Unlocking Financial Success: Part-Time CFO Rates Demystified
It was in March 2024 when Global Finance Magazine reported that CFOs around the world have started to switch jobs at a faster rate and occupy their positions for a relatively shorter time. It shows the rising trend of fractional CFOs or part-time CFOs in the business world. The role of a Chief Financial Officer hardly existed a few decades ago. In 2015, practically every company had one!
Small businesses that cannot find a toehold in the aggressive market of entrepreneurship often cannot raise enough funds to hire a full-time CFO. Thus, they end up hiring a virtual CFO who may not be committed 100% to their startup and doesn’t have to be paid the fee of a full-time employee. That’s something TechInnovate, a technology startup did when the business owners found themselves in need of financial advice.
Founded in 2020, TechInnovate developed innovative software solutions for other small businesses. Soon, the founders realized that they needed someone to look after their cash flow management & budgeting. For that, they decided to hire a part-time CFO who saved their business by doing this:
- Financial assessment to identify areas for improvement
- Developing a comprehensive budget aligned with long-term objectives
- Established cash flow management policies for better transparency
- Conducting error-free financial reporting to gain insights into performance metrics
Instead of hiring a full time CFO, they saved money by working a deal with a fractional one. In 12 months, the company was seeing a noticeable surge in its profitability. Its business revenue increased by more than 150% and operational costs went down almost 30%, a testament to part-time CFOs’ skills.
In this article, we’ll discuss part time CFO rates. You’ll learn how much fractional CFOs cost and which key factors affect their salaries. Use this information the next time you’re interviewing someone for this job.
Also, we’ll compare part time CFO rates with the earnings of a full-time CFO. It’ll help you evaluate exactly how much you’re saving by hiring a fractional chief financial officer instead of a full-time money guy.
How much do Part Time CFOs Cost?
The case study mentioned above should motivate you to hire an interim CFO. Here’s how a Forbes article from earlier this year describes what part time CFOs do:
- Not hired permanently as full-time employees
- Working for you on a part-time or retainer basis
- Tackling specific goals that need immediate attention
So, how much do you pay a temporary CFO? Their payment can be something like this:
1. Hourly Rates
Part-time CFOs generally charge between $100 to $500 per hour based on their expertise, experience, the nature of their duties, and other factors. Less experienced CFOs or those hired in less complex industries will charge around a grand or two. However, high-quality CFOs who work in demanding sectors (finance or tech) will charge you up to $500.
2. Monthly Retainer Fees
On average, the monthly retainers of interim CFOs go from $1,500 to $16,000. These fees may begin from $1,500 for basic services performed by chief financial officers. However, if you’re asking temporary CFOs to perform more comprehensive services, they may ask for higher retainer fees, e.g., $8,000 or double the amount! That’s especially true when you’re a startup that requires:
- Full-proof operational support
- Extensive financial modeling
Billing Structures
In light of this discussion, we can see that part-time CFOs have three billing structures:
- Hourly Billing: It’s common for smaller projects or when you need a CFO’s expertise intermittently.
- Monthly Retainers: This arrangement is better for ongoing engagements where the CFO dictates a set number of hours every month to you.
- Project-based Fees: Some CFOs may agree to work for you intermittently on certain projects & deliverables rather than providing ongoing services.
In most cases, part time CFO services will set you back between $6K and $8K a month. So, you may have to set $72K to $96K aside a year for the services of these professionals. In the UK, £60K a year is what you will pay to your interim CFO. Now, we’ll compare this salary with the earnings of a full-time CFO.
Full Time CFO vs. Part Time CFO: Salary Comparison
You may wonder how much money you can save on hiring a person intermittently for financial projects. In this section, we’ll go over a brief comparison of the salaries owed to two CFOs, one works part-time while the other is hired full-time.
Full-Time CFO Rates
- Salary: The median annual salary for a full-time CFO in the US is a little over $444,400, as per recent estimates (Investopedia). However, these salaries can often range from almost $336,000 to almost $575,000 on the higher end. In some companies, CFOs get a package of $506,000. In other companies, CFOs make a little over $362,000 a year on the lower end.
- Benefits: Also, CFOs who work for you permanently get other bonuses & incentives as well. These benefits can sometimes raise their total compensation from $600K to $900K. It’s another reason why more and more companies are letting go of the idea of having a full-time CFO on board.
Part-Time CFO Rates
- Hiring Cost: An interim CFO will charge you $100 to $500 (as mentioned above). However, the final pay of your temporary CFO will depend on what kind of stuff you, the business owner, want them to perform. Your small business may have to pay them a retainer fee of $1,500 to $16,000 based on different factors.
- Flexibility & Expertise: However, a part-time CFO can help you scale your business based on your current needs. This professional gives you high-level expertise without the long-term commitment associated with hiring a full-time financial expert.
| Full Time CFO | Part Time CFO | |
| Average Salary | Over $400K (on average) | Around $96K (at the higher end) |
| Salary Range | $335,954 – $574,857 | Varies by hourly rate and many other factors |
| Total Package | Can be over $600,000 (on average for high-end CFOs) | Typically no bonuses so there is no total package |
| Engagement Type | Full-time commitment | Flexible hours or a monthly retainer |
| Cost Efficiency | Higher overall cost | A very cost-effective option |
In short, hiring a Part Time CFO instead of a Full Time one will save your business over 60%! That’s why it is very important for businesses to really consider outsourcing CFO jobs.
Five Factors Influencing Part-Time CFO Rates
After hiring a fractional CFO, this professional may stick with your company for a few months or years. It’s possible for them to work for multiple clients. You have to take different factors when determining how much a part-time chief financial officer will be paid. We’ll discuss these important factors here in detail:
Experience and Expertise
If a CFO has a very extensive background in strategic planning, fundraising, or mergers and acquisitions, they may ask for a much higher rate than other CFOs. Their proven track record can justify this salary due to the value they bring. Also, certain industries need specialized knowledge (healthcare and technology), which can also affect rates. CFOs familiar with specific regulatory environments or market dynamics may charge more.
Scope of Work
The nature of financial responsibilities that the part-time CFO is expected to take on in terms of obligations dictates his or her rate. The more strategic the obligation, the more financial restructuring or advisory role, the higher it will be priced relative to routine financial management. Short-term contracts are also priced differently than long-term ones. Long-term agreements usually attract rate reductions.
Company Size and Revenue
Companies with higher revenues or more complex financial structures require more seasoned CFOs. For instance, companies whose revenues fall in the range of $1 million to $30 million may gain the most from part-time CFOs. The number of employees will also affect the financial complexity of an organization, and therefore the level of experience a CFO should have.
Geographic Location
There are enormous variations based on the geographic location for rates.
Example Part-time CFOs charge a higher amount when located in cities like New York or San Francisco compared to others in smaller towns or rural areas. This is because their cost of living is high, and demand is relatively higher in such places. The rates are also determined by the demand for financial professionals in that region; their increased demands lead to increased prices.
Engagement Structure
Part-time CFOs may charge hourly rates ranging from $100 to $500, or work on a monthly retainer basis that can range from $1,500 to $16,000 depending on the scope and frequency of services provided. Companies often choose part-time CFOs for their flexibility; businesses can scale their engagement based on current needs without incurring full-time costs.
Cost Benefits of Having a CFO Services
The nature of the chief financial officer’s work is evolving with every passing minute. They were first thought to be only financial advisors who salvaged business leadership, but today, they are outright strategic partners. Yes, you read that right! Besides devising business strategies and budget planners, they also offer sizeable cost benefits.
On top of that, they demand decent salaries, unlike full-time chief financial offers, who demand exorbitant wages. Below is proof of how CFO services are providing substantial cost benefits to businesses:
1. Comprehensive Expertise in Exchange for Minimal Income
Big companies hire full time CFOs as they’re not bothered about the budget; they have all the means to secure the deals. Meanwhile, smaller businesses and entrepreneurs who’ve just started can only opt for fractional CFO services and interim CFOs. But thankfully, they offer the same support as their seniors. They offer all-inclusive financial services while working only for a few hours.
2. Freedom to Grow Big and Expand
Hiring part time CFOs means bringing sociable chief financing officers into the house. Not to mention that most of them bring in decades of experience, but their dedication is on point. They help companies scale up financial leadership by providing them with pocket-friendly tailored solutions. Whether they require an effective business strategy during the growth phase or undergo mergers or asset acquisitions, they’re ready!
3. Paying Attention to Core Business Activities
Outsourcing full time or fractional CFO services allows companies to concentrate on their core operations. This means they don’t need to worry about cash flow management or imminent budget crises. Because company assets and anticipated capital gains are in safe hands—CFO specialists. They cover all the resources and strategize plans to overcome negative impacts and implications therein.
4. Enriched Financial Strategy
Their viable financial planning and analysis (FP&A) helps organizations remain cognizant of the corporate climate. In return, this helps them make informed decisions that drive profitability. Also, they’re able to secure surplus investments for other important business projects. All in all, their expertise in effective budgeting and fiscal forecasting helps develop workable business strategies while containing monthly deficits and yearly net loss.
5. Risk Management and Work Compliance
A CFO’s role includes more than just keeping finances and expenditures under control. Our sincerest acknowledgments as they also manage risks to a company’s asset count and reputation. So, it’s clear that utilizing CFO services is like putting a 360-degree fiscal shield over your company. They mitigate risks, manage financial reports, and trim the company’s workforce. Without a doubt, they help businesses save their precious time, identify workplace ambiguities, and secure substantial sums.
6. Cost-Effective Solutions
Hiring an interim or employing a fractional CFO means you save boatloads of money. Yes, you heard it right! They’re inexpensive compared to full time CFOs. The good news is that it has yet to engage with full-fledged business acumen. That’s a huge surprise for businesses running short on budget They’re like mentors who guide a company’s leadership to the right profitable direction. They are truly those who are committed to their profession; they do everything in their power to salvage businesses from incurring losses.
7. Immediate Impact on Financial Health
Interim CFOs can quickly evaluate a company’s financial health; that is what makes them a great addition to the company. Further, they can amend fixes and call for contingency plans to control unruly mismanagement and outrageous surplus deficits on the floors. These part time CFOs’ inspections and actions certainly bring larger-than-life changes to a company’s fiscal structure.
8. Growth Support and Deliverance
Fractional CFO services go beyond finances. And how do they do that? Well, they develop business growth plans that go with the flow and help businesses meet their targets. Plus, they align company goals and devise effective business strategies that align with the company’s core vision and objectives. Overall, they help small-scale businesses and bigger organizations navigate through challenges while adapting to contemporary fiscal tools and techniques.
Final Words – Part Time CFO Rates
So, why don’t you consider outsourcing CFO services? Hiring a fractional chief financial officer is a pretty great idea for small businesses and startups. Quoting Coin Masters (a guy who served as a part-time CFO for three different companies), fractional CFOs support a company and their expense line item is “one of the first things to look at.” Accessing top talent has become easier for business owners today. Now, they may hire a CFO virtually. So, you should definitely consider working with an interim CFO today.
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