Fractional accounting is not a new concept. It can be seen as a customizable expansion of outsourced bookkeeping. According to the needs and budget of your company, you hire the services of experienced finance professionals. So is a fractional accounting team just glorified bookkeeping with flexible hours? Here are a few key differences in bookkeeping vs accounting to help you decide which is more appropriate for your company.
To begin with, let us understand the debate of bookkeeping vs accounting. Although the terms are used interchangeably they actually refer to two different kinds of financial services.
What Is Bookkeeping?
Bookkeeping is the cornerstone of any successful business and refers to the daily recording, storing, and retrieving of financial information and transactions made by your business. The most common business transactions include purchases, sales, receipts, payments, and invoices.
It is important for bookkeepers to focus on accuracy and be fluent in key financial topics. Bookkeepers are usually overseen by accountants.
What Is Accounting?
While bookkeeping focuses on recording the financial transactions of your business, accounting services provide a higher level of financial services which include interpreting, classifying, analyzing, reporting, and summarizing your financial data. Accounting services include classification, bank and credit card reconciliations, analyzing sales data and stats, financial projections, cash flow management, training, and consulting. Unlike bookkeeping you will not just receive a report, you will also receive an analysis and advice on what your next steps should be.
What Does A Fractional Accounting Team Do?
A fractional accounting team is a team of financial experts led by an experienced CFO who helps evaluate where your company stands financially. They are responsible to ensure that the company has a financial foundation to support the strategic goals and steps for growth. The CFO will bring in an accounting manager to oversee your accounting functions, assist with audits, document procedural improvements, and advise on topics like revenue recognition. A risk analyst will be a part of the team who will evaluate the integrity of your systems and make recommendations to ensure compliance and security. The system specialist will create customized implementation plans for software integration and transition. Analysts will create accurate forecasts and budgets to create material for presentations and to help with specific project projections. The fractional accounting team can also take on the responsibilities of a bookkeeper if your company needs them to do so.
What Are The Advantages Of Fractional Accounting
A fractional accounting team will give you the advantage of having an insightful team which allows for your accounting needs to be met with speed and accuracy. It is both high value and cost-effective and makes good business sense. It allows you to only use and pay for the accounting and finance resources that you need. Along with accounting you also get the services of financial planning and analysis. As your business grows you will need accounting services in addition to bookkeeping services. One of the main advantages of hiring a fractional accounting team is that they become a dedicated part of your company’s mission. They will work to add value to revenue generation, investor relationships, and administrative processes.
Bookkeeping Vs Accounting, The Larger Picture
1. Save Money
Fractional accounting will save you money as you pay only for the work done. The cost of hiring, training and added benefits to be given to an in-house bookkeeper can be quite expensive. An in-house bookkeeping service will cost you office space, equipment, and operation charges which fractional accounting services won’t. With fractional accounting services, you will also get more expertise for the price of a bookkeeper.
2. Leave It To The Specialists
Outsourcing bookkeeping and accounting services to a fractional accounting service will ensure that your business is in the hands of skilled, reliable professionals. It will give you access to a large pool of resources and teams of top industry professionals that understand your industry well. Having an external team also ensures that if one person quits there is no single point of failure that can happen with an internal team.
3. Focus On Your Core Operations
Outsourcing your financial services allows you to focus on the running and managing of your business’s core operations while saving you time and effort.
4. Benefit As You Scale Up
The benefits of scalability are enormous when you engage a fractional accounting service. It helps you comfortably expand your expenditure and plan your potential future. The ongoing analysis of your business finances allows you to make good decisions in preparation for growth.
5. Access To Accounting Systems And Tech
Outsourcing can give you access to the best and latest accounting systems in the industry which you may not be able to afford on your own. Fractional accounting firms invest in the best technology available so that they can offer the best services. At no point do you lose access to your information while you outsource your financial services
If you have a business that needs fractional accounting and CFO help, we at Accounovation are passionate about helping our clients grow profitably. We also provide businesses with a complete fractional accounting team for the price of a full-time bookkeeper. Get in touch with us at Accounovation.com for a free consultation on how we can assist you with accounting services.