Fractional CFO vs Fractional Controller: Strategic Roles Compared

When your startup reaches a certain stage in its evolution, it’s likely to require some financial assistance. One of the best ways to ensure access to high-quality financial services while responsibly managing resources is to work with an external Fractional CFO or Fractional Controller.

A Fractional CFO is responsible for much of the same things a full-time CFO is, except on an external and part-time basis. They’ll provide strategic financial guidance and oversight and help manage the overall strategy of your financial operations. A Fractional Controller, conversely, focuses more on the day-to-day financial matters as well as financial reporting and compliance.

Since our founding, Graphite Financial has provided industry-leading fractional financial services to hundreds of startups spanning different industries and remains a leader in Fractional CFO and Fractional Controller offerings.

Understanding Fractional Financial Leadership

In a business sense, the term “fractional” essentially means that your startup will receive part-time or project-based service. Fractional financial professionals work outside your startup, but still deliver high-quality work and high-level insight. This type of relationship is also much more cost-effective than bringing a financial professional in-house as a full-time employee, especially for a resource-limited startup.

For instance, full-time CFO salaries are usually several hundred thousand dollars each year, while the average Controller salary is about $100,000 per year. Our financial service packages at Graphite start at $1,250 per month, representing a significant cost savings. What’s more, fractional relationships are flexible, allowing your startup to move up to more comprehensive service tiers as your operations evolve.

Fractional CFO: Strategic Financial Leadership

A Fractional CFO is a strategic external partner who provides financial guidance and oversight to your startup. These professionals are ideal for startups that are growing or need specialized financial services without the commitment of a full-time employee. Some of the key tasks that Fractional CFOs provide include:

• Financial reporting
• Cash flow management
• Scenario planning
• Managing investor relations

Fractional CFOs can also dig deeper into your financial data to help startup leadership make smarter decisions on the future of their operations and ensure the company’s financial health remains strong.

Fractional Controller: Operational Financial Management

Unlike a Fractional CFO, a Fractional Controller tends to work on more of the day-to-day financial matters of your startup. Some of the everyday tasks Fractional Controllers perform include:

• Preparing financial statements
• Overseeing internal controls
• Providing financial analysis to support decision-making
• Budgeting and forecasting
• Processing payroll
• Adhering to regulatory standards

Key Differences Between Fractional CFOs and Controllers

The biggest difference between a Fractional CFO and a Fractional Controller is the focus of their role. Fractional CFOs tend to focus more on the big picture pertaining to your startup’s business objectives, while Controllers concentrate more on the day-to-day operations.

For instance, Fractional CFOs provide high-level financial leadership and strategy, focusing on long-term planning. They can also help manage investor relations and help your startup prepare for fundraising rounds.

Fractional Controllers focus more on accounting operations, financial reporting and compliance.

Think of a Fractional CFO as the leader of your startup’s financial strategy, while a Fractional Controller is more of the “doer” who works based on the direction provided by your startup’s financial leadership.

When Your Startup Needs a Fractional CFO

Think your startup needs a Fractional CFO? Here’s a look at some of the common scenarios and growth stages that tend to require more specialized financial leadership and expertise:

• When your startup reaches Series A funding
• When your startup begins achieving rapid growth
• When your startup begins to face more complicated financial decisions
• When financial management can no longer be adequately handled by in-house leadership

When Your Startup Needs a Fractional Controller

Your startup is likely to need a fractional controller if you find yourself in a position similar to the scenarios noted in the previous section. However, there are some key differentiators that may warrant a Fractional Controller rather than a Fractional CFO. For instance:

• If your startup is managing multiple revenue streams
• If you have advanced budgeting requirements
• If you require accurate financial reporting
• If your financial reporting lacks details or timeliness
• If you need assistance navigating growth stages

Leveraging Both Services for Comprehensive Financial Management

Sometimes, your startup might require a Fractional CFO and a Fractional Controller. If that’s the case with your startup, these two fractional roles can actually complement each other quite well, with the controller handling the day-to-day operational tasks and the CFO managing the long-term, more strategic picture.

In such a situation, the CFO would manage the Controller and work together with your startup’s leadership. This makes sense for startups that need more comprehensive financial management, both in the short term, day-to-day matters, and in the long term, strategic picture.

Cost Comparison: Fractional CFO vs. Fractional Controller vs. Full-Time Hires

Hiring a CFO and controller in-house is an investment — and it might be one that your startup either cannot make or is unwilling to make early in its evolution. For instance, the average annual salary of an experienced CFO is several hundred thousand dollars, while the average controller makes just north of $100,000. Those salaries can be difficult for a resource-limited startup to absorb.

This is where fractional support makes sense. Rather than pay salaries to full-time employees (not to mention benefits), Graphite’s plans start at $1,250 per month, representing a significant cost savings over the alternative. Depending on your startup’s specific needs, you can often work with your partner to arrange pricing models based on work by the hour or by the project as well.

Industry-Specific Considerations

Different industries have different business models — and thereby different financial needs. For instance, SaaS startups tend to work on a subscription-based model, while eComm, agency work and HealthTech have more conventional business models. When you work with Graphite, we’ll pair you with a financial professional who has experience in your industry of operation to ensure you get the most value out of a Fractional CFO or Fractional Controller partnership.

Selecting the Right Fractional Financial Partner

Selecting the right fractional financial partner isn’t much different from the process you go through to select any valued partner. Here’s a look at some of the criteria that you’ll want to weigh as you make your decision:

• Experience and level of expertise
• Any advanced credentials or qualifications
• Experience in your specific industry of operation
• Cultural fit
• Communication frequency and preferences

Graphite’s Approach to Fractional Financial Leadership

As a high-quality provider of fractional financial leadership, Graphite has partnered with hundreds of startups to help fuel their growth and optimize their company’s financial operations. Moreover, we offer different service packages so that Graphite can grow as your startup evolves.

At Graphite, we aim to serve as more than just a valued partner but as a true extension of your startup. Thanks to an onboarding manager we assign to every account, we get acclimated quickly so we can begin delivering results for you faster. Contact us today for more information and to meet our team.

Elevate Your Financial Leadership

Looking to elevate your financial leadership? Whether your needs involve a Fractional CFO or a Fractional Controller, Graphite is here to partner with your startup on the financial services it requires. For more information on our services and to learn more about our Graphite financial professionals, contact us today to schedule a complimentary consultation.

FAQs

What’s the typical time commitment for a fractional CFO vs. a fractional controller?

Time commitment depends on the needs of your startup. Startups in their early stages may require only a few hours of service per week, while startups in growth mode may require more regular financial services like help with financial statements, strategic financial planning and advanced cash flow management.

How do fractional financial experts integrate with our existing team?

We assign an onboarding manager to every one of our accounts to kick this partnership off on the right track. In the early days of this partnership, we’ll set boundaries, identify financial challenges, and define roles to ensure a high-value arrangement.

Can a fractional CFO or controller eventually transition to a full-time role?

As your startup’s needs become more significant, a fractional financial professional can transition into more of a full-time role, albeit still providing strategic planning externally of your startup.

How do we measure the ROI of hiring fractional financial leadership?

Beyond quantifiable metrics like revenue growth and cost reductions, there are also intangibles to consider. These include improved financial planning and better overall strategic decision making.

What software platforms do your fractional experts use?

We use and recommend a suite of standard tools to our partners, but we can also work with most platforms based on preference.

How quickly can we implement fractional financial services?

We work to get assimilated quickly. All partnerships come with an onboarding manager to help set the tone and get all parties up to speed.

Will we need to change our existing accounting systems?

While we prefer certain tools and software, we can adapt our approach to any programs that you’re already using and familiar with.

How do fractional CFOs and controllers handle confidential information?

Your startup’s security and confidential information is of extreme importance to Graphite. We have an internal security team that prioritizes financial data safety and adherence to financial regulations.