Fractional or full-time

Sometimes, a founder hires a full-time CFO because it feels like a milestone, and ends up paying £100k+ a year for someone whose work only takes up two days a week. On the flipside, a founder might go fractional to save money, and end up with a finance leader who’s never in the room when they need them. This guide is written to help you work out what’s right for you.

The maths

From my CFO benchmarks:

Full-time: £80k to £120k a year at seed and £120k to £160k at Series A, plus equity of 0.75% to 2% at seed and 0.4% to 1% at Series A. Add employer’s NI, pension and the option grant, and the true cost of a Series A CFO is closer to £145k to £195k.

Fractional: £500 to £1,200 a day at seed, £700 to £1,500 at Series A. At two days a week that’s £4,000 to £9,600 a month at seed and £5,600 to £12,000 at Series A. Over a year, two days a week at the Series A mid-point is roughly £105,000, no equity, no notice period longer than a month.

So fractional is cheaper, until it isn’t. Three days a week at £1,200 a day is £180,000 a year, and at that point you’re paying more than a full-time Series A CFO for someone who has other clients.

When fractional works

You need a CFO for a project. For example a raise, a debt facility, or restructure - if it’s going to be three intense months, then not much, then fractional would work well.

The strategic work is thin. You want someone to challenge the model, sit in board meetings and take the investor calls, but the day-to-day work could be a Head of Finance job or even outsourced? A day a week of the right person could be perfect.

You want to preserve equity for full-time hires. A fractional CFO doesn’t usually take equity, which keeps your option pool for the permanent team.

You want to test the fit. Plenty of fractional engagements turn into full-time hires. It’s the longest interview you’ll ever run and it costs nothing extra.

Where it fails

Stock. If you’re managing inventory, cash goes out in lumps and the forecast changes daily, then a finance leader who’s only reachable one day a week isn’t that useful.

The founder wants a partner. Some founders need someone to think with every day - fractional people can be excellent at the thinking but they’re unavailable for the every day.

Their other clients have a crisis the same week you do. It happens - the good ones manage it but it’s still a risk you don’t carry with a full-time hire.

My own experience runs both ways. At Apex we had a full-time CFO who was the wrong hire (I’ve written about that in the CFO guide), and we had a fractional CMO who was excellent. He’d done the role several times before, at businesses our size, and was useful from the very first week. Senior experience at a price that a seed-stage business can pay is why I’m a believer in the model, and why I place into it.

A rough rule

Under £1m in revenue with no stock: outsourced bookkeeping plus a fractional CFO for the raise.

Between £1m and £4m, or any stock at all: a full-time Head of Finance, with a fractional CFO on top if a round or a facility is coming.

Above £4m, or with a Series B in view: a full-time finance leader, and the question becomes Head of Finance or CFO.

For candidates

If you’re a finance leader weighing up fractional work, the candidates page covers how I work on both sides.

If you’re still not sure which, get in touch and we can talk it through.