Outsourcing vs. In-House Finance: Which is Right for You?

Written by Jason Granado
Startup Finance

Small businesses and venture-backed startups face a lot of challenges when it comes to managing their finances. They must strike a balance between keeping costs low while ensuring the finance function runs smoothly.

One way businesses can achieve this is by outsourcing their finance functions or hiring in-house finance staff.

In this blog post, we’ll compare and contrast the benefits and drawbacks of each option, and highlight the advantages of partnering with a BPO firm like Rooled that specializes in finance and accounting services. Rooled’s team of experts have extensive experience working with businesses of all sizes, and we can help your business make a seamless transition to outsourcing. Let’s dive in!

Outsourcing vs. In-House Finance

Outsourcing and in-house finance are two methods of handling financial functions within a company. In-house finance refers to the practice of hiring and maintaining a team of full-time employees to manage a company’s finances. This team is typically responsible for functions such as bookkeeping, financial planning and analysis, and financial reporting.

On the other hand, outsourcing finance functions involves contracting an external company or service provider to handle some or all of the financial tasks that the company needs to manage. Outsourcing can involve a range of financial tasks, from bookkeeping to financial planning and analysis to tax preparation.

The key difference between outsourcing and in-house finance is the ownership of the financial function. With in-house finance, the company owns and manages the finance function entirely on its own, whereas with outsourcing, the financial function is delegated to an external provider. Each approach has its own set of benefits and drawbacks, and the decision of which approach to take will depend on a company’s unique circumstances and goals.

Hiring In-House: Benefits and Drawbacks

Having finance staff on-site provides the benefit of having direct access to financial information and the ability to receive immediate feedback. In addition, having in-house finance staff allows for a greater degree of control over financial operations, as the team is solely dedicated to the business’s financial needs.

However, hiring and maintaining in-house finance staff can be a costly endeavor for small businesses and startups, especially when it comes to salaries, benefits, and training. Additionally, hiring the right finance staff with the necessary skills and expertise can be challenging, and turnover can be costly.

Another potential drawback of hiring in-house staff is that it can limit a business’s access to specialized expertise. In contrast, outsourcing finance functions to a specialized company like Rooled can provide access to a team of experts who have experience working with a variety of businesses and industries.

Outsourcing: Benefits and Drawbacks

Outsourcing finance functions can bring a variety of benefits to small businesses and startups. One significant advantage is cost savings. Outsourcing eliminates the need to pay for employee benefits, office space, and equipment, which can be costly for small businesses. Instead, outsourcing to firms like Rooled can provide these services at a fraction of the cost. In addition, outsourcing finance functions can allow small businesses to access specialized expertise that they might not have in-house. For example, a company like Rooled specializes in finance and accounting services and can provide a team of experts to manage a company’s finances.

However, there are also potential drawbacks to outsourcing finance functions. One is the loss of control over financial processes. When outsourcing, a company is essentially turning over control of its finances to a third party. This can be concerning for some business owners who prefer to have more control over their finances. Additionally, outsourcing can potentially lead to communication issues or delays, which can be problematic in time-sensitive situations. Finally, outsourcing may not be the right fit for every business. For example, businesses with unique or complex financial needs may require in-house finance staff to manage their finances effectively.

What is a BPO Firm?

A BPO firm, or Business Process Outsourcing firm, is a third-party provider that offers comprehensive business process solutions to organizations. Unlike traditional outsourcing providers, BPO firms typically handle end-to-end processes, providing a full range of services, including operations, technology, and staffing. This allows for greater flexibility and customization in outsourcing arrangements. By partnering with a BPO firm like Rooled, small businesses and startups can leverage the expertise of experienced professionals and access advanced technology, without having to invest in the infrastructure and resources required to manage finance and accounting functions in-house. Additionally, BPO firms often provide ongoing support and consultation, enabling businesses to adapt to changing market conditions and stay competitive.

Advantages of Partnering with a BPO Firm like Rooled

Partnering with a BPO (Business Process Outsourcing) firm like Rooled can offer several advantages to small businesses and startups. One of the most significant benefits is the access to specialized expertise. BPO firms specialize in various business functions and can provide expert advice, resources, and technology. For example, Rooled offers finance and accounting services that are tailored to meet the unique needs of small businesses and startups. By partnering with a BPO firm like Rooled, businesses can take advantage of this expertise without having to invest in specialized staff or technology.

Another advantage of partnering with a BPO firm is cost management. BPO firms can provide cost-effective solutions to manage business functions, allowing small businesses and startups to save on labor costs, infrastructure, and technology. Rooled offers customized pricing plans that are designed to help businesses manage costs while still receiving the highest quality service.

However, there are also potential drawbacks to partnering with a BPO firm. For example, businesses may have concerns about security and data privacy when outsourcing key business functions. It is crucial to work with a trusted BPO partner, such as Rooled, who can provide the necessary security measures and protocols to ensure the protection of sensitive data. 

Additionally, there may be concerns about communication and coordination when working with an external partner. However, a reputable BPO firm will work closely with businesses to ensure a seamless transition and effective communication throughout the partnership.

NetSuite’s Role in a Seamless Transition to Outsourcing

NetSuite is a cloud-based enterprise resource planning (ERP) software that provides businesses with a comprehensive suite of financial and accounting tools. NetSuite can support a seamless transition to outsourcing by streamlining finance and accounting processes, improving visibility into financial data, and enabling collaboration between businesses and their outsourcing partners. NetSuite’s cloud-based infrastructure also makes it easier for businesses to securely share financial data with their outsourcing partners, ensuring that financial data is always up-to-date and accurate.

NetSuite’s features and benefits are particularly useful for small businesses and startups because they enable these businesses to manage their finances more efficiently and effectively. Some of the key features of NetSuite that are useful for small businesses and startups include automated billing and invoicing, financial reporting and analysis tools, real-time financial visibility, and customizable dashboards. NetSuite also provides businesses with a centralized platform for managing all of their financial and accounting needs, making it easier to keep track of financial data and maintain compliance with regulatory requirements.

Rooled is a BPO firm that specializes in finance and accounting services. Rooled can help small businesses and startups integrate NetSuite into their finance and accounting processes by providing expert guidance and support throughout the transition to NetSuite. Rooled’s team of experienced finance and accounting professionals can help businesses set up NetSuite, configure it to meet their specific needs, and provide ongoing support and maintenance as needed. Rooled can also provide businesses with training and education on how to use NetSuite effectively, ensuring that businesses get the most value out of their investment in NetSuite.

Outsourcing finance functions and hiring in-house finance staff each have their own advantages and disadvantages. While in-house staff can offer on-site expertise and greater control, outsourcing can provide cost savings and access to specialized skills. 

Working with a BPO firm like Rooled can further enhance these benefits by providing comprehensive finance and accounting services, while NetSuite can support a seamless transition to outsourcing with its user-friendly platform and customizable features. For small businesses and startups looking to manage costs, streamline processes, and focus on core competencies, outsourcing finance functions with the help of Rooled and NetSuite may be a smart strategic move. Contact Rooled today to learn more about how we can help you achieve your financial goals.

About the Author

Jason Granado

Co-founder of Rooled and Director of Accounting, Jason has been involved in the outsourced accounting industry for 17+ years. Jason graduated from San Jose State University where he received his Bachelor of Science, Accounting degree.