Hybrid accounting: combining in-house and outsourced teams for maximum efficiency

The finance function has evolved into a strategic engine that drives growth, performance and resilience. As organisations mature, one question consistently emerges: how should finance be structured to deliver both control and flexibility?

The rising cost of hiring, regulation, and technology has pushed many companies to rethink traditional models, especially in London. Increasingly, the most effective approach combines the strengths of internal finance staff with the strategic and technical expertise of outsourced finance and accounting partners like BSmart.

This is the essence of hybrid accounting: a model that integrates in-house teams with external specialists, typically led by a fractional Chief Financial Officer. The result is a structure that maintains internal ownership of day-to-day financial activity while gaining senior financial leadership and insight at a fraction of the cost of a full-time executive.

Why hybrid models are gaining ground

The traditional finance department offers control and proximity to the business. However, it also carries significant fixed costs. Salaries, National Insurance contributions, pensions, sick pay, paid /annual leave, and training quickly increase overheads, particularly in high-cost regions such as London. You also have to think about recruitment costs which is often around 20 percentage of the new recruits, yearly annual salary.

By contrast, fully outsourced models may reduce costs but can sometimes create distance from operations. Internal staff often hold valuable institutional knowledge and context that external providers lack.

The hybrid model resolves this tension. Transactional and administrative tasks remain in-house, while strategic, technical, and oversight roles are managed by external experts under the direction of a fractional CFO. This structure keeps control close to the business but connects it with the broader perspective and financial discipline that senior leadership brings. This also gives some organisations peace of mind that some of their finance function is maintained in house.

The role of the fractional CFO

In a hybrid model, the fractional CFO sits at the centre of coordination. They translate financial information into strategic insight and ensure that internal and external resources operate in alignment.

Their remit typically includes:
• Strategic planning, forecasting, and performance analysis.
• Oversight of internal teams and outsourced partners.
• Management of cash flow, capital structure, and investment decisions.
• Board and investor reporting.
• Risk assessment, scenario planning, and governance.

Unlike an accountant or finance manager who focuses on historical data and compliance, a CFO is forward-looking. A fractional CFO provides that same strategic leadership on a part-time or project basis, bringing the experience of a senior finance executive without the associated full-time cost.

Economic and operational benefits

As indicated earlier, the hybrid model offers clear economic advantages. Retaining a full-time CFO in London can cost more than £120,000 annually, excluding National Insurance, pension, and benefits. When combined with additional finance staff, the total can exceed £300,000 per year.

Engaging a fractional CFO, supported by a blend of in-house and outsourced resources, delivers comparable expertise and governance for a fraction of the cost. This arrangement eliminates employer liabilities, recruitment fees, and overheads while introducing scalability. Services can be expanded during periods of growth or investment and scaled back during stable trading cycles.

Operationally, hybrid accounting allows businesses to maintain continuity. Internal finance staff retain ownership of culture and daily processes, while external specialists bring depth of knowledge in areas such as tax planning, regulatory compliance, and automation. The fractional CFO ensures cohesion between both sides, providing clarity and accountability.

The technology advantage

Modern finance platforms have made the hybrid model seamless. Cloud-based accounting systems allow real-time access for both internal and external teams, ensuring full visibility without duplication or data loss.

A fractional CFO uses these systems to establish dashboards, metrics, and reporting frameworks that make financial performance transparent across the organisation. Decision-making becomes faster and evidence-based.

The same tools also enable automation of repetitive tasks such as reconciliations, invoice processing, and payroll. This reduces manual workload and allows internal teams to focus on value-adding work.

Strengthening governance and strategy

A hybrid finance model led by a fractional CFO can improve governance and oversight. Clear reporting lines, defined responsibilities, and regular financial reviews reduce operational and compliance risks. External oversight ensures that processes remain aligned with regulatory standards while maintaining independence and objectivity.

Strategically, businesses gain access to senior-level insight and skill that would otherwise be unaffordable.

Implementing a hybrid finance structure

Building a hybrid finance function begins with evaluating the current capacity and needs of the business. Leadership teams should identify which tasks require in-house presence, such as expense management and supplier relationships, and which can be outsourced more efficiently.

The next step is to establish governance. The fractional CFO should oversee performance metrics, data security, and communication between internal staff and external providers. A unified reporting framework ensures that all financial information flows through one point of leadership.

Technology is the enabler. Cloud systems, automation, and secure document-sharing platforms make hybrid collaboration seamless. With the right tools, even global finance operations can be managed effectively from a distance.

A forward-looking model

As economic conditions and expectations evolve, the most resilient companies will be those that match their structure to their stage of growth. Larger or growing organisations can benefit from a hybrid model that combines in-house control with outsourced CFO leadership, while smaller businesses or start-ups may choose to fully outsource their finance function for expert support and flexibility.