Fractional CFOs Explained: What They Do & How to Hire One
Joe Sweeney
May 7, 2025
Summary
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.
Keep reading to find out more about:
Insights from Lauren Pearl
Lauren Pearl is an expert startup fractional CFO and business strategist who brings deep operational and financial leadership to scaling companies. A former CEO turned CFO, Lauren draws on 13+ years of experience leading startups through fundraising, growth, and transformation.
Throughout this article, you’ll find quotes from Lauren that bring this topic to life with real-world expertise and practical takeaways.
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 Can Do (Benefits & Problems Solved)
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 AR/AP 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.
Does Your Business 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 & How Much They Cost
Finding the Right 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. "
Cost of Hiring a Fractional CFO
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.”
Setting the Right Foundation for a Fractional CFO: How Upflow Saves You Time and Money Down the Line
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.
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 just trying to understand what’s working, the right 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 really needs — and finding someone who’s 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.”
By hiring the right fractional CFO, structuring the finance team efficiently, and leveraging sophisticated orchestration solutions like Upflow, businesses can set themselves up for sustainable financial growth.
More on Lauren Pearl
Lauren is a numbers-driven business strategist and CFO who specializes in helping growing teams navigate financial complexities and make informed decisions.
Lauren founded Lauren Pearl Consulting (L.P.C.) as a side project while co-founding a VC-backed startup, but the demand for her expertise quickly turned it into her full-time mission. As she puts it:
"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."
L.P.C. is the solution for founders who feel like their startups growth is throwing them off the rails. Many entrepreneurs are told to "fake it until they make it," but once they have staff to pay, tons of new customers, and investors to answer to, the margin for error shrinks dramatically—especially in today’s volatile financial environment.
Lauren's approach ensures that her clients never have to "fake it." Instead, they have an experienced expert on staff who:
Clears blockers and provides clarity in financial decision-making.
Establishes a structured path forward based on best practices.
Connects founders to the most trusted financial tools and partners.
Sets up scalable systems that allow businesses to grow efficiently and sustainably.
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.
Frequently Asked Questions (FAQs)
Q: What is the difference between a fractional CFO and a full-time CFO?
A: A fractional CFO offers part-time or contract-based financial leadership, while a full-time CFO is a permanent executive overseeing financial operations daily. Fractional CFOs are ideal for companies that need strategic support but aren’t ready for a full-time hire. They typically focus on financial strategy, forecasting, system design, and high-impact decisions — not daily tasks like bookkeeping or bill pay.
Q: How do I know if my business needs a fractional CFO?
A: Your business may need a fractional CFO if you’re experiencing rapid growth, struggling to manage cash flow, preparing for fundraising, facing complex financial decisions, or need specialized expertise for a short-term project. Additionally, if you need someone to establish financial systems or assist with major strategic initiatives (like mergers or acquisitions), a fractional CFO can provide the support you need without the cost of a full-time hire.
Q: What kind of companies benefit most from a fractional CFO?
A: Startups, small businesses, and mid-market companies often benefit most from fractional CFO services. These businesses sometimes don’t have the budget to hire a full-time CFO but still require expert financial advice to scale effectively. Fractional CFOs are especially valuable in industries that experience frequent changes, need complex financial forecasting, or are undergoing significant transitions. They can also be indispensable for any first-time founders or CEOs who don’t have a formal business education, to help translate financial data into actionable insights.
Q: For how long does a business typically hire a fractional CFO?
A: The length of time you work with a fractional CFO depends on your business needs. Some businesses hire a fractional CFO for a specific project or period, such as fundraising or a merger, while others maintain a long-term relationship for ongoing strategic guidance. Typically, fractional CFOs are hired for a few months to a few years, but the arrangement can be adjusted based on your business goals.
Q: Can a fractional CFO work remotely?
A: Yes, many fractional CFOs work remotely, especially in today’s digital-first world. With the availability of cloud-based financial tools and communication platforms, fractional CFOs can manage your financial needs from anywhere, making it easy to collaborate and stay updated without requiring an on-site presence.
Q: What should I expect during the first few months of working with a fractional CFO?
A: During the initial phase, a fractional CFO will typically focus on understanding your business, reviewing financial statements, assessing current processes, and identifying areas for improvement. They’ll work with you to establish financial goals, create forecasts, and implement systems to help optimize your financial operations. This period often includes establishing or refining financial reporting, cash flow management, and strategy planning.
Q: How can I ensure that a fractional CFO is a good fit for my business?
A: Vetting matters. Look for a CFO with experience in your industry and in businesses at your stage. Ask about their typical clients, preferred working style, and how they scope engagements. Make sure you align on priorities, pace, and communication — and get clear on what outcomes you’re expecting.
Q: How does using Upflow enhance the effectiveness of a fractional CFO?
A: Using Upflow ensures that your AR processes are efficient, saving time and reducing administrative tasks for your fractional CFO. When your AR is streamlined and automated, your fractional CFO can focus on more strategic aspects of financial management, like financial forecasting, cost optimization, and strategic planning. Upflow also helps improve cash flow, so you can have the financial stability and insights needed for growth. This allows the fractional CFO to work more effectively, making your investment in their services even more valuable.