About getting started with a fractional accounting team

Working with a fractional accounting team can be a vital resource for any growing business. As organizations begin to scale, it can be difficult to keep up with the increasingly complex and overwhelming bookkeeping duties required. That's where fractional accountants come in. Collaborating with a well-rounded team of financial experts can set your business up for success, ensure you're in compliance with the newest regulations, and allow your internal team to focus on their unique skill sets and talents.

But what exactly is a fractional accounting team, and how do I know if my business needs one as opposed to hiring an in-house bookkeeper or single contract accountant? Keep reading to learn more about how to get started with a fractional accounting team. You can also use the links below to go straight to the information most of interest to you.

What Is Fractional Accounting?

Fractional accounting services are outsourced, customizable financial support designed to fit the needs of your business. In a Deloitte survey, 40% of executives indicated that an overall need to cut costs in an increasingly competitive business landscape has renewed their interest in exploring outsourcing partnerships. Using a fractional accounting team allows your business to benefit from a suite of complementary skills - without breaking the bank.

Fractional accountants are used on part-time or on a project basis. They are employed by a financial services company, not by the individual businesses they work with. Their services can be utilized in the long-term and continue to grow with you, or they can be contracted on a temporary basis to fill a specific stop-gap within your organization. Either way, they are generally more cost-effective than making an in-house hire, especially for businesses that do not yet need a full-time accountant. Outsourcing bookkeeping and accounting can save your firm money by eliminating the cost of failed hires, lowering infrastructure expenses and recruiting costs, spending less on training and oversight, and allowing for on-demand scalability.

Good business performance is a result of good decision making, and it is impossible to consistently make effective decisions without having accurate information. By providing accurate, complete and timely financials - and helping you to build fluency in their interpretation - a fractional accounting team will build a more actionable picture of the economic health of your business. This will enable you to:

• Make critical decisions about pricing, products, clients, projects, services, and locations
• Gain control over your business and its profitability
• Elevate your focus to growing your business
• Protect your business from theft and fraud
• Avoid potential embarrassment with peers and key stakeholders
• Prepare your business for sale or capitalization

Working with a fractional accounting team will also ensure you're keeping up with modern best practices. As new technology continues to change the way we work, it's critical to make sure you are maximizing your financial resources. To learn more, check out our guide on 5 Ways To Modernize Your Accounting.

Hiring A Fractional Accounting Team Vs. An Outsourced Bookkeeper

While we've covered how a fractional accounting team is more cost-effective than hiring the same bundle of competencies in-house (with multiple accounting resources), you may be wondering how a team compares to a single outsourced contractor. It all depends on what your business really needs.

At kept.pro, we put the emphasis on the team in “fractional accounting team”. We work with you to identify the unique needs of your business, and build a custom team with the specific expertise needed to address them. You benefit from our combined skills and experience, along with our built-in infrastructure and vetting processes, at a lower cost than you could build something similar internally.

There are absolutely some companies that only need one bookkeeper. This can be an effective and low-cost option for small or dwindling firms where the owner can easily review all the transactions and payroll each month. This may be the right decision for you in your business if:

• The owner initiates every single transaction (no “autopay” or other signatories/cardholders)
• There are only one or two bank and credit card accounts
• There are few employees
• There is no growth
• Bookkeeping is only conducted for tax filing

If your business meets these criteria, a single outsourced bookkeeper (with some support from an end-of-year tax preparer) could suffice. However, it is important to note that leaning on just one person for your financial health and data does open yourself up to greater risks of human error and fraud. Imagine if your bookkeeper was sick, or suddenly quit, or simply made a mistake. What would the impact be on your company if, for instance, an invoice was paid twice? Or if a payroll cycle was missed? Or if that single person turns out to be unscrupulous? More than 50% of occupational frauds occur due to a lack of internal controls or an override of existing internal controls, according to a recent report by the Association of Certified Fraud Examiners. This study also found that the typical fraud case lasts 12 months before being detected, at a median cost of $145,000. Unfortunately, saving a few bucks going with a single (often inadequately vetted) bookkeeper can cost your business hundreds of thousands - if not millions - of dollars.

By working with a fractional accounting team, you get the peace-of-mind of a secure and robust financial system - at, yes, a fraction of the cost. There are multiple layers of fail-safes built in to make sure material mistakes don't slip through the cracks and result in catastrophe. In addition, a strong fractional accounting service provider functions as a critical part of your team. A partner like kept.pro will work with you to identify your pain points, and bring in an array of supplementary services you likely couldn't afford in an internal accounting department, such as HR support, recruiting, training, and more.

What Services Does A Fractional Accounting Team Provide?

A fractional accounting team consists of accounting professionals, with an appropriate range of financial expertise and specific industry knowledge. Whatever your business needs, no matter how simple or complex, a strong team will be able to help! Core fractional accounting services include:

As previously discussed, having accurate, complete, and timely financial data is key to the health of any organization. The critical output of these recurring services is the delivery of regular financial reporting and KPI tracking to the CFO, fractional CFO and/or CEO, to ensure they have the right information readily available when making high-consequence decisions.

As a trusted partner to your business, a fractional accounting team can handle your finances in their entirety, or work with you to build existing internal capacity. The team will continue to adapt to your needs, and is scalable as you grow. Understanding your financials can propel your business forward even more rapidly than you can imagine. Check out how one kept.pro client was able to maintain its financial reporting capacity while it increased its revenue from $5M to $50M - in just 24 months.

How Can A Fractional Accounting Team Help My Business Grow?

There's one thing we'll never tire of saying: Data is king. This applies for businesses of all sizes, across all industries. Building quality financials will allow you to make decisions for informed growth, reduce the risk of fraud, and develop financial credibility with both internal and external stakeholders.

As you saw in the previous case study we linked, a multi-site service business went from $5M to $50M in revenue in just 24 months - a trajectory enabled, in part, by working with our fractional accounting team to create new financial systems.

In another case study, this time with a marketing agency, kept.pro improved their reporting capabilities as part of an initiative to improve profitability. By assessing the existing financial processes - and then consolidating all their accounting and operations platforms into a single system - we were able to streamline operations and help leadership feel confident and informed when making key decisions about pricing, personnel and client relationships. We also provided support by:

• Training internal staff
• Collecting overdue accounts to improve cash flow management
• Correcting data structures for simplicity and clarity
• Delivering ongoing accounting services

This led to improved profitability, which funded key growth initiatives. Here's another testimonial about our fractional accounting team services:

If you're interested in learning more about how fractional accounting teams can help your business grow, check out this article on Strategies To Build And Maintain Investor Trust. You can also set up a free consultation with a kept.pro expert.

How Much Does A Fractional Accounting Team Cost?

According to U.S. News, the average salary for a full-time accountant was $78,000 in 2022. That number does not include the cost of healthcare and other benefits. While fees for outsourced accounting and bookkeeping professionals can vary, at kept.pro we lead with pricing transparency.

As you can see, our recurring services are a flat monthly fee that start at $2,000. This includes a dedicated team that provides customized monthly reporting, KPI tracking, data cleanup, controller oversight, and a monthly review meeting. Depending on the characteristics of your business and the scope of an engagement, recurring services can range from $2,000-$10,000+ each month - however, 80% of our clients spend $3,000-$6,000 per month with us for complete, accurate and timely financials.

We also provide support for custom projects, with monthly retainers starting at $3,000. The end cost of a project is determined through hourly billing. A custom project can range from a set of simple tasks with clearly defined goals, to a broader offering that helps you get started as you're still determining the scope of a recurring agreement. Either way, you will get full access to our suite of services and expertise to help with quality financials, growth strategies, fraud mitigation, and more. If you're interested in exploring a recurring or project-based agreement, you can set up a free consultation with a kept.pro expert.

Protecting Your Business From Financial Fraud With A Fractional Accounting Team

Financial fraud is running rampant. We've already cited findings from a recent report by the Association of Certified Fraud Examiners, but what we shared so far is just the tip of the iceberg. According to the study, Occupational Fraud 2024: A Report To The Nations, which investigated 1,921 incidents from around the world, the total cost of these fraud cases was a whopping $3.1 BILLION. Organizations lose an average of 5% of revenue to fraud each year, which can be devastating to a growing business. As it takes 12 months for most instances of fraud to be detected, scammers can do considerable damage before getting caught.

The report also showed that the median financial loss to organizational fraud jumped 24% from 2022 to $145,000 in 2024. The presence of some kind of anti-fraud controls lowered the fraud losses and led to quicker detection. Background checks on potential employees are one key way to help prevent fraud - however, 43% of defrauded businesses admitted they didn't do any kind of background checks on the scammer. Unsurprisingly, the report also found that more than half of occupational frauds occurred due to a lack of internal controls or an override of existing controls (a sign they weren't strong enough to begin with).

In addition, 84% of all fraudsters displayed at least one behavioral red flag. These warning signs include:

• Living beyond their means
• Financial difficulties
• Unusually close association with a vendor/customer
• Control issues, such as an unwillingness to share duties
• Irritability, suspiciousness, or defensiveness
• Self-centered attitude
• Bullying or intimidation

A strong fractional accounting team can help prevent these devastating instances of fraud. As seen in this case, a bookkeeper who was considered “like family” to her employers was found to have stolen $380,000 from one business in just nine months - only to allegedly steal another $200,000 from her next employer! The accused fraudster had been arrested several times in the past, and if the businesses had conducted criminal background checks, they may have averted being scammed.

Risk mitigation is a foundational service provided by a fractional accounting team like kept.pro. As an established business in the financial services industry, we conduct extensive criminal background and employment history checks on each of our experts as part of the hiring process. One of the very first things we do with all of our new clients is a deep-dive into the health and hygiene of their books, to make sure there aren't any obvious signs of potential fraud. We also have expert partners with extensive experience in forensic accounting, who can perform thorough investigations if fraud is suspected.

Arguably, the most important risk mitigation step is derived from the very nature of the fractional accounting team - segregation of duties. Effective accounting teams like ours are intentionally set up to separate treasury activities (such as releasing payments) from transaction processing and account reconciliations. They also separate the role of conducting the work from the role of reviewing the work, as an appropriate layer of oversight.

Again - a growing business cannot be expected to perform all the duties and due diligence of a large publicly traded company. It would be irresponsible to even try to, as your time and resources are limited. As a founder, it is critical you find strategic partners that offer the right tools for the job at hand. A fractional accounting team that has robust internal controls will allow you to rest easy and focus on achieving your business goals.

Hiring A Fractional Accounting Team Vs. A Fractional CFO

As you're evaluating the financial needs of your business, you may come across the term “fractional CFO”. A fractional CFO, or fCFO, can provide valuable insights, and this is a service we offer in collaboration with firms that specialize in different aspects of CFO work. However, more often than not we find that what our clients need first are the foundational, actionable, and cost-effective benefits of a fractional accounting team.

With a fractional CFO, you're getting the expertise of an experienced financial executive. This often includes high-level strategy work around operations management, capital allocation, investor relations, and business development. These are all incredibly important focus areas, and the right advice can be transformative. The key to actually benefiting from a fractional CFO - or even a full-time CFO - is making sure your business is actually ready to bring one on.

Far too often, fCFOs are brought into an organization that is in dire need of basic accounting housekeeping. Any financial advice is only as good as the data upon which it is based. So this means that either 1) the fCFO is giving guidance based on bad data, which is essentially useless, 2) the fCFO is managing a vendor selection or recruiting process for an external or internal accounting team, or 3) the fCFO is charging fCFO rates to do accounting work to bring your books up to shape. In at least two of these cases, you have a better alternative by addressing your accounting before bringing in a fCFO.

This is actually one of the reasons that kept.pro exists. Our founder, James Wheeler, worked as a fractional CFO himself. Over the years, he realized that most businesses with a $2M-$30M annual operating budget simply did not have sufficient accounting operations to produce the quality financial data needed to support the expertise a fCFO could bring to bear. You can read more about his journey in this article: Does My Business Really Need A CFO (Fractional Or Otherwise)?

Spoiler alert, but the answer to that question is not usually a Yes. But some signs that you should consider a fractional CFO include:

• You can leverage their unique operational or industry expertise or relationships
• Your industry, structure or business has complex and/or high-consequence regulatory compliance requirements
• You're planning to raise capital
• You're planning to engage in mergers and acquisitions activity

If you are unsure whether your business should move forward with a fractional accounting team vs a fractional CFO, feel free to reach out. Book a free consultation with a kept.pro expert to learn more about which services align with your business goals, and how we can help you achieve them.