is an outsourced finance function cheaper than hiring in-house
Hiring a Finance Manager looks like £55,000 on paper until you add National Insurance, recruitment fees, ramp-up and training time etc. Then there is the Series A round that needs CFO-level input but a £150,000 full-time hire that cannot be justified yet. Meanwhile, founders are spending a disproportionate amount of time managing finance when that attention should be going towards growth, product and customers.
This is a familiar position for a business that has outgrown basic bookkeeping but isn’t ready for a full finance department. An outsourced finance function exists precisely for this stage, providing senior expertise alongside accounting compliance without the overhead of permanent hires.
This guide breaks down the real costs, hidden expenses, and strategic trade-offs to help you make the right choice for your cash runway.
The True Cost: In-House vs Outsourced Finance
A Finance Manager at £55,000 can quickly become a £65,000+ commitment once you add employer National Insurance (15%), pension contributions (3%) and statutory benefits. Recruitment agencies typically charge 15–25% of annual salary which can add £11,000 – £14,000 upfront. Factor in software licences (£300+ monthly), office space and the time spent training and managing them and the true first-year cost climbs well beyond the headline salary.
An outsourced finance function typically costs £800 – £5,000+ monthly depending on scope. Even at the lower end, you get access to a full team of chartered accountants, management accounting specialists and CFO-level strategic input. No recruitment fees, no holiday cover gaps and no management overhead sitting on the founder’s plate.
Beyond salary, employment creates ongoing obligations. Background checks run from £20 to £50 for standard DBS-type checks, rising to £100 to £160 or more for finance or security-sector vetting. Professional indemnity insurance adds hundreds to low thousands annually depending on sector, risk profile and coverage level. These costs rarely feature in the initial hiring calculation but land on the books quickly once someone is in the role.
UK employee attrition ran at 19% in 2025, above the European average of 17.4% and up 11% on the prior year. A failed finance hire means doubled recruitment costs and months of disruption to financial processes at precisely the moment the business needs stability.
| Cost Component | In-House Finance Manager | Outsourced Finance Function |
|---|---|---|
| Base annual cost | £65,000 (including overheads) | £9,500 |
| Recruitment and onboarding | £15,000 | £0 |
| Software and technology | £3,600 | Included |
| Expertise breadth | Limited to one hire’s skillset and experience | Chartered accountants, management accounting specialists and CFO-level input in one engagement |
| Scalability | Capacity limited to one hire | Scales with business needs |
| Deployment time | 2–3 months minimum | Operational within weeks |
| Continuity risk | One resignation creates an immediate gap | No single departure puts reporting at risk |
| Investor readiness | Dependent on the individual’s experience | Built around what investors expect at each stage |
The Hidden Costs Nobody Mentions
Then there’s the opportunity cost. Weekly one-to-ones, performance reviews and training consume 10-15% of founder time which could be better spent on sales, product development or investor relations.
Strategic Value Beyond Cost
Cost comparison misses the strategic dimension. A Series A startup needing monthly board packs, cash runway analysis and investor reporting would need a Finance Director with an estimated average annual salary of £90,000 to £180,000 plus a Management Accountant at £46,100 to £51,800.
An outsourced team delivers equivalent output with broader expertise for £800 to £5,000 monthly. If you are spending more than £5,000 monthly on finance including salary, software and management time, outsourcing may provide more capability for the same or lower total cost.
An outsourced finance team understands investor expectations. They prepare documentation that demonstrates operational maturity with clean management accounts, accurate forecasting and transparent cash flow reporting. This can improve fundraising readiness and support valuation discussions.
When Each Option Makes Sense
Outsourcing often makes sense when:
Cost of hiring outweighs the benefits
There are specific points in a business’s growth where hiring simply doesn’t stack up financially. Early on, when payroll covers two or three people, a full-time finance hire is rarely justified. The volume of work doesn’t warrant the salary and the overhead attached to it. As the business scales, the problem shifts. Fundraising, R&D tax credits and transfer pricing each require different expertise. Covering that through permanent hires is expensive and often unnecessary. At senior level, the numbers rarely add up. A CFO-level operator at £150,000 a year is hard to justify when the business needs that input two days a week. An outsourced finance function fills that gap without forcing a premature permanent hire.
The talent gap is real
Good finance talent is difficult to find and harder to retain. If your current setup is stretched to keep pace with regulatory changes or relies too heavily on one person, outsourcing reduces continuity risk and gives the business access to wider expertise.
Growth has outpaced your finance skills or setup
Growth, restructuring, a new market or an upcoming exit all place additional demands on internal teams. When management time is absorbed by day-to-day financial issues, an outsourced finance function can add capacity quickly while keeping reporting and decision-making on track.
Your financial processes are still run manually
Outdated software and unreviewed workflows create inefficiencies that compound quietly. The right outsourced provider brings current technology and the sector experience to improve processes instead of simply maintaining them.
The numbers aren’t telling the full story
If the numbers don’t clearly show how the business is performing against its objectives, decision-making becomes harder to defend internally and to investors. A stronger finance function turns financial data into usable insight, not just historic accounts.
Compliance is falling behind
Financial regulations change regularly and the consequences of falling behind are rarely minor. An outsourced finance partner maintains dedicated compliance expertise so the business is not relying on one stretched internal resource to keep up.
Building an in-house finance team typically becomes the right move as you approach Series A or Series B. At that stage, the business needs someone who can own the financial narrative, prepare board packs and engage directly with investors.
The starting point is usually hiring a senior finance lead or virtual CFO operating at a strategic level. What works well for our clients at this stage is pairing that role with an outsourced finance function handling the operational side, management accounts, payroll, VAT returns and vendor payments.
The senior hire stays focused on strategy while the outsourced team ensures nothing falls through operationally. If you are at that stage and defining what your finance lead should deliver in the early stages, our CFO 90-day plan guide is a good place to start.
In-House Finance Pros
- Dedicated resource focused solely on your business
- Deep institutional knowledge over time
- Direct control over priorities and processes
- Immediate availability for urgent queries
In-House Finance Cons
- Limited expertise compared to specialist teams
- Holiday and sick leave coverage challenges
- Ongoing training and development costs
- Technology infrastructure and software expenses
The Rise Accounting Approach
Strong outsourced finance providers deliver strategic guidance that scales with the business, maintain cash flow stability through proactive forecasting and ensure compliance through expert oversight.
Rise Accounting’s outsourced finance function operates on that basis. Our fixed-fee model eliminates budget surprises and dedicated teams operate as extensions of your business rather than an external supplier. The service covers CFO-level strategic guidance, investor-ready reporting, financial forecasting and modelling at a fraction of the cost of a full-time team.
Whether you are preparing for fundraising or optimising operational efficiency, our dedicated team of Chartered Accountants and ACCA-qualified accountants delivers measurable value beyond simple cost savings.
Frequently Asked Questions
Is outsourcing finance cheaper than hiring in-house?
Outsourcing is generally cheaper when considering the total cost of an in-house hire, which extends far beyond just salary. Founders often underestimate hidden expenses like employer contributions, recruitment fees, software and management overhead which can significantly impact cash runway. An outsourced finance function provides comprehensive support for a predictable fixed fee often less than the true cost of a single senior in-house role.
How much does an outsourced CFO cost?
An outsourced CFO service is typically part of a broader finance function package costing £800 – £5,000 monthly depending on your business’s complexity and scope. This provides strategic guidance often including fundraising preparation and investor reporting for much less than the £150,000 annual salary of an in-house CFO. It allows scale-ups to access top-tier financial strategy without the full employment commitment.
What is the main disadvantage of outsourcing finance?
A main disadvantage can be a perceived loss of direct, immediate control over an internal employee and the slower development of deep, company-specific institutional knowledge within your immediate team. However, reputable outsourced providers mitigate this by assigning dedicated teams who become familiar with your business and offer consistent availability. This balances the need for control with access to specialised expertise.
Are prices lowered by outsourcing a finance function?
Yes, outsourcing typically lowers overall finance costs by eliminating hidden expenses like recruitment fees, employer contributions, software licenses, office space and management time. This allows founders to allocate capital more efficiently towards growth initiatives, improving cash runway. You gain access to a full team of specialists for a predictable fixed fee often less than the true cost of a single in-house hire.
What are the hidden costs of an in-house finance team?
Beyond salary, hidden costs for an in-house finance team include significant recruitment fees, employer National Insurance and pension contributions and statutory benefits. You also need to budget for software licenses, office space, hardware and the considerable management time founders spend on supervision and training. These often-overlooked expenses quickly inflate the true cost of an internal hire and impact your burn rate.
Matt co-founded Rise Accounting and leads the firm’s corporate finance and FinOps strategy practice. He works closely with startups and scale-ups navigating funding rounds, financial planning and investor readiness. Before Rise, Matt built deep expertise across financial modelling, cash flow management and growth-stage advisory.
