There's a gap almost every growing business falls into: too big for a bookkeeper alone, too small to justify an £90,000 full-time finance director. An outsourced finance director — also called a virtual FD or fractional FD — exists precisely to fill it. Here's what one actually does, and what it costs.
What is an outsourced finance director?
An outsourced finance director is a qualified, senior finance professional who works with your business part-time, for a fixed monthly fee, delivering the strategic financial leadership a full-time FD would — without the full-time salary, employment cost, or the need to fill a whole week. The terms outsourced FD, virtual FD and fractional FD all describe the same thing.
The key word is director. This isn't bookkeeping and it isn't tax filing. It's the level above — the person who looks at your numbers and tells you what they mean and what to do about them.
What do they actually do?
A good outsourced FD service typically covers:
- Monthly management accounts — a proper monthly read on performance, with commentary. (See what management accounts are.)
- Cash flow forecasting — a rolling 13-week forecast so you're never surprised by your bank balance.
- Board and investor reporting — board-ready packs for lenders, investors or your own management team.
- Budgeting and planning — annual budgets, and the monthly variance analysis that tells you whether you're on track.
- Profitability analysis — which products, services, clients or sites actually make money, and which quietly lose it.
- Strategic input — pricing decisions, hiring decisions, investment appraisals, funding conversations. The "should we?" questions.
- A tax calendar — every HMRC deadline mapped with expected amounts, so nothing lands as a surprise.
What does it cost?
This is the part owners most want a straight answer on. As a rough guide for the UK SME market:
| Option | Typical cost | What you get |
|---|---|---|
| Full-time FD (employed) | £70k–£110k+ salary, plus NI, pension, benefits | Five days a week — usually more capacity than an SME under £5m needs |
| Outsourced / virtual FD | £1,000–£2,500 per month | The strategic output, scaled to what you actually need |
| Bookkeeper only | £300–£800 per month | Transactions coded — but no interpretation or strategy |
The maths is straightforward: an outsourced FD gives you the senior expertise for roughly a fifth to a third of the fully-loaded cost of employing one — because you're paying for the output, not for filling a full week.
Is it right for your business?
An outsourced FD tends to make sense when:
- You're turning over roughly £500k to £5m
- You're growing, and the decisions are getting bigger and riskier
- You're making calls on gut feel because you don't have reliable monthly numbers
- A bank or investor wants to see proper financial reporting
- You can't yet justify — or don't yet need — a full-time FD
It's probably not right if you're very early stage with a simple cost base (a good bookkeeper and accountant will do), or if you genuinely need someone in the building five days a week (then hire).
How to choose one
Two things matter most. First, qualification — you want a chartered professional (CIMA, ACCA or ICAEW), regulated and insured, not just someone who's "good with numbers." Second, senior attention — ask who actually does your work. The value is in a senior person looking at your numbers each month, not junior work under a senior badge.
A CIMA-qualified FD, for a fraction of the cost
We provide outsourced Finance Director services to UK SMEs — monthly accounts, cash forecasting, board reporting and strategic input, on your existing Xero. Senior-led, CIMA-supervised, fixed fee from £1,500/month.
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