Finance teams have come a long way from simply managing bookkeeping, tax filings and payroll. Shifting regulations, globalization, evolving technology and concerns around cybersecurity and data have made accounting more complex over the last decade. At the same time, it’s difficult to find qualified talent to handle these challenges.
Given that accounting plays such a key role in business growth and decision-making, you might be wondering whether you have the expertise in-house to keep pace. If not, it may be time to rethink your approach — either by expanding your internal team or outsourcing to a trusted provider with the skills and resources to stay ahead.
Conducting a cost-benefit analysis can help you decide which approach is the most economical, reliable and scalable for your business needs.
Before you start an analysis, you want to be clear on your goals and scope. Do you want to ensure your back office can scale as your business evolves and grows? Do you want to free up funds to put towards other parts of your business, such as upgrading technology or boosting sales? Whatever your objectives, a cost-benefit analysis will help you determine whether to invest in your internal team or if outsourcing could be a more cost-effective option.
To get meaningful, actionable results, be intentional about what you include in a comparison. Think about whether your internal team can keep up with increasing complexity as your business changes, the time and cost involved in integrating new technology and where you want to direct your dollars. Defining these things will give you a more complete picture of your best path forward.
Whether you rely on an in-house accounting team or use an outsource provider, each offers benefits and drawbacks. To help you determine what’s best for your situation, you should weigh both the financial and strategic impacts on your business. Here are key distinctions to consider:
On-site presence. Because an in-house team “lives the business” and is involved with daily operations, they typically have knowledge about decisions and conversations that an outsourced team doesn’t.
Greater control and accountability. They’re focused on your business, not balancing competing clients and priorities. You also have more control over their performance and can shape their growth and advancement.
Institutional knowledge. A tenured employee on your team holds valuable institutional knowledge, such as insight into your business, the way things work, why certain decisions were made, what’s been tried before, understanding the culture and relationship dynamics.
Salary and benefits. Hiring accounting talent isn’t cheap. Salaries for qualified professionals often start in the six figures. Then, you need to factor in costs such as benefits, training, payroll taxes, paid time off and overhead. The hiring process itself can be challenging as it can take an average of eight weeks to hire. It can also be costly, especially if you're competing for top talent in a tight labor market. For senior-level hires, you’re likely also paying recruiter fees.
Recruitment and retention. Skilled talent expects a clear career path at your organization. If you can't offer challenging roles to match their ability and ambition, they’ll likely leave. Should that happen, all the time and effort you put into developing them is now benefiting another company.
Turnover and risk of burnout. Every person lost to turnover can set you back by at least six months. Churn is particularly common in lower-level roles like accounts payable clerks, where retention is often a challenge.
Another issue is that turnover tends to beget more turnover. Take, for example, two people who leave a 10-person team. The remaining eight are expected to pick up the slack. Work overload can lead to burnout and quitting. As people exit, you may be scrambling to bring in temps who don’t know the systems nearly as well, creating a cycle of stress and instability.
On-demand expertise. Providers have a deep bench of experts to support a wide range of needs, from complex tax situations and compliance changes to audit preparation. This allows you access to the right expertise whenever you need it, saving time and money having to recruit and onboard new talent.
Improved financial performance. When it comes to financial reporting, providers are held to a higher standard. Their work is subject to industry oversight, including the American Institute of Certified Public Accountants (AICPA) peer review, which means they must follow strict professional and compliance standards.
When there are audits, providers give a clear trail and documentation to support the numbers. With an internal team, an auditor may work collaboratively to figure things out which can result in adjustments or delays (and higher fees) if things aren’t properly documented or reconciled.
Scalability. A big advantage of outsourcing is a provider’s ability to scale quickly and efficiently. Should things change in your business, they can easily ramp support up or down to match your needs. Providers can also pull in talent from multiple locations — onshore, nearshore or offshore — giving you access to a global workforce. And, depending on the workload, a provider can assign a fraction of a person’s time, so you’re not forced to hire additional staff. You only pay for what you need.
Accountability. The best providers work with you to develop a service level agreement (SLA) that spells out exactly what both you and they are responsible for, from quality and timeliness to what happens if something goes wrong. They’re on the hook to deliver and keep pace with the skills your business requires.
Less day-to-day control. It’s normal to feel like you have more control when someone’s working directly for you in your same location. However, you don’t need to micromanage tasks as long as you’re confident that the financial data you’re getting is accurate and timely.
Whether someone’s in the next office or part of an outsourced team, chances are you’re communicating via phone, email or Zoom. What matters most is the quality of the work, not where the person sits.
If you decide to outsource your accounting function, you should consider how they manage sensitive information, communicate with you and your team, and contribute to strategic decision-making. Here are some areas to explore:
Data security. Providers handle sensitive information all the time, such as payroll records, tax IDs and financial data, so robust security protocols are imperative. But your internal team handles the same data today. Ask how your data would be protected, who would have access to it and what safeguards are in place, especially for any work done offshore, and objectively evaluate whether that is the same or better than what you have today and will need tomorrow. If the provider can't explain their controls clearly, that’s a red flag.
Strategic support. A good provider doesn’t just process transactions and hand you a report. They help you interpret it. That means thinking ahead, identifying risks and offering insights for smarter decision-making. Just like in sports — an engaged provider shouldn’t be sitting on the sidelines. Instead, they should be in the game with you. Is your internal team doing this today, or do you have to figure out what it all means each month?
Communications and responsiveness. The best providers will set a regular meeting schedule with you and your team, offer honest feedback — even when mistakes happen — and build in redundancy to ensure you're never left waiting.
Process & Technology Integration. Providers can optimize processes and connect the dots between systems. They can evaluate your setup to find bottlenecks or inefficiencies in tools, technology and workflows.
For instance, you might use a collection of systems: one for payroll, another for payables, still another for financial reporting. A provider can stitch those together in a way that works.
Relationship Fit: Outsourcing is a partnership. You want a team that’s proactive, dependable and feels like an extension of your business and not just a vendor. You want people who are not only experts, but who you’d want to invite to your holiday party.
When you manage accounting in-house, it’s easy to overlook hidden or “soft” costs, like turnover, training time and lost productivity. With turnover rates between 15% to 20% and roles taking an average of eight weeks to fill, open positions can put added stress on your existing team and increase the risk of burnout and related costs. Once you’ve made a hire, it can take at least three months — if not longer — to get them up to speed.
For employees who are on their way out, they’re probably not as engaged, which means productivity drops. If suddenly you need to replace a high-performing team member, it could take at least a year to achieve that same level of expertise.
Consider whether your employee needs a laptop? A license for your ERP system? Office space? These things can easily add another 10% in overhead expenses.
Even offshoring isn't free. It requires partnering with secure, capable firms. While individual contractors might offer basic support, they often lack the consistency and compliance standards that providers can deliver and offer you no recourse if a problem occurs.
By contrast, an outsourced provider manages their own team, training and technology infrastructure. You're not paying for headcount, only outcomes. And at the end of the day, that’s what matters — getting the results and valuing your business needs.
Are you satisfied with your in-house accounting function or could outsourcing save you time, money and improve efficiency? We’ll help you explore the financial and operational impact of both options, so you can make the right call. Learn how our outsourcing experts can provide strategic support to help you stay focused on what matters most.
Tired of operational roadblocks? Get a free, 30-minute, private consultation with outsourcing experts to roadmap your back-office optimization.
