Virtual CFO vs fractional CFO: what is the difference?

Short answer: there is no real difference. A virtual CFO and a fractional CFO are the same service under two names.

Two names, one service

Both give your business a senior finance leader for part of the week or month, without a full-time salary. “Virtual” describes how the work is delivered: remotely. “Fractional” describes how much of the person you get: a fraction of their time.

Which word you hear depends on where you are. “Fractional CFO” is the usual term in the United States. “Virtual CFO” is more common in Australia. You will also see “outsourced CFO” and “part-time CFO”. They all mean the same thing.

An interim CFO is different. An interim works full-time for a fixed period, usually to cover a gap while a company recruits.

What a virtual CFO does

• Monthly management accounts you can read and act on
• Cash-flow forecasts, so you see a shortfall before it arrives
• Budgets, and a monthly check of actual results against them
• Board and investor reporting
• Advice on the big decisions: pricing, hiring, funding and cost

What a virtual CFO does not do

A CFO is not a bookkeeper. Day-to-day bookkeeping is a separate job, and a CFO needs clean books to work from. Many businesses buy the two together. A virtual CFO also does not audit your accounts.

When you need one

• You have outgrown basic bookkeeping, but a full-time CFO is too expensive.
• You are raising finance and investors are asking for forecasts.
• Cash is tight and you cannot see why.
• Your board wants better reporting.
• You are making a decision you cannot easily reverse.

How to choose

• Look for a professional qualification and real operating experience, not only advisory work.
• Agree a clear scope: what you get each month.
• Ask for a fixed fee, agreed up front.
• Make sure you will work with the senior person, not a junior.

Clarity Founders offers virtual CFO services led by a Fellow Chartered Accountant who has held the CFO seat.