# How Young Founders Are Embracing Outsourced Accounting
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-02-15
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Why Young Founders Are Choosing Outsourced Accounting in UK & US
Meta Description: Discover why young entrepreneurs are outsourcing accounting tasks. Learn about the benefits and cost efficiencies of using outsourced finance services from
URL: https://financedigest.com/how-young-founders-are-embracing-outsourced-accountinghtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1194230849-1736816236825-compressed.jpg)

_By_ **_Graham Davies,_** _CEO and founder at_ [_Addition_](https://www.additionfinance.co/) _, an outsourced finance business supporting over 180 SMEs and startups in the UK and US._

A common theme in startup culture is that entrepreneurs must wear many hats – sometimes, all at once – in order to get their business going.

But the newest generation of founders are stepping away from this narrative. Instead of ‘doing it all’, they’re making sure it all gets done – but not necessarily by them.

A 2021 national survey by [Addition](https://www.additionfinance.co/) found that 82% of business founders ages 18-24 have chosen to outsource their bookkeeping and accounting – as opposed to a whopping 51% of founders aged 55+ who said they manage these tasks internally.

The 33% difference in uptake of outsourced accountants suggests a shift in the next generation of founders. Young start-up owners are embracing leaner core teams and offloading process-heavy tasks to external suppliers.

**Why are young founders choosing outsourced accounting?**

A [key driver behind this sizable divide could be costs](https://www.financedigest.com/as-the-cost-of-living-bites-tackling-insurance-quote-manipulation-is-key.html "As the cost of living bites, tackling insurance quote manipulation is key"). Hiring an in-house bookkeeper in the UK will set you back an average of [£24, 372](https://www.glassdoor.co.uk/Salaries/bookkeeper-salary-SRCH_KO0,10.htm) – not a shockingly high amount, but quite possibly out of reach for grassroots startups. But with VC investment at an all time high, funds might not be the deciding factor here.

The average self-employed person spends an average of [12 working days a year on tax compliance](https://www.accountsandlegal.co.uk/small-business-advice/british-smes-spend-12-working-days-per-year-on-tax-compliance) alone. [Time is golddust to entrepreneurs, and 12 days worth of drumming up new leads (or spending time with loved ones) is a lot of time to spend on something](https://www.financedigest.com/the-spritz-gets-a-shake-up-something-nothing-launches-new-ready-to-drink-spritz-in-time-for-summer.html "The Spritz gets a shake up! Something & Nothing launches new ready-to-drink Spritz in time for summer") you may not even fully understand.

The ‘Great [Resignation’ that has sensationally gripped many countries is a prime](https://www.financedigest.com/liz-truss-resigns-after-six-weeks-as-uk-prime-minister.html "Liz Truss resigns after six weeks as UK prime minister") example of a workforce who are reshuffling priorities for a better work-life balance. Young people are [turning side hustles into their main income stream – and they see no reason why they should waste time and energy](https://www.financedigest.com/ahold-turns-to-solar-panels-lowers-thermostats-to-save-energy.html "Ahold turns to solar panels, lowers thermostats to save energy") on DIY bookkeeping while they’re doing so.

And the outsourcing doesn’t just stop at [balancing the books](https://www.financedigest.com/can-cfos-balance-the-books-with-rising-operating-costs.html "Can CFOs balance the books with rising operating costs?"). Portfolio CFOs are gaining rapid popularity amongst startups and SMEs.These high-qualified individuals usually work with agencies or freelance, and will [manage multiple company accounts](https://www.financedigest.com/exact-launches-practice-management-solution-to-help-transform-accountants-into-trusted-business-advisors.html "Exact launches Practice Management solution to help transform accountants into trusted business advisors") – or portfolios – at once. They’ll typically have extensive experience in their field, and [offer dedicated services](https://www.financedigest.com/barclays-sets-up-taiwan-subsidiary-to-offer-brokerage-services.html "Barclays sets up Taiwan subsidiary, to offer brokerage services") at a much more affordable rate.

COO at [Addition John Miller explains why even startups with funding](https://www.financedigest.com/need-additional-funding-but-not-sure-how-to-go-about-it.html "Need additional funding but not sure how to go about it?") are leaning away from onboarding an in-house CFO. “Startups don’t require a CFO on a full-time basis.” He reasons, “The cost is arguably not worth it. At £80k – £150k+ for a full [time CFO in a startup to a medium company](https://www.financedigest.com/oxford-bus-company-outsources-for-the-first-time.html "Oxford Bus Company Outsources for the First Time"), this expense is often hard to justify.”

Of course, [hiring a portfolio](https://www.financedigest.com/iberdrola-hires-barclays-to-sell-stake-in-spanish-renewable-portfolio-expansion-says.html "Iberdrola hires Barclays to sell stake in Spanish renewable portfolio, Expansion says") CFO is still an expense. However, the [investment is well worth the cost](https://www.financedigest.com/hidden-costs-when-investing-and-how-not-to-get-hit.html "Hidden costs when investing… and how not to get hit"). “The aim for all back-office roles, like finance, is to pay for yourself.” Says John, “Therefore, having a CFO on a part-time basis makes this easier in a [small business](https://www.financedigest.com/10-dirty-tricks-for-small-businesses-to-watch-out-for-when-negotiating.html "10 dirty tricks for Small Businesses to watch out for when negotiating"). At £3k per month, it’s almost a third of the cost, whereas I would argue the benefits will not be a third of the size.”

**What do startups** [need from outsourced accountants?](https://www.financedigest.com/5-countries-you-need-to-have-an-offshore-account-in.html "5 Countries You Need To Have An Offshore Account In")

For founders taking advantage of outsourced [financial services](https://www.financedigest.com/wrapping-financial-services-in-a-security-blanket.html "Wrapping Financial Services in a Security Blanket"), the possibilities go beyond bookkeeping and even standard accounting. Entrepreneurs are looking to [level the playing field](https://www.financedigest.com/using-agility-to-resist-economic-instability-and-level-the-playing-field.html "Using agility to resist economic instability and level the playing field") between themselves and big companies. Here are four [key ways that startups are utilizing the power of outsourced finance](https://www.financedigest.com/3-key-ways-you-can-transition-from-finance-to-fintech.html "3 key ways you can transition from finance to fintech") experts:

- **Financial [Management and Strategic](https://www.financedigest.com/the-importance-of-strategic-human-resource-management.html "The Importance of Strategic Human Resource Management") Planning**

Young [founders are looking for support with implementing controls so funds](https://www.financedigest.com/female-founders-still-struggle-to-get-funded-time-to-rip-up-the-old-rulebook.html "Female Founders Still Struggle to Get Funded: Time To Rip Up The Old Rulebook") can be spent easily, but with solid regulations. Portfolio CFOs are helping them determine where the [company needs](https://www.financedigest.com/italys-windfall-tax-on-energy-companies-needs-to-be-rewritten-pm.html "Italy’s windfall tax on energy companies needs to be rewritten – PM") to go, and how to get it there.

- [**Forecasting and Budgeting**](https://www.financedigest.com/how-financial-planning-starts-with-a-new-approach-to-budgeting-and-forecasting.html "How financial planning starts with a new approach to budgeting and forecasting")

This is a major pain point for grassroots startups, which is why many are reaching out for [support at breaking an overall strategic](https://www.financedigest.com/strategic-budgeting-ensures-success-of-community-support-programs.html "Strategic Budgeting Ensures Success of Community Support Programs") plan into nuts and bolts. Knowing how much they should spend, and on what, is a key advantage to have at such an [early stage](https://www.financedigest.com/valuing-your-early-stage-startup.html "Valuing your Early Stage Startup") in their business.

- **KPI and Performance Tracking**

KPIs are vital to financial [growth](https://www.financedigest.com/how-embedded-insurance-can-drive-growth-and-value-for-the-insurance-and-finance-sectors.html "How Embedded Insurance Can Drive Growth and Value for the Insurance and Finance Sectors"). A portfolio [CFO will implement automated ways](https://www.financedigest.com/10-ways-automation-has-changed-the-role-of-the-cfo.html "10 ways automation has changed the role of the CFO") to periodically track performance to plan – which is another reason that new founders are hiring their services.

- **[Cash Flow](https://www.financedigest.com/should-your-business-reconsider-invoice-financing-top-tips-on-why-reappraising-this-method-liberates-business-cash-flow.html "Should your business reconsider invoice financing? Top tips on why reappraising this method liberates business cash flow") Management**

Cash is king for all startups. Staying on [top of what is coming in and what is going out is vital for survival as well as success](https://www.financedigest.com/the-secret-to-academic-success-colouring-in-oxford-and-cambridge-residents-top-the-list-of-crayon-wielding-adults.html "The secret to academic success? Colouring in! Oxford and Cambridge residents top the list of crayon wielding adults"). Strategic allocation of resources is something the new generation of entrepreneurs are seeking help with earlier than ever.


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---