Published on
December 30, 2024
Scaling Your Finance Team: When to Hire vs Outsource
Learn when to outsource vs. hire in-house for your finance team as your business scales, balancing cost, control, and expertise.
Struggling to manage your growing business's financial needs? Here's the key: Outsource early, hire in-house as you scale.
- Outsourcing is cost-effective, provides access to experts, and allows leaders to focus on growth. It's perfect for startups or when handling specialized tasks like compliance or financial modeling.
- In-house hiring offers control, deeper business knowledge, and long-term savings. It’s ideal when your company surpasses $15M–$25M in revenue or 50+ employees.
Quick Comparison
| Factor | Outsourced Solutions | In-House Team |
|---|---|---|
| Cost | Lower, flexible based on needs | Higher upfront, long-term savings |
| Expertise | Broad, specialized professionals | Limited to team’s knowledge |
| Scalability | Easily adjustable | Requires hiring and training |
| Control | Managed via service agreements | Direct oversight, immediate access |
| Best For | Startups, early-stage companies | Companies scaling post-Series B |
Whether you outsource, hire, or adopt a hybrid approach, the goal is to align your financial strategy with your growth stage and evolving needs.
1. Benefits of Hiring In-House Finance Staff
When companies transition from Series A to Series B, hiring in-house finance staff often becomes a priority. This shift is especially important as businesses hit key growth milestones and require more direct oversight and integration.
Deeper Business Understanding and Industry Knowledge
In-house finance teams bring a personalized approach, leveraging company-specific knowledge and sector expertise. This is especially useful for challenges like SaaS subscription models, healthcare compliance, or managing cash flow for small businesses. Howard Katzenberg, Founder and CEO of Glean, highlights that in-house teams add value by focusing on strategic business insights - not just crunching numbers.
Long-Term Cost Savings
Although hiring in-house staff involves upfront costs, it can lead to up to 50% savings in operational expenses as financial operations become more complex and transaction volumes increase. This makes it a practical choice for companies needing advanced financial management.
Support for Growth and Scaling
When businesses grow beyond 50 employees or hit $15-25M in revenue, in-house teams play a vital role in managing critical tasks like:
- Strategic financial planning
- Complex revenue recognition
- Compliance and internal controls
- Real-time financial decision-making
These functions are essential for navigating the challenges of scaling.
Seamless Technology Integration
An in-house team is better positioned to set up and maintain integrated financial systems, which can streamline processes and minimize inefficiencies. Early adoption of these systems helps avoid future complications and ensures smooth operations.
Building an experienced finance team is key to supporting long-term growth. While in-house teams offer control and depth, outsourcing remains a flexible and cost-effective option for certain needs.
2. Advantages of Outsourcing Financial Functions
Outsourcing financial functions can be a game-changer for businesses, especially those in growth phases or dealing with complex financial tasks.
Lower Costs
By outsourcing, companies can skip the overhead costs of full-time salaries, benefits, and infrastructure. Instead, they can tap into external expertise at a fraction of the cost. In fact, 37% of businesses outsource finance and accounting functions to save money.
Access to Experts
Outsourcing connects businesses with seasoned professionals - no lengthy hiring process required. This is particularly helpful for specialized tasks like financial planning and analysis (FP&A), compliance, and strategic planning. With tools like NetSuite or QuickBooks combined with expert services, businesses can maintain strong financial management.
Leadership Can Focus on Growth
By delegating financial operations, business leaders can concentrate on big-picture goals like expanding into new markets or securing investors. This allows executives to spend less time on day-to-day financial tasks and more time driving growth.
Flexible Support
Outsourcing providers can scale their services to match a company’s needs - whether it’s basic bookkeeping for startups or advanced financial modeling for larger enterprises. This flexibility ensures businesses get the right level of support as they grow.
Stronger Security and Compliance
With outsourcing, businesses can ensure their financial data is secure and compliant with industry regulations - key for sectors like healthcare or SaaS, where data protection is non-negotiable.
Real-Time Insights
Outsourced providers often offer real-time access to financial data, enabling better and quicker decision-making.
Lower Operational Risks
Relying solely on in-house employees can be risky. Outsourcing ensures continuity through standardized processes and proven best practices, reducing potential disruptions.
Tailored Industry Solutions
Outsourcing can address unique industry needs. For example, SaaS businesses benefit from simplified subscription billing and compliance, healthcare companies stay aligned with strict regulations, and small businesses gain affordable financial management.
While outsourcing offers flexibility and expertise, in-house teams provide more control and deeper integration. Up next, we’ll dive into a comparison to help you choose the best approach for your business.
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Comparison of Hiring In-House vs Outsourcing
When expanding your finance team, deciding between building an in-house team or outsourcing depends on your company’s growth stage, financial needs, and goals. There's no universal answer - it’s all about what fits your business best.
Growth Stage Considerations
As companies grow, their financial requirements become more complex. For instance:
- Series A: Focus is on basic bookkeeping and managing cash flow.
- Series B: Needs shift to more advanced financial planning and reporting.
- Series C: Compliance and in-depth financial analysis take center stage.
- Series D: A solid financial infrastructure is crucial to support scaling efforts.
Cost Structure Analysis
Here’s a comparison of key factors between in-house teams and outsourced solutions:
| Factor | In-House Team | Outsourced Solutions |
|---|---|---|
| Cost | $300,000–$500,000 annually (Series B) | Costs vary based on service levels |
| Control | Direct oversight, immediate access | Managed through service agreements |
| Expertise | Limited to team’s knowledge | Broad access to specialized skills |
| Scalability | Requires hiring and training | Easily adjustable based on needs |
| Integration | Deep cultural understanding | Brings external insights and practices |
Your choice should align these factors with your business's current stage and operational priorities.
Strategic Decision Points
Companies often transition from outsourcing to in-house finance teams when they hit these milestones:
- Revenue grows to $15–$25M
- Workforce expands to 50–150 employees
- Financial operations become too complex for external management
Technology Integration
Platforms like Mosaic help bridge the gap between in-house and outsourced models. By integrating real-time financial data, they streamline collaboration and improve data accuracy, no matter the model you choose.
Risk Management
In-house teams offer control over processes, while outsourcing ensures consistent compliance and security - especially important in industries like SaaS or healthcare, where regulations are strict.
Hybrid Approach
Many businesses find success with a hybrid model. This approach keeps core financial tasks in-house while outsourcing specialized functions like FP&A or compliance. It’s a practical solution during periods of transition or rapid growth.
The ultimate goal is to align your finance strategy with your company’s growth path. Whether you go in-house, outsource, or mix the two, the focus should always be on creating processes that grow with your business.
Wrapping Up
Growing your finance team means finding the right balance between cost, expertise, and your company’s stage of growth. For early-stage businesses, outsourcing can handle essential tasks effectively. As financial needs grow more complex, building an in-house team becomes crucial.
Consider this: 41% of CFOs report struggling to focus on strategic planning due to daily finance responsibilities. This highlights how important it is to choose the right setup at each stage of growth.
A mix of outsourcing and in-house solutions can be a smart strategy, evolving as the company grows:
| Growth Stage | Approach | Key Focus |
|---|---|---|
| Pre-Series A | Outsource | Handling fundamental tasks |
| Series A-B | Hybrid | Managing core processes |
| Series C+ | In-house | Driving strategic initiatives |
This flexible approach allows businesses to expand their financial operations without overextending resources too early. Whether you go with outsourcing, an in-house team, or a combination of both, the goal should always be to build systems that grow with your company.
As your business scales, your financial processes need to keep up with increasing demands while staying efficient. The key is to implement solutions that meet your current needs and set the stage for future growth.
