The accounting profession faces mounting challenges as talent shortages and evolving workplace expectations reshape the industry. The global shortage of qualified and skilled accountants has been making headlines, particularly in the Global North, with a bigger majority of Chief Financial Officers (CFOs) struggling to find or replace qualified staff.
According to a report by the International Federation of Accountants (IFAC), at the top of the list of causes of this is the decline in interest by young professionals in this area of work. The younger generation are shying away from the accounting profession for such concerns as dissatisfaction with pay, limited remote work opportunities, burnout from long hours, and rapid technological advancements. Fears of AI replacing accountants also persist.
Other reasons for this alarming trend in the accountancy space include the abiding high demand for accountants and the fact that a majority of the existing experienced accountants are set to retire in a few years, mostly comprising the Baby Boomers, who account for more than half of all qualified accountants.
Since timely and accurate financial reporting is crucial for investor confidence and informed decision-making, businesses have to deal with various ripple effects of this shortage that leaves them in stiff competition in attracting and retaining accounting talent.
Small businesses have particularly been hit hard, being competed out by their larger counterparts due to limited budgets to hire and retain sufficient and qualified accountants. However, if businesses are to grow, the role of qualified accountants must not be downplayed. Therefore, it is time for businesses to reimagine the Accounting Function; and at the centre of this reimagination is the appreciation of the role of Fractional Accountants.
For starters, Fractional Accountants (FAs) are experienced accounting professionals who work with businesses on a part-time, temporary, or as-needed basis rather than as full-time employees. They provide specialized financial expertise and support businesses with bookkeeping, financial reporting, budgeting, compliance, and strategic financial planning.
With the shortage of accountants come, among others, the high cost of hiring and retaining qualified staff, delayed financial reporting and knowledge gaps that lead to potential errors in reporting and tax compliance. Appreciating the role of FAs, then, can be a safeguard against these challenges that may cripple business growth. Especially are FAs relevant to startups, small businesses, and businesses undergoing transitions.
Many businesses hire FAs to provide accounting & financial management, financial reporting, budgeting and forecasting, compliance and tax management, processes improvement, internal controls etc. Their accounting & financial management role entails handling general ledger, invoicing, reconciliations, and cash flow monitoring, while for financial reporting, FAs undertake preparation of monthly, quarterly, and annual financial statements.
When in charge of compliance and tax management, FAs support businesses in ensuring compliance with regulatory requirements, filing tax returns, and optimizing tax strategies. Some larger businesses hire FAs to take charge of Accounts Payables or Accounts receivables functions, while some have them to hold brief for staff on extended absences or while hiring to fill a vacancy.
Hiring the services of FAs has proven to be cost efficient as businesses easily leverage top talent without the costs associated with full-time salaries, benefits, recruitment costs and long-term commitments. FAs are also scalable as they are hired as needed, ensuring flexibility during peak workloads or when handling special projects.
Perhaps the main reason small businesses should consider FAs besides their cost-efficiency is their specialized expertise. FAs bring niche expertise in areas like financial reporting, capital investment analysis, and process automation that, for small businesses, may be impossible to have in-house. Also, being external consultants, FAs can provide the much-needed unbiased assessments and fresh ideas to improve internal processes and strategies of small businesses. They also need little to no training and supervision as they are already experienced, thereby minimizing onboarding and training time and costs, which would be higher with junior in-house hires.
Additionally, every startup should consider hiring a Fractional CFO (Chief Finance Officer) to gain certain strategic financial expertise without the high cost of a full-time executive. This allows the business to access experienced financial leadership while managing expenses efficiently.
Besides, a Fractional CFO plays a crucial role in fundraising and investor relations by preparing financial models, optimizing cash flow, and enhancing credibility with potential investors. They also help implement strong financial processes, ensuring scalability and compliance while maintaining financial discipline. By leveraging a Fractional CFO’s expertise, startups can navigate growth challenges, secure funding, and build a solid foundation for long-term success.
