Outsourced Accounting Services: The Complete Guide for Growing Businesses

Your business has grown. Revenue is climbing. But your financial operations haven't kept pace.

The bookkeeper who was perfect at $1M revenue is now overwhelmed at $5M. Month-end close takes three weeks. You're not sure your numbers are right. And when investors or lenders ask questions, you scramble.

This is the accounting gap that growing businesses face. Too complex for basic bookkeeping. Too early (or too expensive) for a full in-house accounting team. The solution? Outsourced accounting.

What Is Outsourced Accounting (and What It Isn't)

Outsourced accounting means hiring an external firm to manage your accounting functions instead of employing internal staff. But the term gets thrown around loosely. Let's be precise.

What Outsourced Accounting Is

• A professional finance team that handles your accounting operations—accounts payable, accounts receivable, bank reconciliation, month-end close, financial statement preparation
• An extension of your business that learns your operations, understands your industry, and adapts processes to your needs
• A scalable solution that grows with you—more complex as your business grows, less when you need it
• Access to expertise you couldn't afford to hire full-time—specialists in revenue recognition, multi-entity consolidation, or your specific industry

What Outsourced Accounting Isn't

• Offshore data entry: Some firms offshore transaction processing to low-cost countries. That's not accounting—it's data entry. Quality outsourced accounting involves skilled professionals who understand your business.
• Set-it-and-forget-it: You can't just hand over your books and disappear. Good outsourced accounting requires ongoing communication, clear processes, and regular oversight.
• One-size-fits-all: Your $8M manufacturing business has different needs than a $8M SaaS company. Quality providers tailor their approach to your industry and complexity.
• A replacement for financial leadership: Outsourced accounting handles operations. Strategic finance decisions—where to invest, how to manage cash, when to raise capital—still need leadership, either in-house or through fractional CFO services.

The Outsourced Accounting Service Stack

Outsourced accounting isn't monolithic. Think of it as a stack of services, from foundational to strategic. Most businesses need some combination.

Tier 1: Transaction Processing (Bookkeeping)

The foundation. This is what most people think of as "bookkeeping."

• Recording transactions in your accounting system
• Categorizing expenses to proper accounts
• Processing accounts payable (entering bills, scheduling payments)
• Processing accounts receivable (sending invoices, tracking collections)
• Bank reconciliation
• Credit card reconciliation

Who needs this: Every business. Even if you handle strategic finance internally, someone needs to process transactions accurately.

Tier 2: Monthly Close and Financial Statements

Moving beyond transaction processing to actual accounting.

• Month-end close process management
• Adjusting entries (accruals, prepaids, depreciation)
• Account reconciliation (all balance sheet accounts)
• Financial statement preparation (income statement, balance sheet, cash flow)
• Management reporting
• Variance analysis (budget vs. actual)

Who needs this: Businesses over $2M revenue, or anyone who needs reliable monthly financials for decision-making, lenders, or investors.

Tier 3: Controller-Level Oversight

This is where outsourced accounting becomes outsourced finance operations.

• Internal controls design and monitoring
• Compliance oversight (sales tax, 1099s, regulatory requirements)
• Audit preparation and support
• Process improvement and automation
• Team management (if you have internal bookkeeping staff)
• Technical accounting (revenue recognition, lease accounting, complex transactions)

Who needs this: Businesses over $5M revenue, PE-backed companies, businesses preparing for audit, or anyone with complex accounting requirements.

For a detailed breakdown of controller responsibilities, see our guide on Outsourced Controller Services.

Tier 4: Strategic Finance (CFO/FP&A)

Beyond accounting operations into strategic financial leadership.

• Financial planning and analysis (FP&A)
• Budgeting and forecasting
• Cash flow management and 13-week forecasts
• Board and investor reporting
• Capital strategy and financing
• M&A support and due diligence

Who needs this: Businesses over $5M-$10M revenue seeking growth, PE-backed portfolio companies, or anyone making significant strategic decisions. This is typically delivered as fractional CFO services.

When Outsourcing Makes Sense vs. Building In-House

Outsourced accounting isn't right for every company. Here's how to decide.

Outsource When:

• You're in the $3M-$50M revenue range: Too complex for a solo bookkeeper, too early for a full accounting team.
• You've outgrown your bookkeeper: Late closes, errors in financials, inability to handle complex transactions. See our guide on signs you've outgrown your bookkeeper.
• You need specialized expertise: Multi-entity consolidation, international operations, complex revenue recognition, or industry-specific requirements that a generalist can't handle.
• You want to focus on core business: Managing an accounting team isn't where you add value as a business owner.
• You're scaling rapidly: Outsourced providers can scale up (and down) faster than hiring.
• You're PE-backed: Sponsors often prefer outsourced accounting for consistency across portfolio companies and audit-ready books.

Build In-House When:

• You're over $50M revenue: At this scale, you likely need dedicated internal resources, though you might still outsource specialized functions.
• Industry regulations require it: Some heavily regulated industries (banking, insurance) may require internal accounting staff for compliance reasons.
• Real-time operational needs: If accounting is deeply integrated with daily operations (high-volume retail, complex inventory), in-house staff may be more responsive.
• You've found the perfect hire: If you can recruit an exceptional controller or accounting manager who fits your culture and budget, that's valuable.

The Hybrid Model

Many businesses use a hybrid approach:

• Internal bookkeeper + outsourced controller: An in-house person handles daily transactions; an outsourced controller manages close, financials, and oversight.
• Outsourced accounting + internal FP&A: Outsource operational accounting; keep strategic finance in-house.
• Full outsource + internal liaison: Outsource everything but have one internal person manage the relationship and handle ad hoc requests.

For a detailed cost comparison, see In-House vs. Outsourced Accounting: A Cost and Capability Comparison.

Cost Comparison: In-House Team vs. Outsourced Accounting

The cost question is usually what drives the decision. Here's a realistic comparison.

Building an In-House Accounting Team

For a $10M revenue business needing professional-grade accounting:

Outsourced Accounting

For the same $10M revenue business:

The math often favors outsourcing by 50-70%, especially when you factor in the hidden costs of in-house: recruiting time, training, turnover, and the risk of a key-person departure disrupting your financial operations.

What to Look for in an Outsourced Accounting Provider

Not all outsourced accounting providers are equal. Here's what separates the good from the mediocre.

1. Industry Experience

A provider experienced in your industry understands your revenue model, cost structure, and regulatory requirements. SaaS accounting differs from manufacturing differs from professional services. Ask specifically: "How many clients do you have in our industry? What industry-specific challenges have you solved?"

2. Technology Proficiency

They should be experts in your accounting software (QuickBooks, Xero, NetSuite) and integration tools (Bill.com, Ramp, Gusto). Ask about their technology stack and how they'll connect with your existing systems.

3. Clear Communication Processes

How will you communicate? Weekly calls? Slack channel? Email only? What's the expected response time? Who's your primary contact vs. backup? Good providers have structured communication protocols, not ad hoc arrangements.

4. Defined Scope and Escalation

What's included vs. what's extra? What triggers additional fees? How are unusual situations handled? Get specific about scope to avoid surprise bills.

5. Scalability

Can they grow with you? What happens when you go from $5M to $20M revenue? Do they handle multi-entity? International? Acquisitions? You don't want to switch providers as you scale.

6. Integration with Strategic Finance

Do they just close the books, or do they connect accounting to strategic decision-making? The best providers offer (or integrate with) FP&A and CFO services, creating a complete finance function rather than siloed bookkeeping.

For detailed evaluation criteria, see Choosing an Outsourced Accounting Provider: 15 Questions to Ask.

The Transition: Moving to Outsourced Accounting

Transitioning accounting is disruptive if done poorly. Here's the typical timeline.

Phase 1: Discovery and Planning (Weeks 1-2)

• Review historical financials and current processes
• Document chart of accounts and account structure
• Map existing workflows (AP, AR, close process)
• Identify pain points and improvement opportunities
• Set up technology access and integrations

Phase 2: Parallel Operations (Weeks 3-6)

• Run parallel close: both teams close the same month
• Compare results and reconcile differences
• Refine processes based on issues discovered
• Train on company-specific procedures

Phase 3: Cutover and Optimization (Weeks 7-12)

• Full handoff to outsourced provider
• Establish regular communication cadence
• Implement process improvements identified during transition
• Fine-tune reporting and deliverables

For a detailed playbook, see Onboarding an Outsourced Accounting Team: The 90-Day Playbook.

Managing the Outsourced Accounting Relationship

Outsourcing doesn't mean abdicating responsibility. Here's how to manage effectively.

Establish Clear Ownership

Who internally owns the relationship? This person reviews financials, approves payments, answers provider questions, and escalates issues. Without clear ownership, things fall through cracks.

Set Communication Cadence

• Weekly: Quick status check—any open items, upcoming deadlines, questions
• Monthly: Review closed financials, discuss variances, plan for upcoming needs
• Quarterly: Relationship review—what's working, what needs improvement, any scope changes

Define SLAs and Expectations

• Close deadline (e.g., books closed by 10th business day)
• Response time (e.g., questions answered within 24 hours)
• Accuracy standards (e.g., adjustments under 1% of revenue)
• Deliverables format and timing

Review Financials Actively

Don't just file the monthly reports. Review them. Ask questions. Understand variances. The provider manages operations, but you own the numbers. If something doesn't make sense, ask.

How Outsourced Accounting Enables Strategic Finance

Here's what separates great outsourced accounting from commodity bookkeeping: the connection to strategic decision-making.

Clean, timely, accurate financial data is the foundation for everything strategic:

• Cash flow forecasting requires accurate historical cash data and reliable accruals
• Budgeting depends on properly categorized expenses and clean departmental coding
• Board reporting needs trustworthy financial statements delivered on time
• Investor due diligence demands audit-ready books and clear documentation
• M&A preparation requires clean financials and supportable numbers

Without good accounting operations, strategic finance is built on sand. You can have the best CFO in the world, but if the underlying data is wrong, their analysis is worthless.

Frequently Asked Questions