Most Singapore SMEs do not need a full-time CFO. A company with straightforward trading, one entity and no outside investors is usually well served by good bookkeeping, a competent outsourced accountant and a tax agent. A fractional (part-time) CFO becomes worth considering when the business faces decisions the monthly accounts cannot answer on their own: raising equity, taking on bank facilities with covenants, running several entities, or moving out of audit exemption. A full-time finance hire makes sense when that work is continuous, not occasional.
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
This guide is for owners and directors of growing Singapore companies deciding how to strengthen their finance function.
What does each role in an SME finance team actually do?
Owners often use “accountant”, “finance manager” and “CFO” loosely. Before deciding who to hire, it helps to separate the jobs. Each layer answers a different question.
| Role | Main question it answers | Typical output |
|---|---|---|
| Bookkeeper | Has every transaction been recorded correctly? | Coded ledger, bank reconciliations, invoices and bills entered |
| Accountant (in-house or outsourced) | What are the true results and financial position? | Month-end and year-end closing, adjustments, financial statements, GST returns |
| Tax agent | What tax is payable and is it filed correctly? | Estimated chargeable income, tax computation, Form C-S or Form C |
| Auditor (if required) | Do the financial statements give a true and fair view? | Independent audit opinion |
| Financial controller | Are our processes and controls reliable? | Closing timetable, approval limits, internal controls, team supervision |
| CFO | What should we do next, and can we fund it? | Forecasts, funding strategy, board reporting, investor and bank relationships |
The auditor must be independent, so it cannot also act as your CFO. The corporate secretary sits alongside this team on the governance side; our article on how the corporate secretary, accountant and tax agent work together explains the handovers.
What is the difference between outsourced accounting and a fractional CFO?
Outsourced accounting is about producing accurate records and statutory outputs on time. A fractional CFO uses those numbers to help the directors make decisions. Both are useful, but they are not substitutes.
- Outsourced accounting looks backwards: it closes the month, prepares the financial statements, files GST and supports the tax return.
- A fractional CFO looks forwards: it builds a cash flow forecast, models pricing or hiring decisions, prepares the company for a bank or investor, and sits in board discussions.
A fractional CFO cannot do useful work on unreliable books. If the monthly numbers are late or wrong, fix the accounting first. Our guide to preparing management accounts sets out the monthly reports a CFO will expect to see.
Which events usually trigger the need for senior finance help?
Size alone is a poor guide. The better test is whether the company faces decisions with large financial consequences that the owner cannot comfortably handle alone. Common triggers include the following.
- Raising equity. Investors expect a financial model, a clean cap table reconciled to the register of members, and quick, consistent answers in due diligence.
- Bank facilities with covenants. Term loans and trade lines often come with financial covenants and periodic reporting. Someone must monitor headroom before a breach, not after.
- A second or third entity. Group structures bring intercompany balances, transfer pricing, consolidation questions and separate filing calendars.
- Losing audit exemption. Once the company or its group no longer qualifies, the year-end becomes an audit, which needs tighter closing, schedules and supporting documents.
- Rapid growth or margin pressure. When revenue grows but cash does not, the business needs working capital analysis, not just a profit and loss statement.
- A sale, merger or succession plan. Buyers and incoming owners scrutinise the numbers; preparation usually starts well before the conversation does.
How does the audit exemption threshold affect the decision?
Under the small company concept described on the ACRA audit exemption page, a private company qualifies as small if it meets at least two of three criteria for the immediate past two consecutive financial years: total annual revenue of S$10 million or less, total assets of S$10 million or less, and 50 or fewer full-time employees. If the company is part of a group, the whole group must meet the test on a consolidated basis. Shareholders holding at least 5% of the issued shares can still require an audit. ACRA has also announced a review of the revenue and asset thresholds, so check the current position each year.
A company approaching these limits should plan ahead. The first audit is smoother when fixed asset registers, inventory counts, revenue recognition and intercompany balances are already in order. Our guide to audit exemption for small companies explains the test, including how to treat new companies and groups.
Who remains responsible for the accounts if you outsource finance?
The company and its directors. Section 199 of the Companies Act 1967 requires every company to keep accounting and other records that sufficiently explain its transactions and financial position and allow true and fair financial statements to be prepared, and to keep them for at least five years from the end of the relevant financial year. If this is not done, the company and every officer in default commits an offence. Section 201 requires the directors to lay the financial statements before the company at its annual general meeting.
A fractional CFO, outsourced accountant or employee helps you meet these duties, but cannot take them over. Directors should still review the management accounts, understand the key judgements and ask questions. Any engagement should make clear that the CFO advises and the board decides.
What should a fractional CFO engagement letter cover?
Because a fractional CFO sees sensitive information but is not an employee, the terms matter. Before starting, agree the following in writing.
- Scope and deliverables: for example, a 13-week cash flow forecast, monthly board pack, annual budget, or support on a specific fundraising.
- Time commitment and availability: days per month and response expectations during busy periods such as due diligence.
- Authority limits: whether the CFO may instruct the bookkeeper, approve payments or speak to the bank. Banking mandates and signing authority should follow board resolutions, not job titles.
- Confidentiality and data: how company and personal data are accessed, stored and returned, consistent with the company’s personal data protection obligations.
- Conflicts: whether the CFO also acts for competitors, investors or lenders in the same deal.
- Handover and exit: what files, models and system access must be returned or transferred when the engagement ends.
The same principles apply to any outside finance provider. Our article on working effectively with an outsourced accounting firm covers the day-to-day side of the relationship.
Decision table: fractional CFO, full-time hire or neither?
| Your situation | Likely fit | Why |
|---|---|---|
| One entity, stable trading, no external investors or covenants | Outsourced accounting and tax agent | Decisions are routine and the owner can read the management accounts |
| Preparing to raise a first equity round in the next 6 to 12 months | Fractional CFO | Intensive but time-limited work on the model, data room and investor questions |
| New bank facility with quarterly covenant reporting | Fractional CFO, possibly a part-time controller | Needs regular monitoring, not a full-time role yet |
| Several entities across countries, large monthly transaction volume | Full-time financial controller, with fractional CFO support | Daily control and supervision work is continuous |
| Investor-backed, audited, with a board expecting monthly reporting and forecasts | Full-time CFO or head of finance | Strategic finance work is constant and needs someone embedded in the business |
| Books are late, unreconciled or disputed | Fix bookkeeping and accounting first | Senior finance advice built on unreliable numbers adds cost without value |
On cost, compare like with like. A full-time hire brings salary plus CPF contributions for Singapore citizen and PR employees, benefits, recruitment time and management effort, and for a foreign candidate, work pass eligibility. A fractional arrangement is paid only for the time and scope agreed. The right comparison is the cost of each option against the cost of a poor funding, pricing or banking decision made without that help.
Example: a hypothetical growing distributor
Example: a hypothetical Singapore distributor, Orchid Supply Pte Ltd, has two shareholders, revenue that has grown quickly over three years, and a new subsidiary in Malaysia. Its outsourced accountant closes the books monthly and files GST. The bank has offered a larger trade facility, but asks for quarterly financial statements and sets a minimum tangible net worth covenant. The directors also expect the group to exceed the audit exemption criteria within two years.
The directors decide they do not yet need a full-time CFO. Instead, they engage a fractional CFO for a few days each month to build a group cash flow forecast, set up covenant monitoring and prepare for the first audit. They keep the outsourced accountant for bookkeeping, closing and GST, and agree in writing who instructs whom. They plan to review the arrangement once the subsidiary’s volume justifies a full-time controller.
Frequently asked questions
Can our outsourced accountant act as our fractional CFO?
Sometimes. Some firms offer both, but check that the person has strategic finance experience, not only compliance experience. Keep the two scopes separate in the engagement letter so you know what you are paying for.
Does a fractional CFO need to be a director or company officer?
No. A fractional CFO is usually an adviser, not a director. Appointing someone as a director brings statutory duties and should be a deliberate board decision, not a by-product of a finance engagement.
Can a fractional CFO sign our financial statements?
The financial statements are approved by the directors, and the directors’ statement is signed by directors. A CFO can prepare and explain them, but the board remains responsible.
When should we move from a fractional CFO to a full-time hire?
When the work is continuous rather than project-based, for example when monthly board reporting, investor relations, banking and team supervision together fill most of a working week.
Do we still need a tax agent if we have a CFO?
Usually yes. Tax compliance is specialised, and a CFO will normally rely on a tax agent for the tax computation and filing, while focusing on planning and decisions.
Need help strengthening your company’s finance function?
Raffles Corporate Services can take over bookkeeping and monthly closing, prepare management accounts and financial statements, file GST and corporate tax returns, and keep your filing calendar on track so that any CFO you engage starts from reliable numbers. Contact us at [email protected] or on WhatsApp at +65 8501 7133 to discuss what your company needs. This article is general information, not accounting or tax advice.
Kevin Yeo, Raffles Corporate Services