An Outsourced Finance Director (FD), also described as an outsourced or fractional CFO, is a specific accounting role. It is a role taken on by a skilled and highly experienced accountant with a focus on strategy and advisory, rather than regular accounting duties, like bookkeeping and filing.

If you run a business, or are thinking about starting one, you will be familiar with what accountants help with, broadly speaking. But there are several key differences between an accountant and an Outsourced FD.  

In this blog, I’ll explain these key differences, so you can properly understand what level of support your business needs. Choosing the wrong financial support at the wrong time can stall growth or leave you flying blind when making business decisions.

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What do they focus on?

Accountants focus on compliance and good record keeping

One of the key roles of an accountant is to act as gatekeepers of financial compliance. Their most important job is to make sure your business ticks every box for HMRC, files accurate reports, pays its taxes on time, and generally keeps out of financial trouble.

This is essential work; without a skilled accountant, you run a high risk of penalties, audit failure, or worse.

Compliance tasks typically taken care of by your accountant include:

• VAT and Corporation Tax returns
• PAYE and payroll taxes
• Annual statutory accounts filing
• Compliance with accounting standards
• Bookkeeping

They’ll make sure you’re following the law, managing costs properly, and not overlooking something that could come back to bite you six months later. Their role is primarily backwards looking; they are more about maintaining order than driving change.

Outsourced FDs drive business growth

An Outsourced FD focuses on opportunities for growth and efficiency. Their role is fundamentally different to that of a general accountant; rather than assessing things in hindsight, they use business data to help plot the route forwards.

This is obviously a very broad focus, encompassing every area of your business finances and operations. For example, an Outsourced FD may assist their client with:

• Profitability analysis (Management Accounts)
• Strategic growth initiatives
• Cash flow analysis and improvements
• Expansion and diversification strategies
• Investor engagement and fundraising efforts

Outsourced FDs help businesses with ambitious growth goals meet their goals in a way that is planned, tested, measured and backed up by high-quality and up-to-date financial and non-financial data.

It should be noted that most businesses at the stage of hiring an Outsourced FD will also have an accountant; these roles are not mutually exclusive, and often require one another to operate effectively.

What are the differences between an accountant and an Outsourced Finance Director (FD)?

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In-house or outsourced?

Both accountants and FDs can be hired in house on a part or full-time basis and is common practice for large and complex businesses. For many small to medium sized businesses, however, outsourcing often provides a more cost-effective and flexible solution. Outsourcing gives businesses access to high-level talent without the costs involved with hiring and retaining them.

Do you need an accountant or an Outsourced FD?

So, how should businesses decide who to bring in to help, and when?

A good accountant is essential from day one. For early-stage businesses, the biggest financial priorities are typically staying compliant, managing day-to-day transactions and, of course, avoiding costly errors. An accountant can handle your books, taxes, payroll and compliance.

But once the business starts picking up pace, hiring more staff, dealing with complex cash flow and launching new products, you will greatly benefit from more strategic financial guidance, which is where an outsourced FD can step in.  

They will build models, spot inefficiencies, and guide you through big decisions with clarity, helping you answer questions like:

• Are you pricing things right?

• Where are your biggest profits and losses coming from?

• Is this the right time to expand?  

• How can you raise additional funds for growth?

The sweet spot for many businesses is having both. The accountant maintains financial health while the FD powers growth.

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Not sure if your business needs an Outsourced FD yet? Our free quiz can help you understand your suitability for this role.