Keys to a Successful Fractional Accounting Engagement

There is no doubt the US workforce landscape continues to experience significant changes. The business challenges of the last few years have caused many companies to rethink how they can best execute their operating plans. With more and more companies outsourcing their accounting functions, there are a few important things to keep in mind to ensure a beneficial outcome.

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These are the keys to ensuring your fractional accounting engagement will be successful: 

Clearly Defining the Scope of Work
For starters, the scope of accounting work needs to be clearly defined. The incoming accountant needs to have a clear and accurate understanding of all of the work they will be responsible for performing. This can include a variety of tasks within the accounting department, so crystal clear expectations of what is need and what is not needed is essential for success.

Once clear expectations have been established, it is imperative to know whether the departing accountant will be available for training or questions. It’s ideal to have some overlap with the departing accountant so “institutional accounting knowledge” can be passed along to the next candidate. This will ensure a much smoother transition.

However, on the other side of the spectrum, if the departing accountant is not available for training or questions, then it becomes the sole responsibility of the incoming accountant to discover where the existing accountant ceased their transactional work. There are times where, even though this scenario is not ideal, it’s fairly easy to “pick up the pieces” of the prior accountant and “tie into” their existing work. On the other hand, in some situations with more complex accounting operations, it can be quite the challenge to “pick up the pieces” and keep the accounting operations moving forward!

Learning More
To continue the conversation about “picking up the accounting pieces”, the incoming accounting will have to spend significant time digging into various balance sheet and income statement accounts to determine where the departing accountant has “completed” their work.

Typically, it’s ideal to have a clean “cut off” that targets the end of one month and the beginning of another. For example, a prior accountant would be responsible for all financial transactions through March 31, 2022, and the incoming accountant would be responsible for all financial transactions beginning on April 1, 2022. This would also include the departing accountant being responsible for finishing the month-end close process in order to publish financial statements. This process would include items like bank and credit card reconciliations, as well as state and local tax returns, and any other compliance reporting for the month. This is preferred because most accountants like to take the accounting baton from the existing accountant knowing that reconciliations have been completed for the transactions under their watch.

Providing IT Support
Another key to a successful accounting engagement is adequate Information Technology (IT) support. IT support is critical to maintaining efficient accounting operations. In order for accountants to keep the flow of financial transactions and reporting moving, they have to have reliable technology and “access to” the technology.

At one time or another, we have all seen companies struggle unnecessarily due to not having adequate IT support. If there is one area of a company that should not be underestimated, it’s IT support for the financial technology and transactions of a company.

When financial technology is under supported, there can be a significant loss of financial visibility that causes a company to become vulnerable to risk. One example of risk would be information that is seriously delayed or inaccurate, resulting in the true financial health of the company not being known. In this scenario, and numerous others, it’s critical for IT support to be “on point” when it comes to accountants having all they need to manage the financial transactions of a company.

Communicating Effectively
Another key to a successful accounting engagement is high levels of communication. Whether communication is flowing up the organization or down the organization, it’s always important to establish crystal clear expectations and make sure everyone on the team is on the same page.
Where there is little to no communication, it is highly likely there will be unmet expectations and the engagement will underperform.  Where there are high levels of communication, it’s very likely expectations will be met, and clients will be satisfied.

Establishing Deadlines
Another key to a successful accounting engagement is establishing clear deadlines for work deliverables.

Once critical operational deadlines are known, accountants can then determine the amount of lead time they will need in order to complete the work in a timely manner and meet deadlines. If deadlines are not communicated by a client and are not known by an accounting consultant, the end result is often frustration experienced by both parties. This frustration can be avoided by setting very clear expectations from the beginning.

If a fractional accountant does not have clear expectations established for them by a client, they should take the responsibility upon themselves to ask the questions and gain clarity around all necessary deadlines in order to be successful.

Finding the Right Skill Set
A successful accounting engagement hinges on the client understanding the level of skill and expertise a fractional role brings to the table. Just like an in-house hire, a fractional hire can bring different levels of expertise depending on the needs of the role. Some companies may only need basic bookkeeping help while others may need more complicated accounting assistance or specialized project-based support. Someone with less experience than you need may be an affordable option but won’t get the job done effectively, causing unnecessary frustration.

In other words, you can’t expect a bookkeeper to give you the performance and value of a senior accountant. You can’t expect a senior accountant to give you the performance and value of an accounting manager. You can’t expect an accounting manager to give you the performance and value of an assistant controller. I hope the point is clear. It is very important to determine from the beginning the appropriate accounting skill set that is needed in order to get the job done. This will eliminate potential frustration for all parties involved.

Understanding the Difference Between a Fractional Accountant and an Employee
Lastly, an often overlooked key to a successful accounting engagement is for a client to understand the difference between a fractional accountant and a W2 employed accountant.

While a fractional accountant will be performing the same tasks as a W2 accountant, a fractional accountant will not always be available on an immediate basis like a W2 accountant. Companies typically have “direct control” over the time of their W2 employees. This is not the case with accountants who have been engaged on a fractional 1099 basis.

Fractional accountants “control their own time” while managing the expectations of an engagement in order to keep clients satisfied. This can also mean that fractional accountants may have more than one client at a time. When this is the case, they allocate adequate time to each client in order to meet deliverables and keep all parties satisfied. When clients understand the nature of a fractional accountant’s “time structure,” they can adjust their expectations accordingly and know that deliverables will be met based on established deadlines.

A fractional accounting engagement can be a great success when the right guidelines and expectations are established. As a reminder, the scope of work for any engagement needs to be clearly defined from the beginning. A client needs to precisely articulate what they need and want from a fractional accountant. The clearer the picture, the greater success that can be experienced by all. Another reminder is that high levels of communication by all parties will usually result in expectations that are met and clients that are fully satisfied with the performance of their fractional accountant. And finally, it’s very important to engage the right accountant with the right skill set for the job. This will ensure needs are met and clients are receiving the value they expect. Fractional accountants are a great option for companies who are looking for high levels of customer service.

About the Author
Eric Moore, ASP Practice Manager

​Eric Moore is the Practice Manager of ASP. He brings two decades of progressive experience in Controller, CFO, and General Management roles with privately held companies, and has a broad perspective from working in environments ranging from start-ups to multi-generational mid-market companies with revenue in excess of $100M.
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As Practice Manager, Eric is responsible for managing the consulting teams for ASP in all markets, for setting and executing business strategy, and acting as the primary client manager for all engagements. His experience as a consultant with both ASP and CFO Selections, as well as his previous time in general management, make him uniquely qualified to lead the firm.

Eric holds a Bachelor's Degree in Business Administration from Washington State University with an emphasis in Accounting and Finance. He is an active community volunteer, serving with various faith and compassion-based organizations for the last twenty years. In his free time, he enjoys spending time with his wife and three children, watching college football, traveling, hiking, riding his motorcycle, and soaking in the sun at any warm beach. 

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