Ellen Wood, CEO of vcfo, was recently featured in Forbes in a piece by contributor Alexander Puutio.
Financial management can be tough, especially for companies without the budget or need for a full-time CFO. Managing cash flow, planning growth, and making strategic decisions can quickly become overwhelming without expert help. That’s where a Fractional CFO comes in.
What this article covers:
- What a Fractional CFO is.
- How they support business growth.
- When you should hire one.
This blog covers what Fractional CFOs do, how they drive business growth, and when hiring one makes sense. Whether your business is expanding, raising funds, building an acquisition strategy, or facing financial challenges, a Fractional CFO can provide the expertise you need to succeed.
Discover how a Fractional CFO can elevate your business. Schedule a free consultation today.
What is a Fractional CFO?
A fractional CFO is a Chief Financial Officer who is engaged on less than a full-time basis. The amount of time they dedicate to a specific engagement varies based on the scope of work undertaken, and their schedule can even fluctuate week to week. Some fractional CFOs operate on a retainer model, committing to a block of time, while others work on an hourly basis, similar to many professional service providers.
How Fractional CFOs differ from full-time and interim CFOs.
A full-time CFO is an employee and often a company officer, responsible for Finance and Accounting, and sometimes also IT and/or HR.
An interim CFO is a full-time professional hired during transitions, like when a CFO resigns or takes extended leave.
The key difference between the three is the type and length of engagement. A fractional CFO works part-time or as needed, making them a flexible option for companies that don’t require or can’t afford a full-time CFO.
Why businesses opt for part-time CFO services.
Companies hire fractional CFOs when they need financial expertise but don’t require a full-time CFO. Fractional CFOs are especially valuable for growing companies that need strategic financial leadership. Key benefits include:
- Strategic Guidance: Participating in strategic planning to identify opportunities and delivering insight on how to execute on them. Maintaining a focus on maximizing shareholder value.
- Growth Management: Scaling infrastructure, upgrading systems, implementing management reporting to guide decision making, leading and mentoring the team.
- Financial Forecasting: Participating in appropriate strategic planning and then developing supporting forward looking forecasts, mapping out the plan and components necessary to achieve goals.
- Critical Financial Activities: Leading financing rounds, structuring acquisitions, analyzing pricing, identifying cost-saving opportunities, benchmarking performance, supporting an exit and anything else that comes up.
- Exit Planning: Preparing companies for planned exit opportunities as well as being prepared for an unplanned opportunity that can surface with a focus on maximizing shareholder value.
The flexibility and expertise of a fractional CFO make them an essential asset for businesses scaling strategically but before they have a full time need or budget for an in-house CFO.
Key Benefits of Hiring a Fractional CFO
Cost Savings: Financial leadership without the full-time salary.
The most important benefit by far is tapping the expertise of a CFO. At a more granular level, the benefits are cost savings, i.e. financial leadership without the full-time salary.
A fractional CFO offers businesses high-level financial expertise without the expense of a full-time executive salary. This flexible arrangement allows companies to access the precise level of financial leadership they need without overspending. Additionally, working with a firm specializing in fractional executives provides access to a diverse range of expertise and experience. Whether your company is in the early startup phase, navigating hyper-growth, executing on acquisitions or preparing for an exit, a firm is more likely to have a diversity of experience on their team enabling them to provide a fractional CFO with the right expertise and experience for a wide variety of needs. A firm may tap the expertise of several CFOs on their team if needed.
Strategic Financial Planning: Expertise in budgeting and forecasting.
A key responsibility for the CFO is creating financial forecasts mapped to the company’s strategic plan, identifying required resources, and developing optimal funding strategies. A fractional CFO helps businesses develop and execute these forecasts effectively. They also manage budgeting, which sets annual revenue targets and associated expenses. The CFO collaborates with internal departments and teams to refine budgets and monitor performance. When variances occur, they recommend and implement changes. Using Key Performance Indicators (KPIs), they provide insights to prevent surprises and keep performance on track.
Cash Flow Optimization: Ensuring financial stability.
Cash flow is the lifeblood of any business, and a fractional CFO plays a key role in maintaining financial stability. The best plans can fail without proper funding. Steady sustainable cash flow is essential for covering expenses like materials and salaries. Many businesses face cash flow issues due to poor invoicing, lax collections, or engaging in deals too large to finance from current cash flow. A fractional CFO addresses these challenges by enforcing disciplined cash flow management, projecting inflows, and estimating cash needs for growth. Companies should maintain rolling 13-week cash flow forecasts to anticipate needs and stay prepared.
Scalability: Support for growing businesses and startups.
Scaling a business requires careful planning, and a fractional CFO often serves as the architect of this growth. They create comprehensive financial plans to align with the company’s vision, strategically adding headcount and infrastructure at critical inflection points. Delaying necessary investments can lead to inefficiencies and higher costs as the company scrambles to catch up with growth demands. A fractional CFO ensures resources are in place when needed, helping businesses scale effectively and efficiently while avoiding unnecessary expenses or obstacles.
Find out how a Fractional CFO can improve your company’s financial health.
When Does a Business Need a Fractional CFO?
Startup and Early Growth
A fractional CFO can offer invaluable guidance to founders even before a company incorporates. Decisions made at this stage can have lasting ramifications, and consulting with an experienced CFO can prevent costly missteps. For instance, founders must understand the critical value of their company’s equity. Improper handling of equity—as seen in cases where businesses promise excessive shares to early employees or funding partners without foresight or proper agreements—can lead to complex, damaging situations later on. Sophisticated funding sources will walk away from transactions that require significant clean-up of early capital mistakes. A fractional CFO ensures that equity decisions align with both short-term and long-term company goals, protecting its value while avoiding unintended consequences. They also set up the initial financial infrastructure and financial and management reporting, as well as system implementation and banking. They bring the knowledge of what is needed early days and the experience and expertise to execute.
Fundraising
Fundraising is time-consuming and complicated at every stage and especially at the earliest stage. Generally, the funding resources have much more experience with this than the business owner and owners benefit from expert guidance during this critical stage, especially in any transaction involving equity. An experienced transaction attorney should be a key member of your team in partnership with your CFO. Bank financing is not dilutive, but it is also not an option for most start-ups. Early-stage companies and those without the financial wherewithal to guarantee debt often turn to friends, family, angel investors, or venture capitalists for their earliest funding. A fractional CFO helps evaluate these options, ensuring companies understand the impact of terms and conditions that come along with various forms of fundraising. These terms can dictate decision-making control, early repayment rights, additional committed investor returns, and result in significant impact on the allocation of shareholder value in an exit. The importance of understanding the ramifications of the terms and conditions a company enters into in any transaction cannot be stressed enough. A fractional CFO provides the expertise to negotiate fair terms while protecting the company’s finances and growth potential.
Mergers & acquisitions
Mergers and acquisitions (M&A) require careful planning and execution before, during and after a closing. A fractional CFO with the right integration experience is key to ensuring success. The M&A process should start with a clear definition of what a successful transaction will bring to the table and then thorough vetting of potential candidates against those requirements. Instead of getting caught up in deal excitement, CFOs stay focused on the numbers and the deliverables ensuring decisions are consistent with the strategy.
Fractional CFOs also organize required funding, work with investment bankers when appropriate, create data rooms, and prepare financing materials. Most important to success, they ensure proper planning prior to the transaction considering all the impacted elements and particularly the employees and messaging. During the deal, they manage pre- and post-merger integration, including staffing, system integration, and communication. By providing a clear roadmap for a merger or acquisition, fractional CFOs help achieve efficiencies and prevent failures caused by poor planning.
Financial turnaround situations
Leading a financial turnaround is one of the most challenging yet rewarding roles for a CFO. Different situations call for different approaches. Ideally one would start by redefining the strategy, identifying and shuttering unprofitable areas, and developing new areas of opportunity to pivot toward. This work is often done in partnership with the rest of the C-Suite and sometimes additional outside expertise in the area of marketing and sales. Restructuring often includes cost and staff reductions, renegotiating vendor agreements, and setting new goals. These reductions in cost need to happen quickly. However, it’s not just about cutting costs, it’s about redefining strategy for long-term success and moving the company into a structure that supports that revised vision.
Creditor negotiations are also crucial, as they need to have confidence in the restructuring plan. A fractional CFO brings the expertise to craft a solid recovery plan and guide its execution, ensuring the company regains stability and emerges stronger. They are also seen by the creditors as an outside expert bringing new discipline and credibility to what has been a troubled relationship.
Real-World Success Stories
Case Study 1: Delta Millworks
Delta Millworks, a leader in thermally modified wood sidings, has evolved into a renowned provider with over 2,000 product variables. Despite significant growth, the company faced financial strain caused by capital-intensive operations, tax liabilities, and operational disruptions during COVID. These challenges highlighted the need for a more robust financial system and strategic guidance.
Engaging vcfo in 2022 marked a turning point. With expertise from vcfo fractional CFO Elbert Johnson, the team improved cash flow, updated legacy financial systems, transitioned to accrual accounting, and optimized their ERP implementation. Now poised for greater profitability, Delta Millworks is set to reach $40M in revenue with plans underway for a new manufacturing facility.
Case Study 2: AxNano
AxNano shifted from a research-focused organization to a product-driven company tackling PFAS contamination. By creating mobile hardware to capture and destroy harmful chemicals, the company addressed critical water quality issues. Partnerships with the Army Corps of Engineers and General Atomics secured military contracts and fuelled growth.
To support this expansion, AxNano partnered with vcfo. Lee Ann Perry-James, vcfo fractional CFO, led efforts in financial planning, Series A fundraising preparation, and restructured from an LLC to a C Corp to attract investors. These steps positioned AxNano for scalable, sustainable growth. As of May 2025, Year-to-Date Net profits are 179% over 2024 Total Net Profits, which is 56% of last year’s total revenue with 7 more months to go.
Get Financial Leadership without the Full-Time Cost
A fractional CFO offers financial expertise, strategic planning, and operational efficiency on a flexible basis. This enables companies to cost effectively access the expertise they need. Whether your company is expanding, fundraising, or facing challenges, a fractional CFO delivers tailored leadership to address these needs.
If your business needs better financial management, scalability, or strategic direction, it’s time to explore your options. A fractional CFO can help overcome obstacles and position your company for long-term success. The right guidance makes all the difference.
Need financial leadership without the full-time cost? Book a free consultation today!
