Outsourced CFO: What the service covers, how the model works, and when it is the right choice

What outsourced CFO services actually include, how engagement models are structured across different stages, and what to verify before choosing a provider.

The median annual wage for a financial manager in the United States was $161,700 in May 2024. Employment in this role is projected to grow 15 percent through 2034, the fastest-growing category in management occupations. Dividing the median salary by 0.701 to account for the 29.9 percent benefit cost share puts the total employer cost at approximately $230,000 per year before equity. For most seed-to-Series-B startups, that is the cost of two additional product engineers. Outsourced CFO services exist to give those companies senior finance leadership without that full-time commitment.

This guide covers what outsourced CFO services include, how the model is structured, and what founders should look for before signing an engagement.

What outsourced CFO services actually cover

Outsourced CFO services fall higher in the finance organization than bookkeeping and accounting services. The bookkeeper enters transactions. The accountant generates financial statements. The outsourced CFO then takes these financial statements to drive operations ahead by creating the financial model, managing the investor relationship, planning for fundraising activities, and making capital allocation recommendations.

By definition, an outsourced CFO service will cover three aspects of a startup that can only be provided by the outsourced CFO and not the accounting firm.

Strategic Finance: The three-statement model, the 12-month rolling forecast, scenario planning for headcount and revenue, and the monthly board pack delivered to the investors. This is the strategic planning process that turns financial information into a financial tool used for decision-making purposes.

Fundraising: Investor-ready financials, financial model development for fundraising, due diligence process for fund managers, and support at CFO level during the due diligence process. To understand the requirements of investors in terms of the data room during a Series A raise, read about preparing for Series A fundraising.

Compliance & Controls: Month-end close process management, monitoring accounts payable/receivable, payroll sign-off, and audit-readiness required for later-stage investors.

How outsourced CFO engagements are structured

Outsourced CFO services are provided via one of three frameworks depending on the needs at various stages of the company’s life cycle and budget constraints.

In the advisory framework, an experienced CFO is hired for a low hourly rate on a monthly basis; the monthly hours vary from two to four. In this case, the startup requires an experienced finance mind to consult on various decisions, but there is no need for a deeper involvement due to insufficient transaction volumes and report requirements. In the advisory framework, the CFO reviews the monthly close, participates in board meetings, and assists in making decisions.

The fractional model involves a senior CFO who works on a part-time basis and dedicates from four to eight days per month. In this framework, the CFO is involved in all aspects of financial management including monthly closing, preparing reports for the board of directors and investors, and fundraising. The majority of series A startups rely on this framework.

In the embedded framework, the CFO is embedded into the business operations on a temporary basis for three to six months. This framework is utilized in fundraising, restructuring, or other complex financial transactions.

When outsourced CFO services are the right choice

There are three scenarios where it becomes clear that it is time to seek outsourced CFO services instead of carrying on with no finance leadership.

First is twelve months prior to fundraising. Preparing the financial model, the investment narrative, and audit readiness for the process will take twelve months. Engaging a CFO the month before the process even begins is way too late. It is just too much work to prepare within such a short period of time.

Second is when the founder starts dedicating more than four hours per week to finance activities. At this point, the value of his time working on the bank statements or financial modeling will surpass the fees of hiring the CFO. In effect, the founder gains the extra time to dedicate to his main responsibilities.

Third is when the question posed by the investors at the meeting exceeds the scope of knowledge of the founder. This is not a failure on part of the founder, but just a sign that the firm has become too big for the founder to perform all the duties of CFO.

What to verify before signing an outsourced CFO engagement

Three questions separate a strong outsourced CFO engagement from one that underdelivers. Can the CFO describe exactly what they will deliver in the first 90 days? Can they show a board pack from a company at a similar stage? And have they personally led a fundraise at the round size you are targeting? The answers tell you more than any proposal document.

At Fintera, outsourced CFO services are structured around three deliverables from day one: a clean monthly close, a board-ready financial model, and a senior CFO on the board call. Call us.