Accounting Disrupted

Sep 17, 2021 8:49:00 AM | Company Valuation Report Accounting Disrupted

Accountancy firms are expected to endure a repeat of the disruption that IT service providers have seen over the last decade, from Amazon, Microsoft and Google Cloud computing services.

In the last few years accountancy firms have seen rapid adoption of financial technology by its clients, including cloud accountancy, payroll, and invoicing software. Government policy is also driving innovation with Open Banking and the UK Governments “Making Tax Digital” further accelerating acceptance and use of FinTech by SMEs.
 
Accountancy firms are expected to endure a repeat of the disruption that IT service providers have seen over the last decade, from Amazon, Microsoft and Google Cloud computing services. Cloud computing forced IT Service Providers to move up the value chain, becoming advisors to their clients and offering consultancy services on top of Amazon, Microsoft and Google cloud computing. Or risk being purchased by their competitors for low single digit multiples.
 
For accountants it will probably be the services offered by cloud accounting software companies like Xero, Sage and Intuit as well as new services offered by FinTech’s banks such as Revolut or Starling that will force this move to advanced accounting services to offset lost revenue from the automation of bookkeeping, payroll and reporting.
AccountingDisrupted

Recent Mergers & Acquisitions by Cloud Accounting Companies is showing a desire to rapidly build out their services ecosystem, from payments to insurance, to invoicing, to workforce management, that will of course benefit their customers and accountants, but will also commoditise basic accountancy services, reducing the prices points accountants are able to charge. Basic cloud accountant services that include bookkeeping, payroll and filing can now be found in the UK for less than £100 / month!

Cloud Accounting Ecosystem M&A

Xero, valued at ~$13.5 billion with over 3,643 employees in 2021 has acquired a Danish staff rota software provider Planday for €183.5 million, and Swedish e-invoicing technology provider Tickstar for $17.5 million. This follows on from its previous acquisitions of Hubdoc (document management), Instafile (account preparation and tax filling) and Waddle (invoice lending).

Sage with a market cap of £7.80Bn and over 12,000 employees in 2021 has acquired Task Sheriff an Israeli start-up that automates repetitive work and provides decision-making for SMEs and Cake, who provide automation of leave management, joining and leaving process, management of expenses approvals and paying employees. It seems you can have your Cake and eat it! 

And that’s just accountants’ partners – what about the FinTech accounting disruptors? The next Amazon for accountants? We will try and identify some of the next accountancy disruptors in a future FinTech Accounting article.

But as the IT industry found out – disruption is not all doom & gloom and we (M&A Deal Platform) partner with accountants to help them rapidly add advanced services to grow revenue by offering new complimentary services.

Contact us directly or Schedule a Meeting if you would like to learn more about our Accountant Partner Programme.

And look out for our future posts on our Accountant Partner Services.
James Ruthven

Written By: James Ruthven

James Ruthven is a technology leader with 25+ years of success in leading organisations in change and growth, delivering solutions that transform customer experience.