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Outsourced CFO versus Fractional CFO

Understanding the Real Differences Between Fractional CFOs, Outsourced CFOs, and Other CFO Services: The Rankin McKenzie Perspective

At Rankin McKenzie, the oldest and largest fractional CFO firm in the Carolinas, we’ve seen numerous articles attempting to define and differentiate various CFO roles, including fractional CFOs, outsourced CFOs, interim CFOs, part-time CFOs, and full-time CFOs. Unfortunately, many of these articles propagate misconceptions and inaccuracies that can lead businesses astray. As an authority in this field, we feel it’s essential to set the record straight.

Debunking Common Misconceptions with Authority

Fractional CFOs Are Comprehensive Financial Leaders, Not Just Project-Based Specialists

In articles like those from ThinkPlumb and John Courtney on Medium, fractional CFOs are often reduced to project-based specialists, hired for their specific expertise on short-term needs. For example, ThinkPlumb asserts, “Fractional CFOs typically provide services on an as-needed basis,” which underplays the strategic and ongoing role these professionals play within a business. Similarly, John Courtney’s article suggests that “a fractional CFO typically has a limited focus and is often engaged for specific financial projects or tasks.”

At Rankin McKenzie, we fundamentally disagree with this characterization. Our fractional CFOs are deeply integrated into their clients’ leadership teams, providing comprehensive financial services that go far beyond narrow, project-based engagements. We don’t just step in when there’s a problem; we work proactively to steer the company toward sustained financial health and growth. To suggest otherwise is to fundamentally misunderstand the value that a seasoned fractional CFO brings to the table.

The Flexibility Myth: Fractional vs. Outsourced CFOs

Some articles imply that outsourced CFOs are inherently more flexible in adjusting their level of service as a business grows compared to fractional CFOs. John Courtney’s article, for instance, argues that “outsourced CFOs can take on a wider range of responsibilities and can be engaged on a full or part-time basis,” implying that fractional CFOs are less adaptable.

This is misleading. At Rankin McKenzie, we know that flexibility is not a function of whether a CFO is labeled as “fractional” or “outsourced.” Both types of CFOs, particularly those operating part-time, offer the same level of adaptability. A critical aspect of our engagement and onboarding process is understanding the scope of a client’s needs from the outset so that appropriate capacity is established up front. As the financial house comes into greater order and the capacity of the in-house staff develops, we often find clients need an easy-to-accommodate reduction in hours from their fractional CFO. Alternatively, as their business scales, they may outgrow the fractional model entirely, at which point we assist them in finding a full-time replacement. This is the kind of tailored flexibility that comes from experience, not just terminology.

The Misconception of “On-Demand” CFOs

Another fallacy, as highlighted in both ThinkPlumb and Medium articles, is the idea that fractional CFOs provide “access to financial expertise when needed,” implying they operate like a client-directed on-call service. For example, ThinkPlumb claims that fractional CFOs “offer flexibility and cost savings by providing expertise as needed,” suggesting a model where high-level CFOs are sitting on the sidelines waiting to be called into action.

This concept is not only impractical but also economically imprudent. High-level CFOs, whether fractional, outsourced, or otherwise, allocate a defined portion of their time to each client, ensuring that they can deliver focused and effective financial leadership. The idea of maintaining an on-demand, high-level CFO with significant slack in their schedule isn’t likely to be affordable or attract an expert CFO. It simply doesn’t make sense to pay for the availability of a CFO without consistently leveraging their capacity. Instead, businesses should align their needs with the appropriate level of commitment, ensuring they fully utilize and benefit from their CFO’s expertise.

What These Articles Get Right

While we take issue with several of the points made in these articles, it’s important to acknowledge what they get right. Both ThinkPlumb and John Courtney correctly emphasize the importance of selecting the right CFO model based on a company’s specific needs. Courtney’s article rightly notes that “the decision between a fractional CFO and an outsourced CFO depends on the specific needs and requirements of the business,” which is a point we fully support. Likewise, ThinkPlumb accurately highlights the cost-effectiveness of fractional CFOs, stating, “Fractional CFOs can be highly beneficial for businesses that require specific financial expertise on a part-time basis,” which aligns with our experience at Rankin McKenzie.

These articles are correct in pointing out that CFO services must be tailored to the unique circumstances of each business. However, the nuances of how these services are delivered and the real value they bring need to be understood more clearly, which is where Rankin McKenzie’s expertise comes into play.

Clarifying the Terminology with Rankin McKenzie Expertise

The term “fractional CFO” is often misunderstood. At its core, “fractional” is just a sophisticated way of saying “part-time.” A fractional CFO is someone who dedicates a portion of their time exclusively to your business. This can be structured as either a W-2 employee or a 1099 contractor, though solo freelance CFOs often operate under 1099 contracts, spending significant time on business development. Fractional CFOs, especially those affiliated with a firm like Rankin McKenzie, benefit from being part of a network of professionals, allowing them to focus entirely on serving their clients without the distractions of solo business development efforts.

When we talk about “outsourced part-time CFOs,” we’re essentially describing the same role as a fractional CFO, particularly within the context of Rankin McKenzie. Our CFOs have access to a support network, ongoing professional development, and a dedicated business development team, enabling them to concentrate fully on delivering value to their clients.

A Comprehensive Comparison

At the end of the day, it’s really just a simple conversation about part-time versus full-time and outsourced versus insourced.

CFO Type	Employment Basis	Duration	Workload	Typical Use Case	Cost
Fractional CFO	Part-time (up to 4 days/week, or up to 35 hours)	Ongoing, flexible	Part-time, consistent hours	Small to mid-sized businesses needing high-level financial guidance without a full-time commitment	Lower than full-time CFO, varies by engagement
Outsourced CFO	Part-time or full-time	Ongoing or project-based	Variable, depending on contract	Companies needing specific financial services or broader financial management without full-time employment	Typically lower than full-time CFO, varies widely
Interim CFO	Typically full-time, can be part-time	Temporary, until a full-time CFO is hired or the transition is complete	Full-time or reduced hours as needed	Companies undergoing transitions, restructuring, or leadership changes	Comparable to full-time CFO, possibly higher due to urgency
Part-time CFO	Part-time	Ongoing, regular part-time basis	Consistent part-time schedule	Companies needing ongoing financial oversight but don’t require full-time hours	Lower than full-time CFO
Full-time CFO	Full-time	Permanent, full-time	Full-time	Companies with complex financial needs requiring constant oversight	Highest cost, full salary, and benefits

The Bottom Line: Rankin McKenzie Sets the Standard

At the end of the day, the labels—fractional, outsourced, part-time, or full-time—are less important than ensuring that the client and CFO have a clear understanding of the relationship. What truly matters is that expectations are clearly defined from the outset. This clarity will help ensure a successful partnership, regardless of the specific title or contract type.

When you’re ready to find the right financial leadership for your business, consider what you truly need and how best to align that with the expertise available. At Rankin McKenzie, we pride ourselves on matching businesses with the right CFO services to meet their specific needs, providing stability, growth, and strategic direction in a way that suits your business model.