Inhouse Vs Fractional: A practical guide for small businesses
Deciding whether to hire a full-time bookkeeper or outsource (fractional/virtual bookkeeping) is one of those grown-up moments, think homemade sandwich vs. deli: you went homemade to save money, but the deli meal-deal is actually pretty good value, and now you’re looking at that baguet you’re thinking you made a mistake.
Below I’ll walk through the pros and cons, give the situations when each option usually makes more sense, and explain why many small UK businesses find an outsourced/fractional approach gives the best of both worlds.
The big picture: why this choice matters.
Bookkeeping is the backbone of everyday cashflow, VAT, payroll and compliance. Choosing the wrong model can mean poor cash visibility, expensive mistakes or repeated firefighting when the person responsible is off sick or on holiday. Conversely, getting it right frees you up to spend more time with your customers and focus on what’s really important.
If you already use cloud accounting and want flexible, responsive support, an outsourced provider can slot into your systems without taking up office space. For example, our bookkeeping and back-office services are delivered remotely but designed to feel like part of your team.
When an in-house hire usually makes sense
Consider recruiting a full-time bookkeeper if any of the following apply:
- You have consistent, high volume, transactional work that needs daily, on-site attention (e.g. retail till reconciliation, cash handling).
- You already have the finance leadership structure (e.g. a finance manager or FD) and you need hands on desk to execute standardised tasks.
- You want very tight control over internal processes and data access, and you’re prepared to manage recruitment, payroll, training and HR responsibilities.
Pros: day-to-day presence, immediate access, strong cultural fit if you recruit well.
Cons: fixed costs (salary + NI + pension + benefits), single-person skills limits, sick leave/holiday coverage gaps, recruitment time and risk.
When outsourcing / fractional / virtual bookkeeping usually makes sense
Outsourcing or hiring fractional/virtual bookkeepers is often the smarter choice for many SME’s, especially those hiring their first finance person. Here’s why:
- Broader skillset, smaller cost. A single in-house bookkeeper will be great at some tasks but unlikely to cover everything (CIS, payroll, VAT tricky points, cash allocation, credit control). An outsourced team typically gives access to multiple specialists for a fraction of the cost of hiring a single person (we’ve actually had clients say they’d need three separate hires to match the coverage we provide).
- Continuity and cover. People take holidays, get sick, or need parental leave. An outsourced provider plans for that, you get continuity because the team (not just one person) owns your books.
- Scalable support. Your bookkeeping needs fluctuate as you grow. Outsourced/fractional arrangements let you scale up for busy seasons and scale down in quiet months without recruitment headaches.
- Access to specialist services. Need CIS checks, payroll, credit control, or help with trade credit insurance? A full-service provider can not only manage all those for you, but flex the level of support you need over time.
- Predictable, often cheaper, monthly cost. Outsourcing typically converts fixed payroll bills into a predictable monthly fee, easier for cashflow planning.
- Local, human service without the call-centre. Good providers will offer named contacts and local understanding, so you don’t feel like you’re shouting into a generic support line.
Practical decision checklist
Answer these questions to help decide:
- Is the workload steady and large enough to justify a full-time salary?
- Do you need specialised services (CIS, payroll, credit control, debtor watch/insurance, Backoffice support such a telephone answering service) alongside bookkeeping?
- How important is continuity when people are off?
- Do you want flexibility to scale up/down quickly?
- Are you ready to handle recruitment, HR and training costs?
If you answered “no” to 1 and “yes” to 2–4, outsourcing or a fractional arrangement is usually the most cost-effective and lower-risk route.
How to make outsourcing feel like an in-house team
If you pick an outsourced provider, look for this:
- Named account managers so you speak to the same 1–2 people (continuity).
- Transparent SLAs (turnaround expectations).
- Clear onboarding and a documented process for month-end, VAT and payroll.
- Regular management reports so you always know cash position and aged debt.
- Local understanding and easy contact routes (phone and email). Our contact details and service list are on the website if you want to see a real-world example. 64G+1
Final thought (and a little shameless honesty)
If you’re an SME making one of your first finance hires, outsourcing or a fractional model usually gives you better coverage, more expertise and lower risk while you find your feet. Once your business needs a full-time specialist, you can always transition. Many of our clients start with outsourced support, scale their business, then decide whether to bring roles in house, and they appreciate the continuity and expertise during that growth phase.
Want to talk through your specific situation? Give us a ring on 01903 368080 or send us an email <email> we’re local to Worthing in the South East and happy to have a no-pressure chat about the best path for your business.