Why Fractional Accounting? Three Benefits That Will Rejuvenate Your Startup’s Financial Processes

For new and startup businesses, there is a seemingly endless list of necessary tasks to complete for the company to reach a point of functional operations. As a business leader, the efficiency of the company increases when some responsibilities are offloaded to experienced individuals, like marketing, finances, accounting, and other tasks.

New or growing businesses often don’t have the budget for hiring full-time individuals or teams to handle those responsibilities, and they can fall on the plate of the business owner to manage. When it comes to financing and accounting in particular – a critical piece of any business’ operations – the cost is too high, literally, to allow inaccuracies or mistakes to be made due to inexperienced accounting professionals handling the books.

Enter Fractional Accounting Services. This customizable and scalable model allows your organization to outsource accounting and bookkeeping services in a way that accommodates the budget and various needs of your organization. The service is high value and low cost because you pay for a certain number of hours per month or week to benefit from the wide array of services from experienced financial and accounting professionals.

Still unsure if it’s the right move for your growing business? We outlined three major benefits that come with utilizing fractional accounting as a strategic and cost-efficient method for newer businesses to tackle critical business operations without hiring full-time teams. 

It’s customizable to fit your needs and budget

Fractional accounting isn’t a “one size fits all” solution to handle your accounting and finance function – which is exactly what makes it so impactful. A fractional accounting model gives you the flexibility to bring on exactly the resources or positions you need without the high costs of hiring and turnover of full-time employees.

Think about it – for a similar or lower cost as one in-house hired accountant, you could have several fractional employees working fewer hours per week handling all functions of an accounting department for your business. Having a specialized team dedicated a few hours per week or month will provide accurate checks and balances, minimize room for error and streamline operations because the work can be more evenly distributed and completed.

Bringing on people in positions where they are most effective – even on a fractional basis – eases your worries about the operations of the company and allows you to focus on achieving bigger-scale business goals.

It allows you to prioritize your company’s growth and achieve future goals.

In the early days of a startup, things can get hectic with initial funding rounds and other major transactions that occur. These critical stages can determine the future health and success of your company, so why not let the professionals handle it?

By bringing on temporary roles such as a fractional Chief Financial Officer, you can feel at ease knowing your company’s financial planning and analyses have credible input and insight from a seasoned expert. With that taken care of, you can prioritize strategic planning and roadmap your company’s growth for the future.

It improves credibility for startup businesses

Going fractional isn’t a sign of a weak or unsure company – it means you know how to maximize value with the resources available to you, and that’s a clear sign of a strong startup. By going fractional, your organization is benefitting greatly from the flexibility of contract accounting and finance professionals and can prioritize other high-level initiatives that help achieve the company’s mission.

A well-rounded fractional accounting team includes individuals in roles such as a controller, accounting manager, FP&A analysts, system specialists, and a fractional CFO. Typically, you’d source these fractional roles from a specialized accounting firm where they are accredited and certified professionals with years of experience in their respective areas of expertise. As the founder of a new company, why wouldn’t you want to bring on seasoned experts to complete important tasks for your business?

Another perk of using fractional accounting services is that outsourced finance and accounting professionals could potentially consult on corporate governance and fill important roles in advisory boards later down the road in your company’s future.

Kranz Can Help

If your organization is contemplating or already in the process of an M&A transaction, Kranz Consulting is ready to assist you with the experience of hundreds of transactions under our belt. Your M&A decisions must align with your business objectives and be promising at the same time. It sounds simple, but it’s difficult to master. With extensive experience planning and executing, we help companies quickly and cost-effectively add strategic capabilities and tactical support – creating value at every level. Our team of experts can help you with corporate strategy, valuation analytics, spinouts, carve-outs, & joint ventures, and overall merger integration. Reach out today.