The short answer
A fractional CFO is a person. You are buying a slice of one senior finance leader's time — typically one or two days a month — and everything they produce is bounded by how many hours you bought.
An outsourced CFO is a function. You are buying the CFO's judgment plus the team underneath them that does the actual work: the controller who owns the close, the accountant who codes transactions, the analyst who builds the model.
That distinction sounds academic until the first month a board deck is due the same week as the close. A fractional CFO has to choose. An outsourced CFO function does both, because the close never sat on the CFO's desk to begin with.
Where fractional CFOs work well
Fractional is the right call when your accounting is already clean and what you are missing is specifically senior judgment on a defined question.
- You have a solid bookkeeper and a reliable close, and you need someone to build the raise model
- You are running a single, bounded project — a pricing overhaul, a lender negotiation, an audit prep
- Your board asked for a finance voice in the room and you need one within a month
- You are under $2M in revenue with a simple, single-entity structure
The failure mode
Hiring fractional to fix a books problem. A fractional CFO who inherits messy books spends their expensive hours doing cleanup — you are paying CFO rates for bookkeeping work, and the strategic output you actually wanted never arrives.
Where outsourced CFO works better
Outsourced makes sense once finance has become an operating function rather than a periodic question — when the volume of routine work is enough that a single part-time person becomes the bottleneck.
- Your close takes longer than 15 days and the reason is capacity, not complexity
- You are running multiple entities, currencies, or revenue streams
- Investors or lenders want monthly reporting on a fixed calendar
- Your CFO keeps getting pulled into reconciliations instead of forecasting
- You are past roughly $3M in revenue with a real payroll and AP volume
What each actually costs
Fractional CFOs price on time. Expect $200–$400 an hour, or $3,000–$8,000 a month for a retainer covering one to two days. The number is predictable; the scope is what moves.
Outsourced CFO engagements price on scope, because the deliverable is a functioning finance department. A typical range is $4,000–$12,000 a month depending on transaction volume, entity count, and how much reporting cadence you need. That figure includes the bookkeeping and controller layers.
Comparing the two on headline price is misleading. A $5,000 fractional retainer plus a $2,500 bookkeeper plus your own time managing both is not cheaper than a $7,500 outsourced function — it is the same money with more coordination overhead landing on you.
The question that settles it
Ask what breaks if this person is unavailable for two weeks. If the answer is "we delay a decision," fractional is fine. If the answer is "we do not close the month," you need a function, not a person.
A practical sequence
Most companies do not choose once. They move through the stack as volume grows, and the transitions are cheaper when you plan them.
- Under $1M: bookkeeper plus your own oversight
- $1M–$3M: bookkeeper plus fractional CFO for raises and board work
- $3M–$10M: outsourced CFO function covering close, reporting, and forecasting
- $10M+: in-house VP Finance or CFO, often with outsourced accounting still underneath