In-house, outsourced or DIY: a clear comparison for NZ business owners
Every business has a finance function. The only question is who's running it.
For most NZ small businesses there are three options: do it yourself, hire someone in-house, or outsource it to a team. Each can be the right answer. Each also has costs that aren't obvious until you're a year into it.
Here's how they compare, without the sales pitch.
Option 1: Do it yourself
This is where almost every business starts, and for good reason. When you're small, the transactions are simple and cash is tight.
What it costs: No invoice, but plenty of hours. Evenings on reconciliations, weekends on GST, time spent working out how payroll handles a public holiday.
Where it works: Early days, low transaction volume, no staff, and an owner who actually enjoys the numbers.
Where it breaks down: The books fall behind. Compliance dates arrive as surprises. And you end up with records that are just about good enough for tax, but not good enough to make decisions from. Small errors can quietly compound until year end, when they're most expensive to fix.
Option 2: Hire in-house
As a business grows, hiring a bookkeeper or finance person can feel like the natural next step.
What it costs: A salary, plus KiwiSaver, ACC, leave, software, training and your time managing them. A capable part-time bookkeeper is a real cost. A qualified accountant or finance manager is a much bigger one.
Where it works: Larger businesses with enough volume to keep someone busy full time, or where someone needs to be physically on site every day.
Where it breaks down: One person rarely covers all twelve jobs a finance function involves. A great bookkeeper isn't necessarily a tax planner or a forecaster. There's also key person risk. When they're sick, on leave or move on, the knowledge often walks out with them.
Option 3: Outsource
Outsourcing means a team handles some or all of the finance function for you, usually working inside your own systems like Xero.
What it costs: A monthly fee, typically scaled to what you need. No salary, leave or training costs.
Where it works: Businesses that have outgrown DIY but don't need, or can't justify, a full-time hire. It also suits owners who want more than bookkeeping: reporting, forecasting and tax planning from people who do it every day.
Where it breaks down: It works best as a partnership. If information doesn't flow, an outsourced team can only work with what it's given. You'll also want to be sure you're getting regular contact and proactive advice, not just a once-a-year catch-up.
Side by side
Direct cost
- DIY: Low
- In-house: High
- Outsourced: Medium
Your time
- DIY: High
- In-house: Medium (managing them)
- Outsourced: Low
Skills covered
- DIY: Whatever you know
- In-house: One person's skill set
- Outsourced: A team's skill set
Key person risk
- DIY: High (it's you)
- In-house: High
- Outsourced: Low
Scales with growth
- DIY: Poorly
- In-house: In steps (you hire again)
- Outsourced: Smoothly
Proactive advice
- DIY: Rare
- In-house: Depends on the hire
- Outsourced: Should be standard
The questions that decide it
Rather than starting with cost, start with these:
- How many hours a month does finance take you now? Put a realistic value on that time.
- Which of the finance functions are you covering? Bookkeeping, payroll, reporting, cashflow, tax planning, forecasting. Most small businesses cover three or four.
- What happens if the person doing it is unavailable for a month? Whether that's you or an employee.
- Are you getting information you can act on? Or just records that keep IRD happy?
If your honest answers point to lots of your time, gaps in coverage and no backup, DIY has probably run its course. If you need someone on site every day and have the volume to keep them busy, in-house may be right. For most businesses in between, outsourcing covers the most ground for the cost.
You can mix and match
This isn't always either or. Plenty of businesses keep someone in-house for day-to-day admin and outsource the specialist work: reporting, tax planning and forecasting. Others do their own invoicing and hand over everything else.
The right setup is the one that gives you accurate numbers, on time, without taking over your week.
If you'd like help working out which fits your business, we're happy to talk it through. Book a time with us here.
Thanks,
Prue and the Astute Mode Team