A Deeper Dive into Fractional Accounting: What Is It and Why Use It?

Every company’s accounting department is distinct. You might utilize multiple full-time employees, part-time bookkeepers, seasonal CPAs, or a combination of all three. 

But, if you have noticed inefficiencies in your accounting workflows or discovered vulnerabilities to increased financial risks, it’s time to call in reinforcements—a fractional accountant could be an excellent option for your business’s needs. 

What is fractional accounting? Below, we explore the concept in more detail, describe common services fractional accountants provide, and discuss reasons why a company might enlist fractional financial staff. 

What Is Fractional Accounting?

Fractional accounting describes the use of fractional—part-time, as-needed, or project-specific—staff to accomplish financial tasks.

Fractional accountants are experienced professionals who provide a variety of accounting services (more on that in the next section), but most fractional staff share a few key characteristics:

• They are employed by a financial services company—not by the individual businesses they serve.
• They provide services to at least one company at a time. Many fractional accountants will manage numerous accounts at one time.
• They typically work remotely from their home or local office and rarely join their clients’ on-site teams. 

What would a fractional accountant’s role at your company look like? Let us map out a day in the life of a fractional professional providing services to your company:

• You need a financial service completed (a month-end close-out, for example), so you send a notification to your fractional accountant. 
• The fractional accountant signs on, remotes into your accounting software (if needed), and corresponds with you as they complete the task if they have any questions.
• Once the fractional accountant completes the requested task, they alert you that it’s done and log their time for billing purposes. 

After a temporary adjustment period spent learning your internal accounting and documentation procedures, your fractional accountant can jump in anytime you need their services—a simple solution to all your company’s finance needs.

What Services Do Fractional Accountants Provide?

Fractional accountants can provide a variety of services to their clients:

• CFO services
• Financial strategy advice
• Capital raise support
• Budgeting, forecasting, and modeling
• On-site employee training and mentoring
• Financial risk management
• Financial management
• Statement preparation
• Accounting system and procedure integration
• Financial staff training and oversight

• General accounting and back-office support
• Accounts payable and receivable
• Month-end closing
• Transaction coding
• General ledger and bank reconciliations

• Government contractor accounting and DCAA compliance
• Incurred cost proposals
• Government contract management
• DCAA audit support

• Audit and due diligence services
• Due diligence and internal auditing
• DCAA audit preparation
• Investor presentation documentation and preparation

• R&D tax credit documentation
• Feasibility analyses
• Credit studies
• Examination support

• Financial staffing and recruiting
• Networking
• Transitioning and onboarding new hires
• Candidate vetting

In essence, if your company has a financial need, a fractional accounting professional can tackle it—even in the most complex circumstances.

Why Use Fractional Accounting Services?

Why might your company seek support from a fractional accountant? There are myriad scenarios where your business could benefit from outsourced financial services.

Add Temporary Finance Staff

Fractional accountants are perfect for temporary financial staffing needs. If you encounter any of the following circumstances, a fractional accountant could easily provide your solution:

• Employee retirement – If your bookkeeper, controller, or CFO is retiring, and you want to take your time finding a high-quality replacement, your financial tasks will not wait—a fractional accountant can fulfill their roles while you headhunt candidates.

• Maternity leave – Maternity leave is temporary, but you will need to enlist someone to take over an employee’s financial responsibilities while they’re on leave—perhaps a fractional accountant.

• Upcoming termination – If you are planning to terminate someone on your finance team, a fractional accountant could ease the transition while you seek a replacement.

• Temporary workload increase – If your accounting workload will temporarily increase in the coming months—to prepare for income tax filing, a capital raise, or major equipment purchases, for instance—a fractional accountant can provide additional support to your in-house team. 

You can seamlessly overcome staffing issues that would otherwise disrupt your financial processes with a fractional accountant keeping your finance department aloft while you seek a permanent solution.

For many, fractional financial services become their permanent solution. 

Manage Company Growth

Whether your company is currently growing or scaling is on the horizon, your finance team must grow at the same pace. A fractional accountant can help you navigate the growth process—and all the hurdles your company will face on the road to recognition.

Company growth can take a variety of forms:

• Increased revenue – If the news of your brand is spreading like wildfire, and you’re suddenly handling more sales than ever before, your finance team will experience a higher workload as you navigate increased profits.

• A capital raise – Capital raises can be complex, and unless someone on your finance team has experience with the investment process, you should consider enlisting a seasoned expert.

• Outcomes of growth initiatives – If your recent marketing and PR campaigns are coming to fruition, and your customer base is growing, a fractional accountant can help you develop new procedures for your increased operations.

Optimize Overhead Costs

Especially for startups, capital can be slim in your business’ infancy. Overhead costs can present a significant financial burden before you establish good cash flow, and hiring a fractional accountant can help you optimize your overhead spending:

• Since they are not on the payroll, fractional accountants can provide financial services without costing you money in payroll taxes, benefits, or office equipment.

• You might not have enough work for a full-time—or even a regular part-time—accountant. Instead of wasting wages on an underworked employee, team up with a fractional accountant to take the reins when needed.

• Hiring a full-time employee is a commitment—fractional accountants can provide stopgap services until you find, vet, and onboard the perfect finance team leader. 

In short, fractional accountants are often a sound investment—they help you manage your financial processes without draining your limited cash supply.

Leverage Fractional Accounting with CFO Hub

Fractional accounting is a powerful tool—whether you’re navigating staffing issues, newfound growth, or overhead bloat, a fractional accountant can fill in the gaps when your finance department falls short of the mark.

CFO Hub offers top-notch fractional financial services to growing businesses nationwide. We can fill every niche at every stage of your company’s growth, and we’re prepared to scale with you. 

If you’re looking for an accounting solution tailor-made for your unique needs, look no further than CFO Hub.