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Rising Borrowing Costs and Your Finance Team | Unison Direct

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A CFO who runs finance for a $40 million distribution business came out of a board meeting with a question. His lenders had asked, for the first time in four years, whether his cost structure was built for the environment they were now in, rather than the one they had all grown used to. The question felt obvious, in hindsight but he had no good answer.
That conversation is happening in boardrooms across mid-market America right now, because the 10-year Treasury yield has climbed to 4.6 percent, mortgage rates are sitting at 6.68 percent, and the cost of carrying debt has fundamentally changed the calculus for companies that built their operating structure during years when capital was essentially free. The question those lenders asked is the question every CFO should be sitting with, not in a theoretical way but in a very practical one, because the answer usually points somewhere uncomfortable.
For most companies, the answer includes the finance department.
This is not an observation that goes down easily. Finance leaders at mid-market companies have spent years assembling teams they trust, and a good controller is hard to find and harder to replace. A reliable bookkeeper, who knows your accounts, your vendors, your timing quirks and your auditor’s preferences is genuinely valuable. Nobody wants to unwind something that works.
But here is the thing about periods of stable capital. They do not just change what you pay to borrow money. They change your tolerance for fixed costs that you would scrutinize much more carefully if the environment were less forgiving. When cost of capital was two percent and revenue was growing, a fully staffed internal accounting function made sense as a matter of convenience and continuity. Companies were not optimizing for cost. They were optimizing for stability and speed. The expense was worth it.
At six percent cost of capital, the math looks different. A controller earning $95,000 carries closer to $130,000 of true annual cost when you add employer taxes, health benefits, equipment, software licenses and the management overhead of having someone in that seat full time. An accounting manager at $75,000 runs similarly when you fully load the cost. Most mid-market companies have two or three people in the finance function performing work that does not require their physical presence in the building or their name on the payroll.
The argument for outsourced accounting services and virtual CFO arrangements has always been framed as a cost argument, and that argument has always been somewhat correct but also somewhat beside the point. The stronger case is the expertise argument. An outsourced accounting team that closes the books for two hundred companies every month develops pattern recognition that an in-house controller simply cannot develop working inside one company. They see the anomalies faster. They know exactly what auditors are looking for because they have been through hundreds of audits. When FP&A models need rebuilding because the business model changed, they have built that exact model for other companies, and they know where the usual errors hide.
This is not a knock on the competence of in-house finance staff. It is a structural reality about how expertise develops. Specialists who work on one problem repeatedly across many clients get very good at that problem in a way that generalists working inside one company cannot match, regardless of how capable or experienced those generalists are.
The transition that works, and UnisonDirect has watched this play out at mid-market companies across industries over the past several years, is not a wholesale replacement of a finance team with an outsourcing arrangement. It is a restructuring of where different kinds of work get done. The CFO or controller who understands the business, who has the lender relationships, who can walk into a board meeting and explain the cash position in plain language, that person is worth keeping close. The technical execution of accounting processes, the month-end close, the tax compliance, the AP and AR management, the variance analysis and FP&A modelling, those functions can move outside the payroll without any loss of quality and usually with a meaningful gain in both cost and execution speed.

Virtual CFO services and accounting outsourcing have matured considerably as a category over the past decade. A reputable firm will assign the same dedicated people on a retainer basis so that continuity and institutional knowledge are preserved. The $2,000 to $3,500 per person per month retainer model means companies are paying for output rather than presence, and for most mid-market companies that math represents a significant reduction in fixed finance overhead.

The CFO who moved to this model two years ago looks prescient today. The CFO who built out a full in-house team during cheap money and is now trying to justify the cost to a board that has noticed the rate environment is having a harder conversation.
The CFO who came out of that lender meeting understood eventually that his finance team was not the problem. The problem was that he had built his cost structure for a world that no longer existed and had not noticed because everything was still technically functioning. Cash flow was tighter. Margins were compressed. Debt service was higher. And the accounting department was sized for a period of abundance that had quietly ended.
The rate environment is not returning to where it was. That means the structures built during that period need a second look, and the finance function is a reasonable place to begin.

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