A part-time/fractional startup CFO has several key roles in a startup. Not only does the CFO serve as a financial advisor, but they can also help with financial modeling, reviewing financials every month and make sure everything is accurate, tighten up the budget when needed, and any board prep that may be required. They can also help with operational duties, including handling the insurance for the startup and managing any leases.
There really are a million things a startup CFO can do.
The cost to bring on a fractional CFO can vary by the level of experience that the CFO has, market conditions and the exact services that the startup needs.
CFO billing structure
Most startup CFOs tend to work with three or four clients, and charge in one of two ways:
Standard hourly rates typically range from $250 to $350 an hour. The rate is always negotiable, but keep in mind that startup CFOs are in pretty high demand right now, so the negotiation leverage is on their side. We’ve seen the best charging $400 an hour for smaller projects recently.
If the CFO is working on a fixed monthly fee, they will typically allocate one full day per week to their clients. They often will leave Fridays open as a day to spend more time with a particular client or provide more of an advisory service.
So, to specifically answer the question:
What do part-time CFOs cost?
Fractional or part time CFOs either bill by the hour or at a fixed monthly price. Hourly rates vary from $250 to up to $400. Monthly costs usually entail one or more days a week specifically dedicated to the client’s business, and are usually $8,000 to $16,000 per month
Ensuring You Receive Services You Pay For
One thing all clients should do is validate that they aren’t hiring a startup CFO who is overextended and has taken on too many clients and responsibilities. You want the cost to be worth the ROI! Sometimes, CFOs are faced with mandates from their firm, requiring a certain number of clients per month. In those cases, they’re only able to spend a couple of hours a month with a client, especially smaller clients. We’ve seen this with smaller accounting firms that are overly focused on growth.
Most fractional CFOs got into the business because they want to help their clients, and especially help startups grow. So they recognize when they’re stretched too thin and aren’t adding value to your startup. The good CFOs will be honest and upfront and let you know that they’re too busy, but they’ll offer to check back in with you in six months or so. This is how we manage our practice at Kruze.
Given the current state of the market, CFOs are even harder to find.
Consider a One-Stop Shop Like Kruze
Sometimes when a startup founder says “I need a CFO,” they’re actually looking for financial modeling to share with their investors or raise capital for just that month. Or maybe they just need the monthly budget to actuals. Seeing where you’re overextended or where you may have spent too much money, or even under-investing, is very valuable.