Should I outsource my finance function?

There are pros and cons to hiring a finance manager vs outsourcing your finances to an external provider. 

Maintaining an in-house finance department can be costly, requires energy to get them recruited and onboarded, and also gives you more employees to keep happy. However, the result is having people with insider business knowledge that an outsourced finance team wouldn’t have. 

On the flip side, outsourcing your finances gives you a team with varying degrees of expertise, who you can deploy in the right areas for the right amount of time (rather than hiring a single person who can only operate at their level). An outsourced finance team is always available (when one person goes on holiday or is sick, someone else can step in instantly), and is always up-to-date with the latest legislation. Plus, outsourcing your finances can be much more cost-effective than having an in-house team. 

What is right for you depends on you and your company. Over the years, we've worked with hundreds of in-house finance managers and FDs to add additional expertise to their finance functions, as well as working directly with business owners to completely outsource their finances. Below, we delve into the benefits of hiring an in-house finance manager vs outsourcing your finances to try and help you make the best decision for you and your business.

Cost-effectiveness

Outsourcing your finances can help businesses save money on recruitment and staffing costs, as they won't need to hire and train as many full-time employees to handle financial tasks. Hiring a finance manager can be expensive, especially if you're a small or medium-sized business. 

Whilst it's likely to be more expensive than outsourcing, having an in-house finance manager could help if you want direct access to this person, which can improve communication and collaboration between departments.

Expertise

If you want to tap into the expertise of professional accountants who have a deep understanding of financial regulations, tax laws, and accounting practices, then you should certainly consider outsourcing your finances. You’ll have access to specialised knowledge and experience in managing financial operations, including accounting, budgeting, forecasting, and financial analysis. They can provide valuable insights and guidance to help businesses make informed decisions to achieve their growth plans. 

Hiring an in-house finance team to replicate all of these skills, along with a finance manager who is the right fit for your company, could be time-consuming, stressful and expensive. In a tight job market, the best finance managers are hard to come by, and they may not have expertise in all the areas you need. 

Compliance

Whether you choose to outsource or hire, the finance manager should ensure that the business complies with financial regulations and standards, including tax laws, accounting principles, and financial reporting requirements. Professional financial services providers are always up-to-date with the latest financial regulations and best practices, ensuring that businesses remain compliant and avoid any legal or regulatory issues. 

Technology

Outsourcing finance can give businesses access to the latest financial software and technology, without having to invest in costly hardware or software upgrades themselves. If you chose to hire a finance manager, you should make sure they are experts in your chosen softwares. If they aren’t, training will need to be provided.

Flexibility

If you want to scale your financial operations up or down quickly, outsourcing can provide you with more flexibility in terms of the level of service you require and the duration of the engagement. Outsourcing eliminates the need to worry about hiring or laying off employees.

Ultimately, if you want someone to answer your queries instantly and interact with all parts of your business, hiring an in-house finance manager is a good option. 

If you're happy to deal with a team of experts via phone and email, want to avoid recruitment costs and hefty salaries, but still want access to the right people with the right tech, then you should definitely look into outsourcing your finance function.

If you’d like more advice on what’s best for you and your business, please get in touch. We’d be happy to help you make the right choice.