What is a finance function, and when does your business need one?

A finance function, sometimes called the finance and accounting function, is everything a business does to record, manage and plan its money: bookkeeping, paying suppliers and staff, invoicing and chasing customers, tax and compliance, reporting, forecasting and financial decision-making. In a large company it is a department. In a growing business it is often one overworked person, the owner, or an accountant who only appears at the year end.

A complete finance function usually covers four layers:

• Transactions: bookkeeping, sales invoicing, credit control, supplier payments and payroll
• Compliance: VAT returns, PAYE, year-end accounts, corporation tax and Companies House filings
• Reporting: monthly management accounts, key performance indicators and cash flow reporting
• Planning and advice: budgets, forecasts, funding, pricing decisions and board-level finance leadership, often provided by a finance director

• You only find out how the business performed months after the year end
• Cash is tight even though the business looks profitable
• The owner or a director is spending evenings on bookkeeping and admin
• You are planning to borrow, raise investment or sell, and the numbers are not ready
• Nobody is responsible for forecasting or challenging the numbers

Building an in-house finance team means recruiting a bookkeeper, a finance manager and, eventually, a finance director. For many businesses with turnover in the low millions, that is more cost and management time than the business needs.

An outsourced finance function gives you the same layers, delivered by a team that already has the skills and systems, and scales up or down as you grow. You can start with bookkeeping and management accounts and add fractional finance director (FD) support when you need it.

Illustrative example: a business with £2m turnover might have a part-time bookkeeper handling day-to-day transactions, an outsourced team producing monthly management accounts and a cash flow forecast, and a fractional finance director joining a monthly review and the board meeting each quarter. This is an example to show how the roles fit together, not a client result.

Elm provides a complete outsourced finance function for growing businesses, from day-to-day bookkeeping and payroll to cash flow forecasting, investor support and fractional finance director advice. If you are raising investment, see our support for founders. For more on monthly reporting, read management accounts explained.