How to Scope a Fractional CFO Engagement
Define deliverables, hours, and expectations before you start—a practical guide to setting up for success.
Key Takeaways
- •Document scope, hours, deliverables, and terms before starting
- •Be specific about what's included vs. what costs extra
- •Build in flexibility to adjust as your needs change
- •Set clear communication and availability expectations upfront
A well-scoped fractional CFO engagement sets clear expectations for both sides. Without it, you might end up paying for services you don't need, missing out on value you expected, or dealing with scope creep that strains the relationship.
This guide walks through everything you need to define before signing an engagement letter. Get this right, and you'll have a foundation for a productive partnership.
Core Elements Every Engagement Should Define
1. Primary Objectives
What are you trying to accomplish? Be specific about your priorities.
Examples of clear objectives:
- "Prepare for Series A fundraise in Q3"
- "Implement monthly board reporting by end of Q1"
- "Build 3-year financial model for strategic planning"
- "Establish financial infrastructure for scaling from $5M to $15M"
2. Time Commitment
How many hours per week or month? This drives pricing and sets expectations.
Light Touch
5-8 hrs/week
Advisory, reporting oversight
Standard
10-15 hrs/week
Full fractional CFO support
Intensive
15-20 hrs/week
Fundraising or transformation
3. Specific Deliverables
What tangible outputs should you expect? List them explicitly.
Ongoing Deliverables:
- Monthly financial review
- Cash flow forecast updates
- Board deck financial section
- Weekly strategy calls
One-Time Deliverables:
- Financial assessment report
- 3-year financial model
- Data room organization
- KPI dashboard setup
4. Pricing Structure
How will you be charged? Common models include:
Monthly Retainer
Fixed monthly fee for defined scope. Most predictable for budgeting.
Hourly + Cap
Hourly billing with monthly maximum. Flexibility with protection against overruns.
Project-Based
Fixed fee for specific projects (like fundraising). Clear deliverable and price.
Setting Clear Scope Boundaries
As important as what's included is what's NOT included. Clarity here prevents disputes and disappointments.
Typically Included
- Strategic financial planning
- Financial model development
- Board/investor reporting
- Cash flow management oversight
- Bookkeeper supervision
- Month-end close review
- Strategic advice and analysis
- Regular status meetings
Typically NOT Included
- Day-to-day bookkeeping
- Payroll processing
- Tax preparation and filing
- Bill pay and AP processing
- Bank reconciliations
- Audit fieldwork
- HR administration
- Legal document review
Gray Areas to Clarify
Some items fall in between. Explicitly discuss: software implementation, vendor contract negotiations, board meeting attendance, investor meeting participation, and ad-hoc special projects. Don't assume—ask.
Communication & Availability Expectations
Misaligned communication expectations are a leading cause of fractional CFO relationship problems. Set these explicitly.
Questions to Answer
Regular Meeting Cadence
Weekly strategy call? Bi-weekly check-in? Monthly deep dive? What format and duration?
Response Time Expectations
Email within 24 hours? Slack within same day? What's the protocol for urgent matters?
Communication Channels
Email? Slack? Phone calls? Video meetings? What's preferred for different types of communication?
Availability Windows
What hours are they generally available? Time zone considerations? Vacation/coverage protocols?
Sample Communication Framework
Weekly: 60-minute strategy call (Tuesday 10am)
Email response: Within 24 hours on business days
Urgent matters: Text/call for same-day response
Slack: Available for quick questions during business hours
Vacation: Two weeks notice, coverage plan provided
Sample Engagement Structures
Here are three common engagement structures to use as templates:
Basic Strategic Support
$3,000-$5,000/moFor companies that have their operations under control but need strategic guidance.
Included:
- Bi-weekly strategy calls (2 hrs/mo)
- Monthly financial review
- Quarterly forecasting support
- Ad-hoc strategic questions
Time commitment:
5-8 hours per week
Best for:
Stable businesses needing advisory support
Full Fractional CFO
$6,000-$10,000/moComprehensive CFO support for growing companies. Most common engagement type.
Included:
- Weekly strategy calls
- Full financial model development
- Board deck preparation
- Cash flow management
- Bookkeeper oversight
- Budget development and tracking
Time commitment:
10-15 hours per week
Best for:
Growing companies needing full CFO function
Intensive/Fundraising
$10,000-$15,000/moHigh-intensity support for fundraising, M&A, or transformation periods.
Included:
- Everything in Full Fractional CFO
- Data room preparation
- Investor model and materials
- Due diligence support
- Investor meeting participation
- Term sheet review
Time commitment:
15-25 hours per week
Best for:
Companies in active fundraising or M&A
Building in Flexibility
Your needs will change. Build flexibility into the engagement from the start.
Flexibility Mechanisms to Include
- Monthly adjustment clause: Either party can request scope changes with 30 days notice.
- Hour bank: Unused hours in light months can roll forward (within limits) or trigger a scope discussion.
- Project add-ons: Define how out-of-scope projects (like acquisitions) will be priced.
- Quarterly reviews: Built-in checkpoints to assess and adjust the engagement.
Avoid Long Lock-Ins
Month-to-month engagements with 30-day termination notice are industry standard and protect both sides. Be wary of fractional CFOs who insist on 6-month or longer commitments before you've worked together.
What to Include in the Engagement Letter
Document everything in a written engagement letter. It doesn't need to be complex, but it should cover:
Engagement Letter Checklist
Frequently Asked Questions
How many hours per week does a typical fractional CFO engagement require?
Most fractional CFO engagements range from 5-20 hours per week. Early-stage companies typically need 5-10 hours for basic strategic support and reporting. Companies in fundraising mode or with complex operations often need 15-20 hours. The right amount depends on your specific needs and the depth of support required.
Should the scope be documented in a formal contract?
Yes. Even with a trusted advisor, document the engagement in writing. This doesn't need to be a complex legal document—a clear letter of engagement covering scope, hours, pricing, and termination terms protects both parties and prevents misunderstandings.
How often should we revisit and adjust the scope?
Review the engagement quarterly or whenever significant changes occur. Business needs evolve—you might need more hours during fundraising, fewer during a stable period. Good fractional CFOs proactively suggest scope adjustments based on changing needs.
What should be explicitly excluded from scope?
Common exclusions include: day-to-day bookkeeping, payroll processing, tax preparation, and audit support (unless specifically agreed). Also clarify who handles things like software implementation, vendor negotiations, and board meeting attendance—these may or may not be included.
Related Resources
Complete Hiring Guide
Full framework for finding and hiring
Onboarding Checklist
What to prepare for the first 30 days
Fractional CFO Pricing
What to expect to pay
When to Make a Change
Signs it's time to transition
Ready to Scope Your Engagement?
Eagle Rock CFO offers flexible engagement structures designed for growing businesses. Let's discuss what would work best for your needs.
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