What Is an Outsourced Finance Function?

Choosing between an outsourced finance function and an in-house finance team ultimately depends on your business size, growth stage, budget and the level of financial support your business needs. In this blog, I’ll take you through the key considerations.

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The finance function of a business covers its full finance operations. Naturally, the complexity of the finance function depends upon the complexity of the business and its needs.

For example, most finance functions include as standard things like:

day-to-day bookkeeping
payroll
accounts payable and receivable
HMRC and Companies House compliance and reporting

But it can also be a strategic driver of growth, including more powerful financial tools like management accounts, cash flow forecasting, support with raising finance and, potentially, top-level financial leadership and decision making.

Every finance function is different, and this is why choosing the right approach is so important.

Who needs a finance function?

In simple terms, every business has some kind of finance function already. It is the finance function that makes sure you’re compliant with HMRC, your staff are paid, and that your ongoing reporting obligations are met.

In other words, it’s not about whether you need a finance function; it’s a question of what it needs to deliver for the business.

Can your finance function be entirely in-house?

It is possible and, in some circumstances, highly beneficial to have all your financial operations in house. For the right companies, having an in-house team dedicated to finance can be the most efficient approach.

But this level of in-house financial autonomy is hard to build and can be very expensive. UK salary benchmarks show senior finance hires (such as Finance Directors) often command six-figure packages once salary, pensions and employer costs are included.

Why outsource your finance function?

Every business can benefit from a strong finance function, with no exceptions. The question is how to achieve this.

Here are some ways an outsourced finance team can provide a significant boost.

Immediate access to experts

Rather than having to build and pay for an internal team of experts, you can access broad finance expertise immediately on a flexible basis. Studies show organisations outsource primarily to access specialised skills and improve efficiency, not just reduce costs.

Instead of hiring separately for bookkeeping, management reporting, financial control and financial strategy, you can keep things lean and focus on the resources you need most as your business grows.

If the service, you receive is unsatisfactory? It’s much quicker and easier to switch providers than it is to retrain, remove or replace an established in-house operation.

Quality and consistency

Outsourcing your finance function can also boost the quality and consistency of your financial information. This is because a reputable provider will bring established processes, reporting routines and systems experience along with them.

This means tight controls from the start. Professional accounting bodies emphasise that strong financial controls and standardised processes significantly reduce reporting errors and risk.

It also means your leadership team gets clear visibility over performance. This enables better decision making during a critical growth period.

Flexibility

When you hire an in-house finance team, you are committed to a set pattern of work and cost. For some businesses, particularly much larger ones, this is beneficial. But growing businesses rarely need the same level of finance support at every stage.

An outsourced finance function can scale up during periods of growth, fundraising, systems change or restructuring, and scale back when needs are simpler.

Many SMEs face constraints in accessing specialist financial expertise due to limited internal resources and budgets.

A fresh, strategic perspective

An outsourced function led by a Finance Director (FD) can look beyond process and reporting and provide industry specific insights. Cash flow forecasting, scenario planning, KPI tracking, long term tax planning. These are all invaluable growth tools that an outsourced FD can use to turn your finances into strategic opportunities.

Not every finance function needs an FD, but for those in the right position, it can make an enormous difference.

What are the downsides?

While we believe outsourcing your finance function is a smart move for many businesses, especially in a period of growth, there are some drawbacks to consider.

By its nature, an outsourced team is not embedded in the business in quite the same way as an in-house finance department. A good provider will go the extra mile to integrate with your team and operations, but full-time immersion in your business is impossible to fully replicate.
There will usually be an onboarding period where people need to get used to new systems and reporting needs, while ownership and accountability can become confusing if not established early doors.
Some firms are strong on bookkeeping and compliance but offer limited strategic support, while others position themselves as a full outsourced finance function without clearly defining who owns what. It is essential that you fully understand the capabilities of your provider before handing over the keys.
In practice, outsourcing should not remove control from leadership, but it does require significant trust, oversight and clear governance.

Our belief is that the benefits of an outsourced finance function outweigh the drawbacks when the provider has the tools, experience and bandwidth to deliver the precise services needed.

Outsourced vs In-House Finance Functions: Comparison Table

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Area	Outsourced finance function	In-house finance team
Cost	Usually lower fixed cost, with pricing based on scope and level of support required	Usually, a higher fixed cost due to salaries, pension, NI, recruitment and other overheads
Access to expertise	You can access to a wider mix of skills across multiple seniority levels	Expertise depends on who you hire internally and may be limited by budget
Flexibility	Providers can scale their support up or down as the business needs change	Less flexible, as expanding or reducing the team takes time and cost
Speed to implement	Can often be put in place quickly using established processes and tools	Recruitment and onboarding can take longer, especially for senior roles
Business knowledge	It may take time to build a full understanding of the business and sector	In-house teams usually have stronger day-to-day understanding of operations and business context
Control and visibility	Relies upon clear communication and reporting structure to be effective	Internal presence may be easier to track and oversee
Systems and process improvement	Providers often bring experience across multiple finance systems and best-practices	Depends on internal capability, time and exposure to different setups
Scalability	Well suited to growing businesses with changing needs	Can work well at scale, but growth usually requires additional hires
Strategic Support	Can include outsourced CFO or finance director support without a full-time salary	May require hiring a senior finance leader, which is more expensive
Continuity	Easier to maintain cover if one team member is unavailable, as support is provided by a wider team	Key-person risk can be significantly higher in smaller internal teams
Best Fit?	Startups, scaleups and SMEs that need strong finance support without building a full team	Larger businesses or ones that need finance deeply embedded in day-to-day operations

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Is outsourcing the right choice?

For many start-ups, scaleups and SMEs, an outsourced finance team offers a more flexible and cost-effective way to access critical finance expertise. SMEs make up over 99% of all UK businesses and employ around 60% of the workforce, making them the primary users of outsourced finance solutions.

An in-house finance team may be the better fit when the business is large enough to justify full-time internal hires, or when finance needs to be closely embedded in daily operations.

In practice, many businesses choose a hybrid model and combine internal staff with outsourced specialist support to fill key gaps.

How to choose the right provider

If you are leaning towards outsourcing your finance team to a specialist provider, here are the most important things to consider:

Make sure they have relevant sector experience
Check that all required services are provided at a high level of quality
Consider the technology and software they use, as you will need to use this too, to an extent!
Learn how they report to clients – does this work for you?
Do they have robust data security policies and controls in place?
Does their pricing work with your budget?
Do they have references or case studies you can explore to build trust?

At Gravitate we are confident that we can add real value to most businesses facing the questions raised in this blog. However, we always recommend a proper consultation to ensure that our services and approach are the right fit.

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An Outsourced Finance Function is a game changer for growing businesses when the right questions are asked, which is we always start with an open, honest conversation.