Start with the decision backlog, not a software purchase
Ask the managing director which decisions are currently delayed: hiring, pricing, stock orders, borrowing or distributions. Record the amount at stake, the decision date and the evidence missing. This creates a practical sequence for the work rather than a general request to improve finance.
A fractional CFO also needs to understand who produces the accounts, who approves payments and who can challenge assumptions. An existing accountant or finance manager remains an important source of context. Agree responsibilities so that strategic support does not leave routine reporting or compliance without an owner.
Days 1–30: establish what cash is actually available
Reconcile bank balances, identify restricted money and list the next material payments. Build a weekly cash view from customer collections and payment dates, including payroll, tax, finance payments and essential investment. Distinguish an agreed facility from an application that has not been approved.
Record the assumptions most likely to change the low point. A debtor described as due this week is different from a customer who has confirmed payment. Use confidence categories and assign follow-up actions. The first useful output may be a short list of collection calls and spending decisions rather than a large spreadsheet.
Days 31–60: make the monthly numbers explainable
Review the close process, reconciliations and timing of revenue and costs. A fast report is only helpful if management knows what is estimated, what has been checked and which balances remain unresolved. Separate the monthly reporting deadline from the work needed to improve the underlying records.
Choose a small set of measures tied to the business model. An agency may need project contribution and debtor days; a subscription business may need retention and support costs. Each measure needs a definition, data owner and comparison with an agreed plan. Do not compare differently defined figures simply because both are labelled margin.
Days 61–90: connect performance to a decision rhythm
Introduce a rolling forecast that reflects current trading and document why it differs from the budget. Review the base case alongside a plausible downside. Translate the results into decisions with owners, deadlines and conditions for revisiting them. The board pack should explain what changed and what action is required.
For example, if additional recruitment depends on collections improving, write down the cash threshold and review date. This is more useful than approving the hire subject to cash flow without defining the test. Keep the decision log with the forecast version used, so later reviews can distinguish a poor assumption from poor execution.
Worked example: profitable growth with a cash constraint
Consider a hypothetical SME with £120,000 available cash. Its initial 13-week forecast reaches a £25,000 low point. A downside collection case delays £45,000 beyond that week, creating a £20,000 shortfall before any further action. Annual profit does not resolve that timing problem.
The CFO can help management examine collections, supplier discussions, discretionary spending and funding options, then assess consequences for delivery and relationships. Moving a payment in a spreadsheet does not secure the supplier’s agreement. Record which mitigations are confirmed and keep an unmitigated case visible until actions are real.
Assess the first-quarter handover
Ask the team to run one forecast update and one reporting cycle using the new process. Observe where they need help, and document the correction. This tests whether the improvement can be maintained when the adviser is absent. A completed workbook without an owner or update instructions is a weaker handover than a simpler process people can operate.
| Area | Evidence to examine | Question to resolve |
|---|---|---|
| Cash forecast | Bank reconciliation and dated collection assumptions | Can another team member explain the next cash low point? |
| Monthly pack | Defined measures reconciled to source records | Can management explain the material variance? |
| Decision log | Owner, approval and review trigger | Can the team identify when the decision must be reconsidered? |
How to assess whether the engagement is working
Agree deliverables at the start: a reconciled cash forecast, a documented reporting timetable, a management pack and a decision log may be appropriate. Specify who supplies information and what access is needed. The work should be proportionate to the company’s size, complexity and immediate priorities.
Assess progress through fewer unexplained balances, clearer forecast changes and decisions made with usable evidence. A fractional CFO cannot guarantee funding or business performance. Ask what will be handed over, who can maintain it and how the engagement will adapt once the immediate problems are controlled.
Your preparation checklist
- List three decisions that need financial evidence this quarter.
- Reconcile the starting cash balance and identify the forecast low point.
- Agree reporting definitions, owners and a close timetable.
- Review delivered outputs and the next priorities after 90 days.
Frequently asked questions
How much time does a fractional CFO need in the first month?
It depends on the records, urgency and access to the team. Agree a scoped initial phase and information responsibilities before choosing an ongoing time commitment.
Will a fractional CFO replace our accountant?
The roles can work together. Define responsibility for bookkeeping, accounts, tax, reporting and strategic decisions in the engagement.
Can we start with one urgent issue?
Yes, subject to suitability. A cash or pricing question can be scoped first, while identifying any data gaps that prevent a reliable answer.
Sources and scope
This is general preparation guidance. Worked examples are original hypothetical illustrations, not client outcomes, market multiples or individual advice. Agree the purpose, evidence and scope before commissioning professional work.
Professional background: ICAEW technical resources. These links provide context and do not imply endorsement, assurance or compliance for an individual engagement.
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