There comes a point in many growing businesses when annual accounts and basic bookkeeping are no longer enough.

Management starts needing answers to questions such as:

• How profitable were we this month?
• Where is our cash going?
• Which products or services generate the best margin?
• Can we afford another employee?
• What will our bank balance look like in three months?

At that point, the natural response may be:

“We need to hire a Finance Manager.”

That may eventually be the right decision.

But before starting recruitment, it is worth understanding the true cost of bringing the finance function in-house and comparing it with an outsourced alternative.

A Finance Manager Costs More Than Their Salary

Suppose you advertise a Finance Manager role at an annual salary of £45,000.

It is easy to think:

Cost to business = £45,000.

In reality, salary is only the starting point.

Employers can also incur National Insurance, workplace pension contributions and the cost of paid leave, alongside recruitment, insurance, equipment and training.

The government’s own business guidance says these additional employment costs can add roughly 10%–30% to total employment cost, depending on the circumstances.

So when comparing an employee against an outsourced finance service, comparing only the employee’s headline salary can produce a misleading result.

Employer National Insurance

Employers pay their own National Insurance contributions in addition to the National Insurance deducted from an employee’s salary.

For most standard employees, the employer Class 1 National Insurance rate for 2026/27 is 15% above the applicable secondary threshold, subject to the relevant category and rules.

That means a growing company needs to budget for more than the salary it offers the candidate.

Depending on the employer’s circumstances, reliefs such as Employment Allowance can affect the final cost, so businesses should calculate their own position rather than applying a simple percentage to every hire.

Workplace Pension Costs

Eligible employees generally need to be automatically enrolled into a workplace pension, with the employer making the required contribution.

The government confirms that employers have automatic-enrolment duties and must make contributions for eligible staff.

Again, that cost sits on top of salary.

Paid Holidays Still Cost the Business

A full-time employee is entitled to paid annual leave.

During that period, the business continues paying the employee even though they are not available to perform their normal role.

The finance work does not necessarily disappear.

Someone may still need to deal with:

• Payroll
• Supplier payments
• VAT deadlines
• Cash-flow reporting
• Management information
• Urgent queries

In some organisations another employee absorbs that workload. Others need temporary cover.

Either way, the business should consider this when calculating the real cost of the position.

Then There Is Recruitment

Recruitment itself can be expensive.

The business may need to pay for job advertising or recruitment-agency fees, management time for interviews, onboarding and training.

There is also a less obvious cost:

what happens if the person does not work out?

The recruitment process may have to start again.

An outsourced finance arrangement generally avoids most of those recruitment costs because the company is purchasing a service rather than recruiting an individual employee.

One Employee Can Also Create a Single Point of Failure

Imagine your Finance Manager:

• takes two weeks’ annual leave,
• is unexpectedly off sick,
• leaves for another position,
• or has expertise in management accounts but little experience with another issue your company suddenly faces.

If one person effectively is the finance department, their absence can become a significant operational issue.

An outsourced finance function can reduce that dependency.

Instead of relying completely on a single employee, the service can be structured around an accounting team and agreed processes.

Do You Actually Need a Finance Manager Five Days a Week?

This is possibly the most important question.

A growing business may genuinely need better financial control.

But that does not automatically mean it needs a qualified finance professional sitting in the business five days every week.

What management may actually need is:

• accurate bookkeeping,
• monthly management accounts,
• cash-flow forecasts,
• VAT and payroll coordination,
• budget reporting,
• KPI analysis,
• and someone available to explain the numbers.

If those activities require only a certain amount of professional finance time each month, employing someone full time could mean paying for capacity the business does not yet need.

What Is an Outsourced Finance Department?

An outsourced finance department provides some or all of the finance functions a company would otherwise manage internally.

Depending on the business, this might start with bookkeeping and reporting and develop into a much broader service.

For example:

Foundation stage
Bookkeeping, reconciliations, VAT and regular financial reporting.

Growth stage
Management accounts, cash-flow forecasts, budgets and KPI reporting.

More advanced stage
Detailed financial analysis, forecasting and management support.

The key difference is flexibility.

As the business grows, the level of finance support can grow with it.

Potentially Reduce the Cost Significantly

For the right business, outsourced finance can cost substantially less than employing a full-time Finance Manager.

That is because the business is not necessarily carrying all of the employment overhead associated with a permanent hire.

Depending on the finance support required and the salary level being compared, an outsourced solution could potentially operate at around half the total cost of an equivalent full-time internal finance resource.

That should not be treated as a universal guarantee.

Some businesses need significant day-to-day finance support and will eventually be better served by building an internal team.

But many SMEs simply do not need a Finance Manager five days a week.

For those businesses, outsourcing deserves serious consideration before recruitment begins.

Outsourcing Is Not Simply “Cheap Bookkeeping”

A proper outsourced finance department should not merely record transactions.

The objective is to turn accounting data into useful management information.

That can include understanding:

Revenue
How is turnover changing?

Gross Margin
Are rising costs reducing profitability?

Payroll
Are employment costs increasing faster than sales?

Cash Flow
What cash will the business need over the next three or six months?

Debtors
How much money is tied up in unpaid customer invoices?

Budget vs Actual
Is the company performing in line with expectations?

These are management questions, not simply bookkeeping questions.

Management Accounts Can Change How You Run the Business

Annual statutory accounts are important.

But by the time management receives them, much of the information is historical.

A business can discover today that its margins deteriorated nine months ago.

Monthly or quarterly management accounts provide much more current information.

That gives management the opportunity to respond earlier.

For example, if payroll as a percentage of revenue is steadily increasing, the business can investigate.

If debtor days are rising, credit-control processes can be improved.

If a particular service line is producing a much stronger margin, management might invest more heavily in it.

The value comes from using the numbers while they are still relevant to current decisions.

Cash-Flow Forecasting Matters Even When You Are Profitable

Profit does not necessarily equal cash.

A rapidly growing business can report healthy profits and still experience severe cash-flow pressure.

Perhaps customers take 60 days to pay while employees and suppliers need paying immediately.

Perhaps VAT or Corporation Tax falls due at the same time as a major equipment purchase.

Perhaps the company plans to hire several employees before the additional revenue arrives.

Cash-flow forecasting gives management an opportunity to see those pressures ahead of time.

That can be much more valuable than discovering the shortfall when the bank balance is already low.

Who Is Outsourced Finance Best Suited To?

It can work particularly well for growing SMEs that have outgrown basic bookkeeping but are not yet ready for a complete internal finance department.

It can also work well for businesses with complex transaction volumes, multiple revenue streams or sectors where margins need to be monitored closely.

Hospitality is one example.

A restaurant may need close visibility over food costs, labour percentages, delivery commissions and VAT.

Private clinics are another.

Management may want regular information on practitioner income, payroll, clinic costs, equipment investment and overall profitability.

The finance function can be built around the commercial realities of the particular business.

When Is Hiring In-House the Better Option?

Outsourcing is not automatically right for everyone.

As a business becomes larger and more complex, there may come a point where it needs a senior finance professional inside the organisation every day.

That employee may need to work continuously with management, operations, suppliers, lenders or investors.

At that point an internal Finance Manager, Financial Controller or Finance Director can make commercial sense.

In fact, a good outsourced finance relationship should help the business recognise when it has reached that stage.

The question is not:

“Is outsourcing always better than hiring?”

The better question is:

“What level of finance support does our business actually need today?”

Compare the Numbers Before You Recruit

Before advertising a full-time Finance Manager role, calculate the total cost.

Consider the salary plus employer National Insurance, pension obligations, paid holidays, recruitment, training, software, equipment and absence cover.

Then ask what the business actually needs from its finance department.

If you primarily need regular bookkeeping, management accounts, cash-flow forecasting, budgets and financial insight, an outsourced finance department may provide the capability you need for considerably less than a full-time hire.

Taxwise Outsourced Finance Department

Taxwise Accountants NI provides outsourced finance support to growing businesses across Belfast and Northern Ireland.

Our service can include bookkeeping, management accounts, cash-flow forecasting, budgets, KPI reporting, VAT and payroll coordination, financial controls and ongoing management support.

The scope is built around what your business actually requires.

Get the Finance Function You Need — Without Automatically Taking On the Cost of a Full-Time Hire.

Book an Outsourced Finance Review

Frequently Asked Questions

Is outsourced finance cheaper than employing a Finance Manager?

It can be. The total cost of employing someone includes more than salary, while an outsourced service can be tailored to the level of support actually required. The saving depends on the salary, employer costs and scope of the outsourced service.

Can an outsourced finance department prepare management accounts?

Yes. Management accounts are often one of the central elements of an outsourced finance service.

Can an outsourced finance team manage bookkeeping as well?

Yes. A properly structured outsourced finance service can combine bookkeeping with reporting, forecasting and higher-level financial support.

Will outsourcing replace my accountant?

Not necessarily. In the Taxwise model, accounting, tax compliance and outsourced finance can be integrated, which can reduce the need to coordinate several different providers.

When should a business hire its own Finance Manager?

An internal hire may become appropriate when the company has enough day-to-day finance complexity to justify someone being embedded in the business full time.