When Do You Need a Fractional CFO?

In this article Neil Nichols, Founder of Accounts and Legal discusses in depth everything there is to know about Fractional CFOs. In 2021, alongside his brother Robert Nichols, Neil sold Portico, the company they’d built together. Since then, he’s helped countless business owners with their finances, here, he shares his thoughts. This article has been fact-checked and approved by Neil and is accurate as of March 2026.

What is a fractional CFO and when do you need one?

A Fractional CFO provides strategic financial leadership on a part-time or flexible basis. They are the most senior member of a finance team and are employed to interpret the businesses finances and make decisions accordingly.

Often businesses will consider a Fractional CFO when the financial complexity of their business increases. This may be due to growth, or when cash flow problems occur, or perhaps the business is preparing for sale and needs to get their finances in order. There are a number of reasons, but at its core, a Fractional CFO is brought in to improve financial visibility and support better decision-making.

Most businesses build up to hiring a CFO. Generally in the early stages its not necessary, but as businesses become more complex, the need for the knowledge, experience and leadership of a CFO becomes essential. A Fractional CFO does all this, but for less cost than a full-time hire.

Signs you Might Need a Fractional CFO

1. You Don’t Have Full Visibility of the Business’ Numbers

Often business owners start a business because they’re passionate about the thing they do. It’s very rare that a business owner sets out on their own intending to do invoicing and chasing payments. Wearing multiple hats works for a while, but as the business grows and becomes more complex, it becomes essential to have a finance team, to not only take the day to day away from the owner, but to properly understand and keep on top of the finance function. In the early stages, bookkeeping and year-end accounts will suffice, but as a business grows, the numbers become more complex. A finance team is needed at this point to handle the day to day running of the business, and, the CFO acts as the cherry on the cake.

2. Cashflow is becoming harder to manage

Again, as your business grows, cash becomes more difficult to manage. Money comes in and out, and timing starts to really matter. A supplier with 60-day payment terms, a client that pays a week late, regular software bills – it can all become a lot to manage. You might begin to notice gaps opening up, or that issues are only becoming clear after the fact, when its too late to do anything about it. Without a clear plan or structure, cashflow tends to become reactive rather than something you can properly plan around.

3. You’re Preparing for Funding or Investment

If you’re at the stage where you’re speaking to investors, expectations can increase quite dramatically. Suddenly you have someone from the outside looking in, so you need confidence in your reporting, cashflow management and forecasts so you can effectively communicate where the business is at. This is often the point where owners realise their current set up isn’t sufficient. It’s not just about having the numbers available, it’s about being able to interpret them, explain them to outsiders, defend them and overall have confidence that they’re portraying an accurate picture of your business.

4. Your finance team is stretched

Often a finance team will already exist, but with lots of plates to spin it’s difficult to take a step back and look at the bigger picture. You might already have bookkeepers, credit controllers and a Finance Manager, but usually they’re very focused on the day-to-day operations. As you grow as a business this can become more of an issue. The daily operations continue to get ticked off, but the more strategic and forward looking aspects like planning and forecasting fall by the wayside. That’s often the point where businesses feel the need for a senior level of leadership with either an internal hire or a fractional CFO.

What the Role of a CFO Covers

A Fractional CFO sits at the top of a Finance team, making decisions about the direction of the business and effectively communicating the numbers to other senior members of the business. Their role is diverse and far reaching and often covers elements of the below:

Financial strategy

• Planning for growth
• Scenario modelling
• Supporting key business decisions

Financial visibility

• Improving reporting
• Making numbers easier to understand
• Tracking performance properly

Financial control

• Cashflow forecasting
• Identifying risks early
• Strengthening financial processes

A Fractional CFO isn’t intended to replace what’s already there, they’re job is to sit above an existing team, bring structure and direction and make more use of the numbers in the decision-making process.

Fractional CFO vs Full-Time CFO

Hiring a CFO is a big step for any business, not just because of the six-figure salary, but also the lengthy recruitment process to find the right person and the long term commitment financially that comes with hiring someone of that seniority. It can be a difficult sell to other members of the business. For a lot of businesses, an internal hire is exactly what they need, but for other, a full-time person might be slightly surplus to requirements.

That’s where a Fractional CFO comes in. It allows businesses to access the same level of experience without the financial commitment to a full-time salary and all the additional costs that come with it, including pensions, national insurance and recruitment fees. It’s also easier to switch off if it’s not working or your requirements change. Often, senior hires will come with 6-month notice periods for termination whereas working with a Fractional CFO has more flexible terms.

Read more: In-House vs Outsourced Finance: What’s the Real Cost for Your Business?

What Stage of Business Needs a Fractional CFO?

It’s less about the size of your business and more about the level of complexity and whether your current financial team is fit for purpose.

At earlier stages, the need is usually around structure and getting the correct reporting and tracking in place so you can be confident in the numbers.

However, as a business grows, the focus shifts to control and knowing what levers to pull. Things like cashflow management, assessing debtor days, looking at costs, managing suppliers and more. Stuff that has a bigger impact on the businesses’ bottom line.

At larger scale, it’s about having a full picture of everything. Naturally there’s more going on, so there are more potential areas for leakages or inefficiencies which need to be managed and understood by the senior team.

Although it tends to depend more on complexity than size, but there are some common patterns:

• £1m–£3m turnover → early need for structure and reporting
• £3m–£10m turnover → scaling, tighter control needed
• £10m+ turnover → increased complexity and strategic oversight

At each stage, the need isn’t just for finance, it’s for better decision-making.

How a Fractional CFO Fits Into Your Finance Function

It’s important to remember that a Fractional CFO isn’t intended to replace a finance setup, it’s there to build on top of an existing team. A lot of business will have some form of finance team in place, how that looks will obviously depend on the size and complexity. Common finance teams we come across with our clients are a bookkeeper handling day-to-day transactions, an accountant taking care of compliance and year-end accounts, or an internal Finance Manager or Controller overseeing reporting.

These roles typically handle the day-to-day activity focussed on keeping the business running. A CFO sits above the day-to-day activity and bring structure to the finance function. That includes making sure reporting is consistent, forecasts are in place and decisions are backed by a clear financial view.

In practical terms, that might mean working with your existing team to:

• Improve the quality and timing of reporting
• Build and maintain cashflow forecasts
• Introduce clearer budgeting and performance tracking
• Support planning around growth, hiring or investment

The aim isn’t to add another layer for the sake of it. It’s to make sure the finance function actually supports the business, rather than just recording what’s already happened.

For many businesses this works alongside an internal team. For others, it’s combined with outsourced finance support to create a complete setup.

Either way, the role of a fractional CFO is to bring oversight, clarity and direction, without changing everything that’s already in place.

Read more: Financial Outsourcing: A Full Guide for SME Owners in the UK

Is a Fractional CFO Right for Your Business?

To be frank, not every business needs a CFO. If you’re just starting out, you’ll be fine with just a combination of bookkeeping and year-end accounting to keep things ticking over. At that point, the numbers are fairly straightforward and decisions can be made without a fully-fledged finance team.

The point where a fractional CFO becomes necessary is when the numbers become more complex. Cashflow becomes harder to manage, reporting needs to be more reliable and decisions begin to have a bigger financial impact.

You’re no longer just tracking performance, you’re relying on it to guide what happens next. At this stage, the question isn’t just ‘Do we need a CFO full-time?’, it’s more ‘Do we have the right level of financial oversight?’.

For some businesses, a Fractional CFO can provide that answer. It brings much needed structure, clearer visibility and financial leadership without committing to a full-time senior hire. For others, it’s part of a wider shift. As complexity increases, businesses often move towards a more complete finance setup — combining strategic input with stronger day-to-day support, sometimes through a broader outsourced finance function.

Ultimately, it comes down to how confident you are in your numbers.

If you have clear visibility, reliable reporting and the ability to make decisions based on solid financial insight, you’re probably in a good place. If not, that’s usually when businesses start looking at options like a fractional CFO.

Read more: The Benefits of an Outsourced Finance Department