $200 to $700 per hour (premium or urgent services may go higher)

• Daily Rates: $1,000 to $3,000 per day

• Monthly Retainers: $5,000 to $20,000 per month

Zanda Recruiting reports that in 2023, the average hourly rate for fractional CFOs was $232 to $358 per hour.

Lauren offers a helpful way to think about value and budget:

“Hourly rates aren’t super helpful here because the type of work CFOs do is so variable. We all work at different speeds, strategy work is hard to quantify in time, plus an hour of budgeting is not the same as an hour spent presenting to your board. Instead of focusing on hourly rates, think about it in terms of what it would cost to hire a full-time CFO - including salary, benefits, bonus, and equity. If that’s not in reach, you can ask a fractional CFO what they can do within your budget. It’s a collaborative conversation. A good CFO will tell you what’s realistic, and help you right-size the scope to get the most impact. All that said, there is an hourly rate below which I’d be cautious of. Accountants and bookkeepers typically charge $50 - $150 per hour. If a fractional CFO is charging below $200, that’s a red flag to me.”

Laying the Foundation for a Fractional CFO

Hiring a fractional CFO is a smart investment, but it’s an expensive one. If their time is spent chasing overdue invoices or untangling messy AR, you’re burning through your budget on tasks that should already be handled.

Before you bring in a high-level financial expert, you need to have your accounts receivable (AR) processes locked in. Without this foundation, your fractional CFO ends up playing catch-up, costing you hundreds or even thousands of dollars on work that’s administrative, not strategic.

That’s where Upflow comes in. Upflow helps you orchestrate and organize your AR workflows, reduce manual effort, and give you real-time visibility into outstanding payments, so your financial ops are humming before a CFO ever logs in.

Put simply: Upflow saves you time and money by making sure your CFO can skip the basic tasks and get straight to the big-picture work, like financial planning, forecasting, and growth strategy.

If you don’t have this in place? You're simply wasting money, paying premium rates for cleanup work that should’ve been sorted from day one.

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Summing up

A fractional CFO can be one of the most impactful hires a growing business makes, especially for founders navigating complexity without a full-time finance team.

The right person brings more than numbers. They bring clarity. They help you make confident decisions, manage risk, and build the financial structure that supports growth. Whether you’re raising capital, extending runway, or trying to understand what’s working, a great CFO becomes a steady hand on the wheel.

Not all fractional CFOs operate at the same level. Some are financial administrators. Others are true strategic partners. The key is knowing what kind of support your business needs, and finding someone built for that role.

“I often get called in after founders have been burned by another bad fractional. There are a lot of war stories. At the end of the day, it's an incredibly powerful hire that can make or break a business. And when you find someone good... it's like adding jet fuel to your tank.”

More on Lauren Pearl

Few people understand this better than Lauren Pearl, founder of Lauren Pearl Consulting (L.P.C.). A numbers-driven strategist, Lauren built L.P.C. to be the finance partner she wished she had as a former founder, COO, and Chief of Staff. She helps startups move from chaos to clarity with scalable systems, clear financial planning, and trusted tools.

"L.P.C started as a side project, but it quickly became clear there was a huge need: The part-time CFO market was full of controllers and accountants. But founders didn’t care about perfect books, they needed a strategic financial thought partner who understood both the operations and the chaos of startup life. I’d been in that seat myself as a founder, COO, and Chief of Staff, so I built LPC to be the kind of finance resource I wished I’d had."

Lauren helps founders clear blockers, structure their path forward, and set up scalable financial systems that support long-term growth. The results speak for themselves:

"Only 18% of first-time founders succeed. Since L.P.C.'s inception, 85% of my paying clients have closed funding or become significantly more profitable."

Lauren also co-hosts The Growth-Minded CFO podcast, powered by Upflow, engaging with finance and business leaders to explore innovative approaches to financial leadership.

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