Why you should be “insourcing” (and not hiring and maintaining accounting staff)

Hiring and maintaining staff is one of the biggest financial commitments a business can make. The hidden costs and risks of hiring can quickly add up – often more than business leaders anticipate, especially with the increasingly restrictive employment legislation.

With the current volatile economic climate, businesses need to remain fluid with an adaptable (yet capable) workforce to remain profitable. One of the biggest challenges business owners face is hiring and managing staff. While having full-time employees can seem like a logical step for growth, many business owners underestimate the true cost of hiring, which extends far beyond just paying a salary.

Below we break down the financial impact of full-time employees, the risks involved, and why a flexible alternative might be a smarter choice. In our 20+ year experience, most businesses between ￡1m and ￡8m turnover, have over-resourced their finance function.

If your current accounts team doesn’t fit where your business is right now, let’s have a chat. You can either call us on 0333 305 0535 or email us at [email protected].

The true cost of hiring and maintaining accounting staff.

Recruiting and onboarding a new team member is a time-consuming and costly process. It’s not just about finding the right person – it’s about ensuring they are the right fit, managing and training them, and keeping them engaged for long-term success. Here’s why hiring full-time staff can be more expensive and complex than it seems:

Salary and benefits – The obvious and hidden costs

While salary is the most visible cost of hiring, it’s only the beginning. Employers must also consider:

• National Insurance Contributions (NICs) – Employers are responsible for NICs on top of gross salaries, increasing payroll costs.
• Pension contributions – Auto-enrolment pension contributions add another layer to employment expenses.
• Holiday pay and sick leave – Full-time employees are entitled to paid time off, which still costs the business even when work isn’t being done.
• Healthcare and other benefits – Many companies offer private health insurance, bonuses, and other perks to attract top talent.

These additional costs can add 15-30% or more to an employee’s base salary, making hiring far more expensive than initially budgeted.

Time investment – the hidden resource drain.

Hiring isn’t just expensive in terms of money; it’s also a massive drain on time. Business leaders must allocate hours (or even weeks) to crafting job descriptions and advertising roles, reviewing applications and conducting interviews, negotiating salaries and preparing contracts, as well as onboarding and training the new hires. For busy business leaders, this time commitment takes valuable focus away from core business activities and revenue-generating work.

The risk of a bad hire – a costly mistake.

One of the biggest risks of hiring is making the wrong choice. A bad hire can cost a business up to 3x the employee’s annual salary due to lost productivity, disruptions to team dynamics, and the cost of re-hiring and retraining someone new. For small businesses, a single bad hire can significantly impact operations, making recruitment a high-stakes decision.

Ongoing management – the long-term commitment.

Hiring an employee isn’t just a one-time expense – it’s an ongoing responsibility. Full-time staff require performance management and regular appraisals, career development and training opportunities, and mentorship and ongoing HR support. Without proper management, employees may become disengaged, leading to lower productivity and potential turnover – adding further costs in recruitment and retraining.

The rising costs of employment in 2025.

The financial burden of hiring full-time employees is expected to rise in the coming months due to various economic and regulatory factors:

• National Minimum Wage increases: The UK government has announced significant increases in the National Minimum and Living Wage. For SMEs already operating on tight margins, these increases mean higher payroll costs and potentially reduced hiring capacity.
• National Insurance Contributions (NICs): Changes to employer NICs could further impact hiring costs. Many businesses will need to reassess their budgets and adjust their hiring strategies to accommodate higher employment taxes.
• Regulatory and compliance burdens: Employment laws are constantly evolving, requiring businesses to stay compliant with new regulations. This includes worker rights protections, new tax implications for payroll, and additional reporting requirements. Failing to comply can result in hefty fines, making HR and legal support an additional expense that businesses must account for.

A smarter alternative.

Given the rising costs and risks, it just doesn’t make sense for many leaders of growing businesses to commit to hiring full-time employees for their finance teams. Many SMEs are benefitting from fractional accounting in-house expertise – financial professionals who provide expert support on a part-time or as-needed basis.

So why should you choose a fractional in-house accounting solution?

• Lower overheads – Pay only for the services you need, rather than committing to a full-time salary, plus there’s no recruitment fees, no holiday or sick pay, no redundancy and no training budgets for you to worry about.
• No long-term commitment – Scale your financial support up or down based on business needs without any risk or additional redundancy or redeployment costs.
• Access to higher-level expertise – Gain access to a proven best practise and all the knowledge and experience of seasoned finance professionals who have seen it and fixed it before, without the cost of a full-time hire.
• Reduced HR burden – No need to manage employee performance (or under-performance), benefits, payroll taxes, or compliance issues.
• Adaptability – “What got you here won’t necessarily get you there” – Marshall Goldsmith. As your business grows and your needs evolve, you can simply request changes from your provider. This eliminates the need to re-recruit, re-train, and re-induct new staff. Your provider handles everything, ensuring a smooth transition. In short, if it’s not the right fit, you can easily make a change and get a better or more suitable solution.
• Less risk – The provider takes on all the risks related to recruitment, training, and development, while also investing in the latest developments in technology and accounting best practice so you don’t have to.
• Easy access – A fractional in-house accounting solution eliminates lengthy recruitment times, enabling faster onboarding and seamless integration. Experienced finance professionals quickly adapt to your business, providing the flexible, scalable support you need, without the hassle.

Before making a hiring decision, business leaders must carefully evaluate all associated costs – not just salaries, but also recruitment, benefits, compliance, and long-term management. For many SMEs, a full-time hire isn’t always the best option. Instead, a flexible approach (such as outsourced finance support), can provide the expertise you need without the financial risk.

How YRH Finance Team can help.

With over two decades of experience partnering with over 1300 growing businesses, we help business leaders focus on what they’re brilliant at, while we help them manage their money with expertise and precision.

We specialise in providing scaling SMEs with the financial expertise they need, when they need it most, all without the overhead of a full-time salary. Whether you need help with:

• Financial reporting – getting management accounts and forecasts that help you improve your profit margins.
• Cash flow management – keeping a watchful eye on the cashflow so you know what you can afford to invest in.
• Efficient day to day transaction management – handling all aspects of your daily transactions, ensuring accuracy, efficiency, and financial visibility.

When you partner with us, you’ll get the right level of accounting support at the right cost – so you can scale your business easier and with less stress.

Considering your hiring options? Don’t rush into recruiting – let’s discuss how a flexible finance solution can support your business growth without the burden of a full-time hire. Just contact us today to learn how we can help.