Guide
What a finance function looks like at £1m, £3m and £5m turnover
A finance function is the people, processes and systems that record what the business does, control the cash, and tell the owners what is going on. In a small company it might be one bookkeeper and an accountant. It does not have to look like a corporate finance department, but it does need to grow with the business. When it falls behind, the symptoms are late numbers, cash surprises and an owner doing jobs they should have handed over years ago.
Turnover is a rough guide, not a rule. A £2m business with stock, borrowing and fifty staff needs more than a £4m consultancy with ten people and no debt. Use the stages below as a starting point.
£1m
Around £1m: get the basics reliable
Typical set-up: the owner, a part-time or outsourced bookkeeper, cloud accounting software, and an external accountant for year-end, tax and VAT.
What usually works: invoices go out, bills get paid, VAT returns are filed.
What is usually missing: monthly numbers anyone looks at, and any forward view of cash.
Priorities at this stage:
- bank feeds connected and reconciled every week, not every quarter
- receipts and bills captured as they arrive, not in a shoebox at year end
- a simple monthly profit and loss, checked against the bank
- a short cash forecast, even if it is only a few weeks ahead
- clear sight of what is owed to the business and by whom
£3m
Around £3m: build a monthly rhythm
More customers, more staff, often some credit terms, stock or a loan. The volume of transactions now needs someone on it most days.
Typical set-up: a full-time bookkeeper or finance assistant, payroll handled in-house or by a bureau, and someone responsible for credit control. The external accountant still does year-end and tax.
What changes:
- a month-end close with a checklist and a deadline
- monthly management accounts with a balance sheet, not just a profit and loss
- a budget for the year, and actuals compared against it each month
- a rolling 13-week cash flow forecast
- a handful of KPIs the owners review every month
Senior input: this is often the point where a part-time finance director makes sense, usually for a day or two a month to set up the reporting, forecasting and controls, and to be the person the owners test decisions against.
£5m
Around £5m: add structure and controls
By now there may be a finance team of two or three, a board or investors, and a bank with covenants.
Typical set-up: a finance manager or senior bookkeeper running the day-to-day, assistants for payables, receivables and payroll, and integrated systems for stock, sales and purchasing.
What changes:
- a board pack every month, with KPIs and commentary
- formal approval limits and separation of duties, so the person who sets up suppliers is not the one who pays them
- lender reporting and covenant tests on a timetable
- budgets owned by department heads, not just the owner
- scenario planning before big decisions such as a new site, an acquisition or a large contract
Senior input: a part-time FD for a day a week or more, or a move towards a full-time finance director if the team and the decisions need daily leadership. Our guide to choosing between a part-time FD, a full-time FD and your accountant covers that decision.
What to keep in-house and what to outsource
| Area | Around £1m, £3m and £5m |
|---|---|
| Day-to-day bookkeeping | Outsourced or part-time at £1m, in-house by £3m, a small team by £5m. |
| Payroll | A bureau or your accountant at first; in-house or a bureau later. |
| Credit control | The owner at first, then a named person, then the finance team. |
| Year-end accounts and tax | An external accountant at every stage. |
| Management accounts | Often missing at £1m, monthly by £3m, a monthly board pack by £5m. |
| Forecasts and budgets | Rarely done at £1m; a part-time FD from around £3m; a part-time or full-time FD at £5m. |
Signs your finance function is behind the business
- the management accounts arrive more than a few weeks after month end, or not at all
- the owner still reconciles the bank or chases late payers
- cash shortfalls are spotted the week they happen
- there is no budget, or nobody compares results against it
- the bank or an investor asks for information that takes days to pull together
Where Fintone fits
We act as the senior layer of the finance function: we build the month-end process, the management accounts, the forecasts and the board reporting, and we work alongside your bookkeeper and your accountant rather than replacing them. Read more on our fractional finance director page, see how we work with companies, or request a free call to talk about where your finance function is now.
Last reviewed October 2026
Talk to Fintone
If your business has outgrown bookkeeping-only support, the first step is a conversation about where it is heading and what information you need to get there.