The $700K Question: Why SMBs Can’t Afford In-House Accounting (And Don’t Need To)

For many SMB owners and Directors of Finance, the same problem shows up around $3–5 million in annual revenue.

Your accounting system worked when the business was smaller. QuickBooks, a bookkeeper, maybe an outside CPA at tax time. But as transaction volume increases, reporting expectations rise, and compliance becomes more complex, cracks start to show.

At the same time, building a full in-house accounting team feels financially out of reach.

The True Cost of In-House Accounting for SMBs

Let’s look at the real numbers.

A basic in-house accounting structure usually includes:

• A financial controller

• A senior accountant

• A bookkeeper
  

Annual salaries alone typically land between $400,000 and $500,000. Once you factor in benefits, payroll taxes, software, training, and management overhead, total costs quickly climb to $600,000–$700,000 per year.

For most small and mid-sized businesses, that level of spend is not just expensive. It’s unsustainable.

Yet without strong financial management, SMBs face growing risks:

• Inaccurate financial reporting

• Cash flow blind spots

• Compliance and audit exposure

• Slower, riskier decision-making

This is where many business owners feel stuck between underpowered bookkeeping and unaffordable in-house accounting.

The Managed Accounting Outsourcing Alternative

This is where outsourced accounting for SMBs changes the equation.

Managed accounting services typically cost $1,500 to $3,500 per month, or $18,000 to $42,000 annually. Even at the higher end, this represents 60–75% cost savings compared to building an internal accounting department.

But cost alone isn’t the real differentiator.

Not all accounting outsourcing models deliver the same value.

Low-cost, unmanaged offshore bookkeeping may look appealing at first, but it often introduces hidden costs:

• Errors that require cleanup

• Delayed or unclear communication

• Increased oversight demands on owners or finance leaders

• Compliance risks that surface too late

For SMBs, these issues erase any initial savings.

What “Managed Accounting Services” Actually Mean

The difference between basic outsourcing and managed accounting services is controller oversight and accountability.

With a managed model, SMBs gain:

• Controller-led oversight to ensure accuracy and consistency

• Quality assurance and performance monitoring

• Clear escalation paths and issue resolution

• Continuity and replacement coverage when needed

• Financial processes that scale with the business

For SMB owners and Directors of Finance, this means professional-grade financial management without the burden of day-to-day supervision.

This model is especially effective for professional services firms, manufacturers, distributors, and retail businesses with 20 to 250 employees.

Real-World Impact for SMBs

Consider a $5 million manufacturing business.

Best-practice accounting costs typically fall between 1.5% and 2% of revenue, or $75,000 to $100,000 annually.

A managed outsourced accounting solution at $2,500 per month costs just $30,000 per year, freeing up $45,000 to $70,000.

That capital can be redirected toward:

• Inventory optimization

• Equipment upgrades

• Hiring revenue-generating roles

• Strengthening cash reserves

It’s no surprise the global accounting services market continues to grow. SMBs are realizing that professional oversight combined with outsourcing efficiency creates a more sustainable path to scale.

Making the Transition to Outsourced Accounting

Moving from in-house or founder-managed accounting to outsourced accounting services doesn’t have to be disruptive.

Most SMBs start by outsourcing their most time-consuming processes:

• Payroll

• Accounts payable and receivable

• Month-end close and reporting

As trust builds, the relationship expands into deeper financial oversight and process improvement.

For Directors of Finance, this reduces operational burden. For business owners, it restores confidence in the numbers.

The Bottom Line for SMB Owners and Finance Leaders

The real question is not whether your business needs professional accounting support.

It’s whether maintaining an expensive, rigid in-house structure is the best use of capital when managed accounting services can deliver the same level of oversight at a fraction of the cost.

For growing SMBs, outsourced accounting with controller oversight is no longer a compromise. It’s a strategic advantage.

Explore how managed accounting works for growing SMBs.