One of the most important strategic decisions in managing a company's finances is whether to hire an in-house accountant or to entrust all financial accounting to a professional service provider. While both options have their strengths, service providers often prove to be more stable and secure partners. This post thoroughly explains why service providers are increasingly becoming the preferred choice, offering explanations, comparisons, and real-life examples.
A company had been successfully using a financial management service provider recognized with a quality mark by the Estonian Association of Accountants for years, ensuring professional and stable cooperation. The service provider maintained regular financial management, accurate reporting, and an efficient accounting system. Everything was running smoothly, and the management was satisfied with the service quality.
The situation changed when one of the board members decided to bring financial management in-house, believing that an on-site employee would be more flexible and closely involved in daily operations. A new employee was hired, and a transition period began, during which the accounting firm continued to provide its services in parallel.
Simultaneously, the management decided to migrate all accounting to new software that was more familiar to the new employee. Unfortunately, the transition was unsuccessful—the newly hired employee struggled with implementing the system and lacked knowledge of the software previously used by the service provider, leading to compounded errors. Within a few months, the previously well-functioning financial accounting was in disarray: reporting became inaccurate, tax calculations contained errors, and documentation became inconsistent. Eventually, the employee left, leaving behind an unstable situation requiring significant corrections.
By that time, the company had already terminated its collaboration with the accounting firm and was seeking a new service provider. Unfortunately, the former partner faced unwarranted criticism due to a lack of honest and open discussion about the causes of the issues. The new service provider, also a quality-certified accounting firm, had to take over in a situation where previous errors were not clearly identified. Responsibility unfairly fell on the previous financial management service provider, who was expected to explain and rectify mistakes they did not cause.
This example clearly illustrates that poorly considered management decisions and weak communication can lead to serious consequences. A service provider that had delivered quality service for years faced reputational damage simply because they were not included in the transition process transparently and constructively. The root of the problems lay in incompetence with the new system and tasks, not in the quality of the previous service.
The moral is straightforward: in financial management, stability, experience, and transparency often outweigh internal experimentation. It's especially crucial that any changes are made thoughtfully, involving existing partners and ensuring clear division of labor and responsibility.
An accounting firm doesn't rely on a single specialist but comprises a team of accountants, tax advisors, and financial managers with diverse skills.
What does this mean for your company?
Broader Knowledge Base: Daily operations involve multiple specialists experienced in various fields such as real estate, manufacturing, services, e-commerce, international transactions, and more.
Access to Specific Expertise: For complex tax issues, international VAT, or consolidated reporting, the firm can immediately involve an expert.
Continuity: In cases of illness or vacation, work doesn't halt because more than one person is familiar with the tasks.
A service provider's goal is always to solve problems, not to assign blame. All errors and mistakes fall under contractual responsibility and are addressed constructively.
A service provider does not:
Oppose the management—they serve the company's interests objectively and professionally.
Avoid responsibility; instead, they proactively address potential issues.
However, an in-house accountant might:
Take personal offense to criticism and become defensive.
Be concerned about job security, potentially leading to filtered information being presented to management.
Example: If data has not been updated or a declaration has not been submitted, the service provider investigates the cause and presents a solution plan, rather than blaming management or concealing the situation.
Outsourcing services doesn't eliminate contact or collaboration opportunities; instead, it allows for flexible work arrangements.
Possible agreements with a service provider:
On-Site Work: A financial manager or accountant can work at the company's office on certain days as needed.
Online Meetings: Regular or ad hoc video meetings to discuss ongoing issues and review reports.
Shared File Systems: Platforms like Google Drive or SharePoint enable real-time document collaboration.
Result: The service provider is visible, accessible, and involved in management to the extent desired by the company.
Modern accounting firms utilize highly automated solutions:
Automatic Invoice Processing: E-invoices, invoice digitization, etc.
Bank Interfaces: Bank transactions are imported automatically.
Integrations: Linking with e-commerce, inventory management, and payroll systems.
Cloud-Based: Tools are accessible 24/7, even to company executives.
Result:
Less manual work, fewer errors, faster information flow.
Management has better and more up-to-date oversight.
When planning a company's financial management costs, it's important to consider more than just the gross salary. Hiring an in-house accountant involves various indirect and hidden costs: labor taxes, training, work tools, and, if necessary, substitutes during vacations or illnesses. With a service provider, all these costs are included in the price, and service quality is guaranteed year-round.
The table below compares costs in a scenario where:
The accountant's gross salary is €2,000.
Work tools and software cost an average of €75 per month.
Annual training costs are about €1,000 (i.e., €83 per month).
One month per year, the accountant is on vacation, during which a substitute is paid 40% of the gross salary (distributed over 12 months).
For the service provider, the service fee is €2,000 per month, meaning the company has a partner available 8 hours a day, 5 days a week—full-time coverage like an employee.
| Expense Item | In-House Accountant | Service Provider (€2,000/month) |
|---|---|---|
| Gross Salary | €2,000 | €2,000 |
| Labor Taxes | €676 | €0 |
| Work Tools and Software | €75 | €0 |
| Training (~€1,000/year) | €83 | €0 |
| Substitute During Vacation (1 month/year, 40% of gross salary) | €66.67 | €0 |
| Total per Month | €2,900.67 | €2,000 |
| Total per Year | €34,808 | €24,000 |
| Monthly Savings | €900.67 | |
| Annual Savings | €9,808 |
Financial savings: It’s possible to save nearly €10,000 annually.
Lower risk: The service does not stop, even if the accountant is sick or on vacation.
Flexibility: The volume of the service can be increased or decreased without changing employment contracts.
All-inclusive: No additional costs for software, hardware, training, or substitute staff.
Recommendation for Entrepreneurs:
If you're considering outsourcing accounting services, take a moment to evaluate the total cost of employment — not just the salary figure. A professional service provider saves not only money but also your time, nerves, and financial risk.
A company’s needs change over time — sometimes the volume of accounting work decreases (e.g., after project completions), and sometimes it increases suddenly (e.g., during expansion).
Advantages of a service provider:
The service volume can be flexibly increased or decreased based on actual needs.
Billing is based on hours worked, volume, or number of transactions.
Drawbacks with an in-house employee:
When the workload decreases, it’s not possible to proportionally reduce the employee’s salary.
When the workload increases, a new hire is required, which takes time and adds extra cost.
Companies often need services that weren’t included in the original contract, such as:
Preparing financial analyses
Preparing forecasts
Implementing new software
Preparing consolidated reports
With a service provider: these needs can be discussed and implemented quickly and efficiently.
With an in-house employee, it often requires:
Negotiating additional pay
Hiring additional resources or outsourcing the task elsewhere
Providing additional training if the employee lacks the necessary expertise
Cost-effectiveness: predictable costs and lower total expenses
Support for management decisions: analyses, recommendations, and reporting
Reliability: consistent service quality and backup coverage
Professional image: a trustworthy partner boosts credibility
Ask yourself:
Does the work require daily on-site presence?
Is the company structure complex or simple?
Does the current staff need support?
Does the company manager need regular financial consulting?
If the company ultimately decides to hire an in-house accountant:
The service provider can help prepare test assignments
Assess candidate suitability and competence
Support the onboarding process and remain as a mentor
An accounting service provider is not just a labor force. They are a strategic partner, whose role is to protect the company’s financial reputation, ensure legal compliance, and support decision-making. Choosing a firm with a quality certificate eliminates the risk of poor service and allows you to focus on what truly matters — developing your business.
Recommendation: Consider carefully and remember that a professional service is an investment, not an expense
