It’s the era of the part-time CFO: the financial leader who works flexible hours putting their unique skill sets to use at multiple businesses. As opportunities for this type of work expand, however, finance leaders who want to make the jump to fractional CFO work need to ensure they are covering all their bases.

A key step before taking on such a role is “knowing what it is that you bring to the table and what your specialty is,” said Michelle Delker, founder of The William Stanley CFO Group, a Wesley Chapel, Florida-based boutique fractional CFO and financial services firm.

Find your niche 

While some might think of CFOs as one-size-fits-all, that’s far from the case, with each leader bringing a unique background and experience to the job — Delker likened it to choosing restaurants, where two might serve the same type of cuisine such as Japanese or Italian fare, but specialize in different regions or cooking styles.

“There are some folks who have tremendous public accounting backgrounds, and maybe those folks are best suited to facilitate transactions with stocks or IPOs to help organizations that need to go public,” she said in an interview. “Whereas, maybe someone else is a specialist as it relates to turn around, maybe managing through liquidity issues. So I think the first thing is to define where it is that you really shine and what you'll be able to fill in the market.”

It’s also critical to get a well-rounded, intimate look at the company, its strengths and challenges, and ensuring there is “a very clear plan and path forward” is critical before signing on for a fractional CFO job, she said. Delker, who founded the William Stanley CFO Group last year, will typically perform between 10 to 12 hours of due diligence before she prepares an engagement offer for a company, she said.

Because of that leg work — which Delker does not bill for — she is “able to clearly define the scope that appears to add the most value, and then I get buy-in or consensus from that leader and then price the engagement accordingly,” she said.

Finance professionals considering fractional CFO work must also be ready to adjust to a new way of working: Some executives may thrive on the flexibility and wealth of experience, Dan DeGolier, CEO and founder of Boulder, Colorado-based fractional CFO firm Ascent CFO Solutions, said in an interview.

“You almost look at it as putting your career on hyperdrive,” DeGolier, who started his career in public accounting and served in a variety of financial leadership roles before founding Ascent in 2011, said of fractional CFO work.  “Because if you’re working with three or four different companies as the CFO, you get to have so many different types of experiences.”

Still, the nature of fractional CFO work is not for everyone; “not everyone can switch tasks” that easily when it comes to working with different companies with different needs, DeGolier said. On the other hand, that challenge and the ability to add value to companies with one’s own unique skill set is one of the main draws of fractional CFO work for leaders, especially as companies begin to hunt for finance leaders with a broader range of skill sets.

“I think what you'll find for folks that are at this point in your career is it is not about collecting a check,” Delker said. “It is about providing that value and bringing (in) that leader to be able to get to that next level.”

Putting a price on it

Having a key understanding of one’s specialty is essential, but it is also critical to know one’s worth when stepping into the burgeoning fractional CFO field, especially as more and more businesses start to contemplate the benefits of hiring such a leader.

As fractional CFOs come into play when the business “may only need on a monthly basis, 20 hours or 30 hours of that professional’s time,” Delker said — making them distinct from interim executives, who hold temporary, but full-time positions — hiring a fractional CFO could represent significant cost savings for smaller businesses. Such a move could shave approximately $60,000 annually from a businesses’ expenses, according to data from cash flow forecasting service provider Helm.  

The bill for a fractional or part-time CFO can vary, but they typically bill between $200-$350 per hour depending on location, Helm said. By comparison, the average annual salary for a full-time CFO hovers around $160,000, according to ZipRecruiter.

Fractional CFO Brendan Maaghul, for example, who left his career in investment banking during the pandemic to pursue such work, charges a fixed monthly fee for his services which typically ranges between $6,000 to $8,000 per month, he said.

Maaghul wound up pursuing fractional CFO work partially because the volatility of the market made focusing on multiple companies a more stable bet, he said. He works primarily with startups or businesses in their early stages, which are just beginning to “have a regular cadence of board meetings and board updates, and their investors are now asking for the various operating metrics, financial metrics that they need to keep apprised of their investment situation,” he said in an interview.

The client relationship starts with an initial four-month engagement, he said, which is the shortest amount of time he will work with a client. Maaghul also typically works with between three or four clients at a time, he said.

How fractional CFOs bill also differs by individual, he said — while a project-based model in which such a CFO is paid to deliver a financial model, for example, may work for some people, “for me, it felt a bit transactional,” he said.

Read the fine print

As opportunities for this type of work grow, another critical first step for would-be fractional CFOs — similar to interims and other part-time executives—is to do their homework and to have a transparent understanding of what they are being hired to do, executive employment attorney Robert A. Adelson said.

That understanding that should be clearly laid out in the contract between the executive and the company, Adelson — who represents the interests of executives including CFOs, CEOs, and CTOs — said in an interview. If a contract has ambiguous language such as, “’you will have the duties of interim chief financial officer and all of the duties associated with the position and such other duties as the CEO may assign,’ you’re screwed,” Adelson said. “You have no protection at all.”

Candidates for the fractional positions should also be sure they are keeping an eye on any potential liabilities they face as a non-permanent employee of the company and ensure those are covered in the contract as well. Additionally, having one’s duties and responsibilities clearly laid out can create more room for executives to negotiate things like compensation and bonuses.

“If you're brought in for a particular purpose, you may use that as an opportunity to fashion for yourself a special bonus,” Adelson said, which could be cash, equity or other awards.

Executives looking for something in the fractional vein can create a limited liability corporation or a consulting firm in order to source out part-time or consulting work, said Adelson.

Having that element of transparency from the start is essential to building a strong relationship with the company: for Delker, the biggest red flag when considering a potential engagement is “if an owner or CEO is consistently dishonest or attempts to mislead,” she said via email.

“The financials tell the story. A good professional will see the truth. It’s one thing for a leader to be misinformed. It’s another to be blatantly dishonest,” she said. “For the relationship to be successful, the CEO must be willing to provide full transparency. They must be open and honest. Otherwise, the engagement will be a constant uphill battle.”