Choosing the right level of finance leadership is a common decision for owner-managed businesses. Many SMEs want senior input on cash, pricing and funding, but do not need a full-time finance director. Two flexible options are a Micro FD and a Fractional FD.
Before making a choice, SMEs should assess their current financial leadership needs and future growth plans to ensure they select the most suitable option.
This guide explains how they differ, when each fits, and how to decide what your business needs.
What We Mean By Micro FD And Fractional FD?
Micro FD: A Micro FD is a part-time finance director with a tight, clearly defined scope. We focus on cash control, monthly reporting, budgets and forecasting, and near-term decisions that improve profit and working capital. The cadence is light and predictable, often a weekly cash session and a monthly pack review.
Fractional FD: A Fractional FD usually covers a broader remit over more hours. Alongside cash and reporting, the brief often includes board support, funding strategy, M&A readiness, pricing architecture, commercial contract reviews and mentoring the finance team. The cadence is heavier, with more time on site or online, and deeper involvement in leadership decisions. A Fractional FD often integrates into the finance department, bringing the ability to manage complex financial challenges. A Fractional FD is a finance professional with extensive experience and expertise gained across multiple industries, and their skills enable them to support strategic growth and operational improvements.
Where They Overlap: Both roles provide senior finance leadership without a full-time salary. Both set a finance rhythm, make key decisions and raise the standard of reporting. The difference is depth, time and scope.
Key Differences At A Glance
- Scope
Micro FD focuses on essential controls and short-term planning. Fractional FD adds strategic projects such as capital raising, acquisitions, or international expansion, and supports budgeting, financial planning, and financial modelling for these initiatives. - Time Commitment
Micro FD is typically a few days per month. Fractional FD is often one to three days per week, sometimes more during a project. - Decision Rights
Micro FD owns cash management and management reporting. Fractional FD often takes a seat at the leadership table and shapes pricing, hiring, and investment decisions, while also providing risk management, compliance, and guidance on financial risks. - Documentation And Governance
Micro FD sets proportionate controls and closes the month on time. Fractional FD introduces board packs, risk registers, delegated authorities, and investor-friendly reporting, and ensures compliance while supporting exit planning and restructuring. - Systems And Data
Micro FD improves data quality and process discipline within existing tools. Fractional FD may redesign charts of accounts, rebuild KPI frameworks, lead systems change once the data is stable, and may also lead to cash flow management improvements and balance sheet analysis. - People And Structure
Micro FD works with existing bookkeeping and accounting resource. Fractional FD may hire, mentor, or restructure the finance team to support scale, and helps companies and medium sized enterprises develop their finance operations and support growth. - Summary
Engaging a fractional finance director is a cost-effective way to access the benefits of experienced finance directors, strategic advice, and a proven track record, tailored to your company’s industry, financial strategy, and long-term strategy.
When A Micro FD Is The Better Fit
- You need tighter control of cash and collections, and a simple 13-week cash flow with weekly actions.
- You want management accounts that lead to decisions, not long reports.
- You are opening one or two new sites and need clear site-level KPIs.
- You have seasonal or supplier-driven volatility and need rolling forecasts that update monthly.
- You prefer a light footprint and a predictable monthly cadence.
When A Fractional Finance Director Is The Better Fit
- A Fractional FD provides guidance and financial planning to help a company achieve its financial goals and develop a robust financial strategy.
- You plan to raise debt or equity within six to twelve months and need lender or investor-ready packs.
- You are preparing for a material contract, acquisition or international launch.
- You want a finance leader to sit in leadership meetings and drive commercial pricing and margin work.
- You need to professionalise the finance function, hire new capability and introduce board-level governance.
- You want deeper scenario planning with sensitivity cases and a documented financial plan.
- A Fractional FD supports growing businesses by aligning financial operations with strategic objectives, highlighting the benefits of this approach for sustainable growth and effective financial management.
A Practical Decision Framework
Use these quick tests to decide what you need now. If you answer “yes” to most items in a list, that model likely fits.
Micro FD Tests
- We need weekly cash discipline and shorter debtor days.
- Our monthly close drifts, and we want a firm timetable and a concise pack.
- We want a small set of KPIs with named owners, reviewed every month.
- We can improve profit and cash without major system changes.
Fractional FD Tests
- We need board-level challenge on pricing, product mix and investment.
- We are preparing a funding round or refinancing.
- We want to restructure finance, hire a controller or implement new tools.
- We have multiple initiatives that require a senior leader on the ground each week.
What Good Looks Like, Regardless Of Model
- Clear Cadence
Weekly cash huddle, month-end within ten working days, quarterly planning and reviews. - Tight KPIs
No more than ten. Typical examples are gross margin by product, debtor days, stock turns, labour cost percentage, cash conversion and runway where relevant. - Action-Led Reporting
Every pack ends with who, what and by when, then we check progress at the next session. This approach ensures that advice is actionable and directly supports decision-making. - Clean Data And Reconciliations
Management numbers reconcile to statutory accounts, and bridges are documented. - Proportionate Controls
Simple spend approvals, standard pricing sign-off, cycle stock counts and a short, live risk log, maintaining the right balance between control and flexibility.
Strong financial leadership provides advice that helps organisations build resilience in the face of business challenges.
Cost, Commitment And Contracting
- Engagement Shape
Micro FD starts with an intensive setup phase to stabilise cash and reporting, then moves to a steady rhythm over a few days per month. Fractional FD allocates defined days each week, and may flex up for projects or transactions. A Fractional FD can also be engaged on a project basis, providing a cost effective way to access senior financial expertise for specific needs. - Commercials
Both models are typically retainer-based with a clear scope and service levels. We keep the agreement short, with a break clause after an initial period so the arrangement stays aligned to results. - Handover And Continuity
We document processes and build a small bench inside the team so that cover is in place when people are away. If the business outgrows one model, moving between Micro FD and Fractional FD should be straightforward.
PAS: Framing The Decision
Problem
Owners carry too many financial decisions, cash is unpredictable, and forecasts are out of date.
Agitation
Late payments and shifting costs reduce room for error. Without a clear rhythm, issues repeat and opportunities slip.
Solution
Choose a level of finance leadership that fits the stage of the business. Use Micro FD for cash discipline, live forecasts and action-led reporting. Use Fractional FD when you need deeper strategic involvement, funding or team build-out.
How We Deliver This At Diamond Accounts
We support both models and keep delivery practical and outcome-focused. At Diamond Accounts, we support a wide range of organisations and clients, including medium-sized enterprises and growing companies. Our team includes experienced finance professionals, accountants, and fractional FDs who have built their careers across various finance director and fractional finance director roles.
A Micro FD engagement often builds on our Management Accounts packs, adds Budget Advisory and a weekly cash routine, then sets a short list of KPIs with named owners. When a business needs more depth, we expand to a Fractional FD brief and, where appropriate, coordinate options through Corporate Finance. Diamond Accounts can also provide a fractional CFO or a fractional finance director on a project or ongoing basis, depending on the needs of your organisation.
Sector context matters. Pharmacies benefit from cash and stock planning aligned to fee cycles, which our Pharmacy Accountants team provides. Retail and hospitality rely on tight wage and stock control, supported through our Food and Hospitality reporting and site-level KPIs.
If you want a local touch in the South East, you can meet the team in Brighton, Eastbourne, Hailsham or Sittingbourne, or start a conversation via our contact page. For a broader view of our services, visit How We Help.