Fractional Accounting: Expert Financial Services on Your Terms

If your startup needs high-level financial expertise but doesn’t want to commit to hiring a full-time team member, a fractional accounting partnership could be the ideal solution.

Unlike hiring a full-time professional to work in-house, a fractional financial partnership involves working with an external partner, usually on a part-time, as-needed basis. However, you’ll still be working with an experienced financial professional who can offer expertise and experience to help guide your startup. Fractional partnerships are scalable and can grow with your startup as it evolves.

The Fractional Accounting Approach

A fractional accounting partnership allows your startup to have high-level support without having to pay a full-time, in-house professional. Fractional accountants are seasoned professionals working part-time, hourly or on a per-project basis. Depending on the level of financial assistance your startup needs, a fractional accountant may offer the following services:

• Financial management and reporting
• Strategic financial planning
• Bookkeeping
• Cash flow management and budgeting
• Financial forecasting
• Investor relations and help with fundraising

Fractional accountants work more on demand than the traditional accounting service model. This allows startups access to the services they need when they need them most.

Comprehensive Fractional Accounting Team Structure

The fractional accounting services you receive will largely depend on the state of your startup and the level of service you require.

If you’re looking for more long-term strategy and financial guidance, you’ll likely want to work with a Fractional CFO. Fractional CFO services can help with high-level planning, financial modeling, and investor communications. If you need more day-to-day operational financial support, a Fractional Controller is likely the one you’ll work with. Other fractional roles include bookkeeper and accountant.

As your startup grows and evolves, you may even find that you need more than one fractional partner and work with multiple outsourced professionals, like both a fractional CFO and a fractional accountant at the same time.

Key Benefits of Fractional Accounting Services

A fractional financial relationship comes with its share of benefits. Some of the leading benefits of this type of relationship include:

• Cost savings: When you consider annual salary and benefits, it can add hundreds of thousands of dollars of overhead to your startup to hire full-time financial professionals in-house. Fractional partnerships represent a small fraction of that cost, making for a significant cost savings.
• High-level service: Good fractional partnerships allow your startup access to experienced, expert professionals who can tackle your financial needs. Essentially, you won’t sacrifice quality by opting for a fractional partnership.
• Scalability: Most financial service companies offer various support plans. While most startups start at lower-tiered support plans, they can easily upgrade to more comprehensive plans as their needs warrant.

Finally, it’s often beneficial to have an objective external perspective on your startup’s finances. A fractional partnership is better positioned to offer that than an in-house professional who may be afraid to challenge the existing status quo. Fractional partnerships provide a variety of benefits and can help startups overcome common challenges by offering objective guidance and developing financial strategies tailored to your growth stage.

Organizations That Benefit Most from Fractional Accounting

Any startup can benefit from a fractional accounting partnership, but there are some tell-tale signs to be on the lookout for when it comes to knowing when you could benefit from such an arrangement. These include:

• When you’re experiencing rapid growth
• When you’re ready for Series A funding
• When your finances have become too complicated for business owners or startup leadership to manage adequately
• If you’re looking for more long-term strategic financial guidance
• If you need assistance creating materials to attract investors
• If you realize that you need professional financial management but cannot afford a full-time CFO

Fractional Accounting vs. Traditional Accounting Solutions

Cost is among the most significant differences between fractional and traditional accounting solutions. Hiring a full-time accounting professional can add hundreds of thousands of dollars to your startup’s overhead per year. Conversely, when you work with a financial services firm like Graphite Financial, our fractional packages start at $1,250 monthly, representing a significant cost savings.

Fractional relationships also offer access to high-level expertise and are scalable.

Fractional relationships also differ from bookkeeping-only and consulting services, as a fractional partner aims to be a true extension of your startup. For a fractional relationship to be successful, your startup must also be successful.

Cost Structure of Fractional Accounting Services

Fractional accounting services typically charge hourly, by retainer or in tiered packages. While all of these cost structures have pros and cons, they all represent significant cost savings compared to hiring a professional in-house.

At Graphite, we offer tiered packages that startups can opt into based on their current financial service needs. Our packages start at $1,250 per month and startups can easily scale up to more comprehensive packages as their needs change. Noting this, fractional financial relationships tend to be much more flexible than conventional ones.

Core Services Included in Fractional Accounting

Wondering what services tend to be included in fractional accounting relationships? While such services tend to differ based on your specific needs and the package you purchase, some of the basic core services include:

• Financial transactions management and reporting
• Bookkeeping
• Tax compliance
• Bill pay and invoicing
• Expense reports and maintaining accurate financial records
• Forecasting
• Tech stack implementation

Implementing Fractional Accounting in Your Organization

Transitioning to fractional accounting is seamless if you work with the right partner. At Graphite, we pair all of our clients with an onboarding manager who helps streamline the process, evaluate financial workflows, and get everyone on the same page. Following the onboarding process, we’re usually set up and ready to support your startup within a few weeks.

Technology Integration in Fractional Accounting

Modern technology allows us to be even more effective with our accounting services. We use cloud-based programs to streamline communication and create an accurate snapshot of your startup in real time. Whether you’re starting from scratch or improving an existing accounting system with additional accounting support, we can integrate existing platforms and systems with our solutions to offer a more comprehensive service.

Industry-Specific Fractional Accounting Solutions

At Graphite, we pair one of our fractional accountants with your startup with specific industry experience. From SaaS to eComm to HealthTech and agency work, our experts have a range of experience working in various sectors and have helped hundreds of startups optimize their financial management since our founding.

Selecting the Right Fractional Accounting Partner

Selecting the right financial partner requires informed decisions like with choosing any other valued partner. Whether you’re seeking outsourced CFO services or basic bookkeeping support, it’s crucial to find the right fit in terms of experience and expertise. There are other factors you want to look for to ensure the best fit. These include:

• Advanced certifications and qualifications
• Communication preferences
• Cultural fit

Real Results: Case Studies in Fractional Accounting Success

Since its founding, Graphite has delivered results for hundreds of startups. One startup that has particularly benefited from Graphite’s bookkeeping, tax compliance and FP&A services is Traxo, an SaaS startup that provides visibility on corporate travel spend. As Traxo grew and scaled, it needed more than just its part-time, in-house bookkeeper, but more comprehensive financial support. It turned to Graphite to help build a monthly close process and provide support on revenue recognition and tracking key metrics.

In the end, Traxo was able to streamline its financial operations and enhance the accuracy of its financial reporting.

“I feel like I’ve got a resident expert from the SaaS world advising us,” notes Traxo CEO Andres Fabris. “Graphite’s team always had a great expert response because this was probably the hundredth time they were dealing with any particular scenario.”

Graphite’s Approach to Fractional Accounting

Graphite’s unique approach to fractional accounting is designed to position your startup for success. From our wealth of experience helping startups in every industry to our fast onboarding process, our approach helps us get our partnership up and running sooner so we can more quickly provide value for your startup.

Transform Your Financial Operations with Fractional Accounting

For more information on the value of a fractional accounting partner and how such a partnership can help take your operations to new heights, contact us today to schedule a free consultation.

FAQs

How much time will our team need to commit to working with fractional accountants?

Once we are onboarded, we aim to streamline the process as much as possible. While we will need leadership input and collaboration, we can work somewhat independently while scheduling periodic touchbases to stay aligned.

What software systems work best with fractional accounting services?

We work with modern tech stacks and software and can recommend and set up various tools for your startup.

How do you handle sensitive financial information?

We have an internal team dedicated explicitly to safeguarding confidential information, ensuring your financial data and financial statements are kept safe and secure.

Can fractional accounting services grow as your startup scales?

Yes — that’s one of the most significant benefits of working with a fractional accounting firm. As your startup grows and evolves, so too can our services. We can meet you where you are to ensure we always provide high-value service.

What’s the typical response time for urgent financial questions?

If you have an urgent problem, we’re standing by and ready to help. We pride ourselves on being there when you need us.

Will we need to change our existing accounting processes?

No, but we may make some recommendations on how you can enhance them to make them work better for your startup.