When to Fire Your Fractional CFO

Signs it's not working and how to transition smoothly—because staying in a bad engagement costs more than making a change.

Last Updated: January 2026|10 min read

Key Takeaways

•Have a direct conversation about concerns before deciding to end the engagement
•Clear signs include: no progress after 90 days, poor communication, lack of proactivity
•Don't let sunk cost fallacy keep you in a bad engagement
•Plan transitions carefully to avoid financial function disruption

Not every fractional CFO engagement works out. Sometimes the fit isn't right, expectations don't align, or the CFO simply isn't delivering value. Recognizing when it's time to make a change—and handling the transition well—is important.

This guide helps you distinguish between normal growing pains and signs of a fundamentally broken engagement. It also covers how to have the conversation and manage the transition professionally.

Before You Decide

Most issues should prompt a direct conversation before a decision to terminate. Many problems can be resolved through clear communication. This guide assumes you've already tried addressing concerns directly.

Clear Signs It's Time to Make a Change

These issues, especially if persistent after you've raised them, indicate the engagement isn't working:

1. You Still Don't Understand Your Finances After 90 Days

A fractional CFO's primary job is to give you clarity. If you're three months in and still confused about your cash position, runway, or key metrics, something is fundamentally wrong.

2. Consistent Communication Problems

Emails go unanswered for days. Calls get rescheduled repeatedly. They're unresponsive during critical moments. If you've raised this and it hasn't improved, they're either overcommitted or don't prioritize you.

3. Deliverables Are Consistently Late or Low Quality

The board deck is always rushed at the last minute. The financial model has errors. Promised deliverables don't materialize. If "almost done" is their constant refrain, that's a problem.

4. They're Purely Reactive

A good fractional CFO proactively identifies issues and opportunities. If you have to drive every conversation and they only respond to what you ask, you're not getting CFO-level value—you're just paying for order-taking.

5. No Strategic Value-Add

They track numbers but don't help you make decisions. They produce reports but don't provide insights. If you're not getting strategic advice that shapes business decisions, you're overpaying for accounting work.

6. Trust Has Broken Down

You don't trust their numbers. You second-guess their advice. You feel like you need to verify everything they do. Without trust, the relationship can't function effectively.

7. They Can't Grow With You

Your needs have evolved—maybe you're fundraising now, or dealing with international expansion—and they're not equipped to help. It's not always a performance issue; sometimes you just need different expertise.

Issues That Warrant Immediate Termination

Some issues are serious enough that you shouldn't wait:

Dishonesty or misrepresentation — Lying about qualifications, hiding problems, or presenting misleading information
Breach of confidentiality — Sharing your financial information with others inappropriately
Serious ethical violations — Conflicts of interest, recommending vendors for kickbacks, etc.
Gross incompetence — Errors so severe they put your business at risk
Disappearing during critical moments — Going dark when you need them most

These situations justify immediate termination without a warning period. Consult your engagement letter for termination provisions.

Before You Decide: Have the Conversation

Unless you're dealing with immediate-termination issues, have a direct conversation about your concerns first. Many problems can be resolved with clear communication.

How to Have the Conversation

1. Be specific about the issues

"I've noticed the last three board decks were delivered the night before the meeting" is better than "you're always late."

2. Explain the impact

"This creates stress for me and doesn't give me time to review or suggest changes."

3. State what you need

"I need the draft at least three business days before board meetings."

4. Ask for their perspective

"Is there something making this difficult that I should know about?"

5. Set a timeframe for improvement

"Let's try this for the next month and reassess."

Document the Conversation

Follow up your verbal conversation with an email summarizing what you discussed and agreed to. This creates a record and ensures you're both on the same page about expectations.

Making the Final Decision

If you've had the conversation and issues persist, it's time to decide. Here's a framework:

Consider Staying If...

Issues improved after your conversation
The core value-add is strong despite friction
Problems are situational (busy period, transition)
You trust their integrity and capability
The alternative (searching, transition) is very disruptive

It's Time to Go If...

Issues persist after clear conversation
You don't see fundamental value from the engagement
Trust has broken down
You dread interactions with them
The cost of staying exceeds the cost of changing

Watch Out for Sunk Cost Fallacy

"We've already invested so much time getting them up to speed" isn't a reason to stay in a bad engagement. The time and money already spent are gone regardless. The only relevant question is: will this engagement deliver value going forward?

Managing the Transition

Once you've decided to make a change, handle the transition professionally:

Step 1: Review Your Agreement

Check your engagement letter for termination notice requirements (usually 30 days), any transition obligations, and how final billing works.

Step 2: Find a Replacement First (If Possible)

Start searching for a new fractional CFO before giving notice. This lets you minimize the gap in coverage and ensures you're not making a rushed hire.

Step 3: Have a Direct Conversation

Deliver the news directly—don't just send an email. Be professional but clear: "We've decided to end the engagement. I appreciate your work, but this isn't the right fit for where we are now."

Step 4: Document the Handoff

Request documentation of all ongoing work: where files are stored, status of projects, recurring tasks, passwords/access credentials, and any pending items.

Step 5: Coordinate Transition with Replacement

If possible, have a brief overlap period where the outgoing CFO can answer questions from the incoming one. Even a single handoff call is valuable.

Step 6: Update System Access

On the last day, revoke access to all systems: accounting software, bank accounts, email, file storage, etc. This is standard practice, not a statement about trust.

What to Tell Your Team and Board

You'll need to explain the change to stakeholders. Keep it professional:

For your team: "We've decided to make a change in our fractional CFO arrangement. [New person/firm] will be taking over. Please redirect financial questions to [interim contact] until the transition is complete."

For your board: "We've transitioned to a new fractional CFO. The previous arrangement wasn't meeting our needs, and we've found someone who's a better fit for our current stage. There will be minimal disruption to our financial operations."

Keep It Professional

Resist the urge to badmouth the outgoing CFO, even if the experience was frustrating. Keep communications factual and forward-looking. The business community is small, and professional conduct protects your reputation.

Frequently Asked Questions

How do I fire my fractional CFO professionally?

Give proper notice (typically 30 days as per your agreement), be direct but respectful about ending the engagement, request documentation of all work and access credentials, and ensure a proper handoff period. A professional departure protects your reputation and theirs.

Should I give my fractional CFO a chance to improve before ending the engagement?

Yes, in most cases. Have a direct conversation about your concerns first. Give specific feedback and clear expectations for improvement. If issues persist after 30-60 days of trying to address them, it's reasonable to transition. However, serious integrity or competence issues may warrant immediate termination.

How long should I wait before deciding to make a change?

Give new engagements at least 90 days before making a judgment. Some challenges in month one or two are normal as the CFO learns your business. However, if core issues persist past month three—or if you see clear red flags like dishonesty or severe incompetence—don't wait.

What if I can't afford a gap between fractional CFOs?

Start looking for a replacement before giving notice. You can interview candidates while your current engagement is active. Once you've identified a replacement, time the transition to overlap by a week or two for knowledge transfer. This minimizes disruption.

Ready for a Fresh Start?

If you're looking for a new fractional CFO, Eagle Rock CFO offers transparent, reliable service for growing businesses. Let's discuss your needs.

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