A finance consultant is hired for a deliverable. A fractional CFO is hired for a seat. That one difference drives the pricing, the contract and who is accountable when the cash runs short.
Deliverable and ownership
A consultant builds a thing: a three-statement model for a raise, a pricing analysis, a NetSuite implementation, a cost-reduction study, a valuation. The engagement ends when the thing is delivered. What happens next is your problem.
A fractional CFO owns an ongoing outcome. The forecast is updated every week because it is their forecast. The close lands on time because they review it. When the bank calls about a covenant, the bank calls them. The work never finishes; it repeats every month, and the CFO is accountable for it repeating well.
Project and retainer
Consultants price by project or by the hour. A financial model for a Series A might cost $10,000 to $30,000. An ERP selection and implementation can run well into six figures. The price is fixed to a scope, and anything outside it is a change order.
Fractional CFOs price by the month. Published retainers run $3,000 to $12,000. The scope is a role description, and the hours flex within limits: more during the budget, fewer in a quiet month.
Who signs off on decisions
This is the difference buyers notice most. A consultant recommends; the CEO decides and implements. A fractional CFO decides within the authority you give them. That can include approving payments up to a limit, choosing the accounting system, setting the close calendar, negotiating with the bank and presenting to the board. You should write that authority down in the engagement letter. Some fractional CFOs also hold signing authority on bank accounts, which is a reason to check that your D&O insurance covers them.
When a consultant is the better hire
Hire a consultant when the work is defined, one-off and specialist. A quality of earnings review before a sale, an R&D tax credit study, a transfer pricing analysis, an ERP implementation and a one-time valuation for a 409A or an option grant all fit. A fractional CFO may manage these projects, but specialists usually deliver them.
When a fractional CFO is the better hire
Hire a fractional CFO when the need recurs. If you find yourself buying a new model every six months because the last one went stale, you need someone who maintains it. If three consultants have each left a recommendation that nobody implemented, you need someone who owns the implementation.
The overlap
Many fractional CFOs started as consultants and still take projects. Many accounting firms sell both. A common path is a fixed-fee project, such as a model and a fundraising plan, that turns into a retainer once the founder sees how the CFO works. If you go that way, agree the monthly fee for the retainer before the project starts.