In-house accounting vs outsourcing: which is better?
Key takeaways:
A single accounting hire rarely provides all the tactical, technical and strategic expertise a growing company needs.
Outsourcing gives you access to specialists across the finance function without building an entire department.
An outsourced team can scale support up or down as workloads and priorities change.
The same investment can provide higher-level expertise without the added costs and management demands of an employee.
Hiring isn’t the only option
You’re in a common situation: your company has outgrown your current team. You’re falling behind on accounts payable, slow to get invoices out, and strategic financial planning has fallen to the wayside to keep the basic daily tasks going.
The obvious next step is to make an accounting hire, right? Not necessarily. You actually have an important choice to make: hire an in-house accounting role or turn to outsourcing.
The decision isn’t just about cost, but about whether you have a gap that one employee can fill long-term or a broader, more evolving finance demand.
Range of expertise
We’ve all seen the job descriptions on LinkedIn that ask for a bookkeeper who can do it all:
General ledger management
Accounts payable and accounts receivable
Payroll administration and compliance
Monthly and year-end close
Cash-flow forecasting and management
Budget development and variance analysis
Financial modeling and scenario planning
Controller-level review and internal controls
CFO-level financial strategy
Tax planning and filing coordination
Audit preparation and auditor management
Board and investor reporting
Banking, lending and bonding support
ERP implementation and accounting software administration
Workflow automation and systems integration
Construction job costing and WIP reporting
Manufacturing inventory and cost accounting
Nonprofit fund accounting and grant compliance
M&A due diligence and integration
Risk management and regulatory compliance
Executive communication and strategic decision support
And we all know that in reality, no human has all these skills, and if they did, they wouldn’t have the time to execute on them.
The reason these job ads show up is that growing companies often actually need this broad range of skills, but they don’t have the resources to hire an entire finance team in-house. Out of desperation they post an unrealistic job description hoping for a miracle.
What often gets passed over is a more realistic solution: outsourcing.
When you bring on a partner agency who has a full team of experienced accountants and finance strategists, you get that broad range of skills and experience you’re looking for in a way that makes financial sense for your organization.
When you need accounts payable support, the accounts payable specialist steps up. When you need quarterly planning advice, the strategist steps up, if you’re facing an audit, the audit specialist steps up. You don’t have to worry about finding the resources. They’re there and ready to help the minute you need them.
Tailored level of support
When companies are in high-growth mode, their needs can change rapidly from one month to the next. Maybe in February you’re just dealing with day-to-day AP and invoicing but by May you’re faced with an audit or putting together a comprehensive report for investors.
When you only have in-house accounting resources, the only way to adapt to these spikes in demand are to force your staff to work longer hours or to bring on temporary hires that don’t have the broader context or loyalty to your company.
Outsourcing gives you the flexibility to respond quickly and effectively as your organization and its needs evolve. There’s a whole lineup of experienced accounting experts to step in when needed and step back when the work is done. They’re already plugged into your systems and culture, and they’ll be there for you to call on when you need them again.
Cost comparison
One thing we sometimes hear from companies is “We could hire someone for the same cost.” But how are you defining the cost?
When growing companies first look to fill an accounting need, they’re usually looking at hiring a generalist in-house because that’s what the budget will support. That choice comes with the limitations we touched on above.
But that same budget, applied to an outsourcing contract gets you much more. It gets you not just one low or mid-level accountant, but a whole team of accountants ranging from tactical specialists to controller- and CFO-level strategists.
And, you get all that without the benefit burden and management obligations of an in-house accounting hire. For your cost analysis to be apples to apples, you need to be considering:
Salary (entry vs. expert)
Payroll taxes
Benefits
Recruiting and onboarding
Software and equipment
Training and professional development
Management time
Turnover and replacement costs
Unless your company is at a stage where building a full in-house accounting team makes sense, then the math almost always points toward outsourcing as the smart financial decision.
The results aren’t hypothetical
How do we know all this? It’s because we’ve seen the difference having a full bench of professionals waiting to step into the game as needed has made for our clients!
From nonprofits going through growth transitions to construction companies experiencing exponential growth (like our client Cobalt) we’ve seen what a difference continuity, experience, and flexibility have on business success.
And, if your company is at a stage where hiring in-house makes more sense, we’ll tell you that as well.
Aerial’s goal is to serve as a finance partner that grows alongside our clients, providing the support they need when they need it. And if the best thing for a business is to have an in-house team, that’s what we want them to have.
Wondering which scenario is right for you? Hop on a call with one of our account specialists and they can help walk you through all the variables so you make the best decisions for your company’s success.
