What's the difference between a bookkeeper, an accountant and an outsourced finance team?
A bookkeeper records what has already happened. An accountant reports on it and files what has to be filed. An outsourced finance team does both, and then uses the numbers to tell you what to do next — the same work an in-house finance function would do, without the in-house salary bill.
The detail
The three roles overlap, which is why the words get used interchangeably — but they answer different questions.
A bookkeeper answers "what happened?". Transactions are recorded and reconciled, suppliers and customers are kept up to date, and the records are accurate enough to rely on.
An accountant answers "what do we have to report?". Year-end accounts, corporation tax, VAT returns and personal tax are prepared and filed correctly and on time.
An outsourced finance team answers "what should we do next?". The bookkeeping and the compliance still happen — they have to — but they become the raw material for management accounts, cash flow forecasting, pricing decisions, hiring decisions and the conversations a business owner would otherwise have with nobody.
In practice
The difference shows up in timing. With bookkeeping alone, you find out how last year went some months after it ended, which is too late to change anything about it. With a finance team, you see the month that has just finished within a few weeks, next to the months before it, and you can still act on what it tells you.
It also shows up in who spots the problem. A bookkeeper who has been asked to record transactions will record them. A finance team looking at the same records is asking why gross margin moved, why debtor days are creeping up, and whether the business can afford the hire it is about to make.
Who this applies to
If your business is small, straightforward, and you are comfortable with the numbers, a bookkeeper and an accountant may be exactly right — and we will tell you so.
The businesses that get the most from an outsourced finance team tend to have some of the following: staff, stock or subcontractors; a growing number of transactions; decisions coming up that need a number behind them; a bank or investor asking questions; or an owner who is currently the finance department as well as everything else.
Common mistakes
Buying the cheapest bookkeeping and expecting insight from it. Insight takes time, and time is the thing the cheapest option removes.
Hiring a part-time finance person before the processes exist, so a good hire spends their first year fixing records instead of improving results.
Assuming software solves it. Xero is very good, and it still only knows what it is told.
Related questions
Outsourced Finance & Bookkeeping
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