Should I invest in an in-house finance team, or are there other options?

As a business owner, there comes a point when managing the finances yourself is no longer practical. Growing activities, increasing compliance requirements, payroll, VAT and cashflow management all demand time and expertise. The question then is whether to build an in-house team of finance employees or to outsource the finance function to an accounting firm.

The answer will depend on the size, complexity and plans of your business. It is important to understand what each option involves and the value each can provide.

This service is much more than just annual accounts and tax returns. A good accounting firm can act as an extension of your business, providing some or all of the activities typically carried out by an internal finance department. Depending on your needs, the service may include:

• bookkeeping and transaction processing
• payment runs
• accounts payable and accounts receivable management
• payroll administration and payments
• VAT returns and compliance
• management accounts – tailored to your business
• year-end financial statements and corporation tax returns
• assistance with audit queries
• cashflow forecasting
• budgeting and financial planning
• KPI reporting and analysis
• strategic finance support and advice.

Rather than employing several individuals, you gain access to a team of finance professionals with different areas of expertise.

Access to a wider range of skills

One of the biggest advantages of outsourcing is access to specialists. Instead of relying on the knowledge of one finance manager or bookkeeper, you can draw on a wider team with expertise in finance. This team will also have easy access to specialist departments, for example, teams who can advise on employee matters such as incentive schemes or HR issues, corporation tax experts who can be consulted as the business grows and compliance becomes more complex, or international network firms. 

Lower cost and reduced people risk

Building an in-house finance department can be expensive. Salaries, pensions, National Insurance, recruitment fees, training costs and software licences can add up quickly.

With outsourcing, businesses pay only for the level of support they need. This can be particularly attractive for small and medium-sized businesses that need professional finance support but do not yet require a full-time finance team. An in-house team can be vulnerable to sickness, holidays or resignations. If a key finance employee leaves unexpectedly, important processes can be disrupted. Outsourcing spreads this risk across a larger team. 

Scalability

Business needs change over time. During periods of growth and change, finance resources may need to expand quickly. An outsourced provider can usually scale support up or down far more easily than recruiting or reducing permanent employees. This flexibility allows businesses to access additional expertise when required without committing to long-term employment costs.

Better technology and processes

Accounting firms often invest heavily in finance technology and process improvements. Outsourcing can give businesses access to modern systems, automation and reporting tools without having to make significant investments themselves. 

Outsourcing is not always the right solution. There are advantages to having your own finance employees. An internal team is fully embedded within the business and can be available immediately for meetings, operational discussions and decision-making. Employees who work exclusively for your organisation often develop detailed knowledge of your products, customers, systems and culture.

For many growing businesses, the answer is not necessarily one or the other. Some organisations outsource their entire finance function. Others retain a small internal team and use an accounting firm to provide specialist support, management reporting, compliance services or temporary additional resource during busy periods.

Outsourcing is often most attractive when:

• the business is growing but cannot justify finance hires
• specialist expertise is needed
• finance processes need improving
• costs need to be controlled
• the business wants flexibility.

An in-house team may be more suitable when:

• the business is large or operationally complex
• finance staff need to be heavily involved in day-to-day operations
• there is sufficient workload to justify multiple full-time roles

Understanding all the options can help you make a more informed decision about the future of your business. If you would like more details on how we can support your business, please get in touch with your usual Crowe UK contact.