No Accounting for Taste ep214: Must finance leaders be tech-savvy?

Matthew Ord: Shall we begin? Let's begin now. Hello and welcome to the latest episode of no Accounting for Taste, with me, Matthew Ord, and the familiar voice of Accounting Web's technology editor, Tom Herbert.

Tom Herbert: Hi, Matt. Hi, everyone.

Matthew Ord: It's just the two of us again today, with Richard topping up his tan. But I have to wonder, Tom, at this point, should we be taking the hint that he just has it shown up for three episodes in a row?

Tom Herbert: Yeah. Who's Richard? You've lost me. Yeah. Unbelievable. You know, uh, our, uh, trio's down to two. In the immortal words of the Lion King,

Matthew Ord: as far the references anyway, it's never a bad time for a Lion King reference. Good work, Tom. Well, I want to kick us off with some, um, accounting excellence news. With the deadline for entries having been extended until 3 June, which means an extra two weeks to get your submissions through the door. We, of course, have the traditional firm and team categories and the individual ones where we'll celebrate the best of the best. But let's talk a little bit about deal of the Year, Tom, as it's a fascinating time for M and A activity in the accounting space. We've talked about private equity, MBOs, firms buying firms without that external funding. It's as good a time as any, really, to be shouting about your deals, isn't it?

Tom Herbert: I mean, it's. It is one of the big topics, big trends over the last couple of years, isn't it, in the accounting profession? The sort of upscaling of firms buying other firms. The. As you said, private equity getting involved and, uh, sort of bringing a lot of firms together. I mean, I don't know about the state of your inbox, Matt, but mine, uh, is just flooded with press releases every day, including firms announcing that they are. They never say acquiring, do they? They always say there must be some kind of legalese behind this. But, yeah, they're joining forces with. You know, you can. You can generally get the idea about who's. I mean, depending on who the press release is from. Right. I guess I just want them to mean something. I've got a little. Got a little spreadsheet here that I. That I keep. And, uh, I reckon, yes, 55 deals that I've been emailed about so far this year. Vast majority involving private equity. Yeah, about 85%, I think, uh, I've got here. But yeah, I mean, I wrote a piece a couple of months back around just how hard it is to sort of get systems aligned in there. And then there's obviously the sort of culture alignment that used to be involved. I mean the people are still the most important element of the firm and so even getting this deals across the line is really hard. So I think it's definitely worth something to shout about.

Matthew Ord: Yeah, agreed, agreed. No, I have to say I think you're underselling your spreadsheet by calling it little. That thing is an absolute monster, first and foremost. Goodness me, I've never seen anything like it. It's huge.

Tom Herbert: Yeah, yeah, there's a lot of tabs.

Matthew Ord: Well, for those looking to enter the awards before the 3 June deadline, you can do so at accountingexcellence.co.uk, and the very best of luck. Now Tom, you have tales of a firm pulling the plug on their UK operations.

Tom Herbert: Indeed. So this is, this is a story I published this week. So as you can imagine I'm um, you know, a big accounting tech spider sat in the UK web and uh, my spidey senses started twitching on Monday where uh, a couple of our readers got in touch to say that their cloud accounting system had emailed them to basically say they were ceasing operations in the uk. So this is Swedish cloud accounting platform Bokio. They launched uh, back in Gothenburg in 2015. Actually grew pretty fast off the back of the fact that they had this sort of twin track model. It was, it was sort of free, basic services were free and then premium services such as, I don't know, like management accounts, statutory filings and then sort of premium support were available as a, a paid subscription. And I did find that somewhere it said that they'd captured 10% of the Swedish market. But uh, yeah, I couldn't actually stand that up anywhere. So I had to take that link out of the article. Um, um, I have just talked about it now. So yeah, we'll say, we'll say allegedly in there. But um, yeah, they, they launched in the UK in 2019. We published a piece on the site. It was an interview with their uh, CEO, uh, Victor Stenson. He said they'd gained about 1200 customers back in 2019. Then they took private equity investment and then they were acquired in 2022 by Norwegian accounting software giant Visma for a reported hundred million euro. A year later that free tier was scrapped after it didn't live up to expectations. So UK customers got a sort of single paid tier, uh, of £20amonth. So yeah, customer numbers were quite difficult to sort of get hold of after that. And then, yeah, as I say, posted on its site on Monday, they said that from 30 June 2026 was no longer available to UK users, which I don't think is a massive amount of time. I mean, giving people six weeks, I mean, users were refunded their remaining subscriptions from that cutoff date. But after that 30th of June date, customers would no longer be able to access any of their accounting information on the platform. So the developers sort of emailed people urging them to, uh, download any reports, invoices, receipts near the accounting records they want to keep. It's one of those, I think maybe for accountants who do tend to keep a regular check of these things, it might be okay, perhaps if you're not particularly organized, might be an end user maybe. And, um, it might be a bit of an issue. You know, perhaps you do go six weeks without checking your system. Maybe the email they sent has disappeared into junk. I can see issues with that kind of thing sort of coming off. So it's definitely one of the downsides of the sort of current cloud accounting era that, uh, you know, you can lose these records and lose them pretty quickly in some cases.

Matthew Ord: What's the usual timeframe? Something like this. Tom, you said that a length of time doesn't seem like a long one. We've obviously had companies kind of pull their resources before and fold or pull out of countries. What time do they usually give?

Tom Herbert: It varies wildly, to be perfectly honest. I mean, obviously this one's over in North America, but bench accounting just folded and, um, that was kind of it. I think eventually it was sort of bought out of liquidation and kind of resurrected, uh, and people could get hold of their accounts, but I think it was over the American year end, so it did cause complete chaos and people having to file extensions and things like that, whereas people like the payroll center I remember gave, you know, at least nine months. I think it was to sort of wind down their operations. So I think it sort of depends on the financial nature of these things. I think bench was a sort of breach in banking covenants. You know, they ran out of, ran out of cash, ran out of Runway. So yeah, it is tricky and I think also, I mean it's not a massive surprise. I don't think they'd made massive inroads in the UK in their seven years and presumably they're making money elsewhere. So, you know, a sensible move. But I think it was quite an interesting, perhaps a foreshadowing of what's to come with the latest batch of AI products that's launching into the market. You know, Bocchio was part of that wave of entrance that hit with the last AI hype machine, um, you know, you had things like auto entry, Coconut Receipt, Bank Dext. All of those interestingly, were acquired. Whereas, you know, the ones that established vendors spun up, you know, Sage Peg, RIP, the QuickBooks Assistant, unit 4 wonder I remember writing about, they fell by the wayside a bit. But it's interesting that none of these, the independent challengers, managed to actually achieve that escape velocity and really challenge the incumbent providers, you know, as Xero did with its cloud accounting system when it sort of disrupted the existing desktop players sort of coming in and doing that job in the cloud. Uh, all the others tend to get snapped up before they can sort of challenge, as it were. So, yeah, given that the majority of this new batch seem to be backed by venture capitalists, they tend to be keen to get a return on their investment. I think we may see more of the same. Uh, in my view.

Matthew Ord: It's an interesting point that one, that we could end up in this kind of endless cycle, if you like, of returning here every few years. What would it take for them not to meet that same fate, do you think? What are they missing?

Tom Herbert: It's one of those where perhaps the venture capital backing. The point I made, you know, these people do want to see a return on their money. And sometimes when the big money comes calling, right, founders invest a lot of time and money into that product. And when they get a large vendor driving a dump truck full of money up to their house, it's hard to refuse. I completely get it. Maybe I wrote a column a few months back on, um, sort of returning founders, you know, the likes of Dwayne Jackson, who sold a couple of accounting software businesses and has now returned with another one. Or the old tax filer boys have released taxpad, maybe with that sort of financial security, maybe they would want to sort of take that a little bit further, uh, uh, and challenge the existing order. But I mean, I don't know, with the sort of financialization of the economy gradually building a business up to a level, the incentive is less than just selling out. Right? So, yeah, I don't know, it feels a bit more fundamental, doesn't it?

Matthew Ord: So if this new wave doesn't manage to challenge the incumbents in the way that they'd obviously like to, could we find ourselves in a similar position, however many years down the line, when these firms slowly just start to back away and maybe act like it never happened?

Tom Herbert: Yeah, maybe. I mean, it is tough. Uh, a lot of these big platforms find it very hard to do innovation. So I think, uh, as I said, I'd listed a few of the tools that hadn't quite worked in the way that the big firms expected. And so actually perhaps the way they innovate is to sort of look at what's coming up and just snap it up and incorporate it into their system. So. And I think like when I spoke to Dwayne Jackson when he came back, he was sort of saying there's never been a better time for someone with a good idea to spin up a new product because of the advantages that things like AI coding, uh, uh, sort of give you, as it were. So if you spot a problem in the market and you know, rather than having to hire like a large team of developers to sort of code a product, you can sort of get it a decent amount of the way there before it needs that, that sort of security testing and all the rest of it. So yeah, yeah, well, it'll be an

Matthew Ord: interesting one to keep an eye on that. Tom, I look forward to the episode in six years time where we're having the same conversation. But until then, well, Rich would be

Tom Herbert: back for that one.

Matthew Ord: Uh, like a bronze God. What a man.

Tom Herbert: What a man.

Matthew Ord: Well, I want to see us out today with a question. I'm going to stick with some tech. That question being, can you be an effective finance leader, uh, in 2026 if you're not tech savvy? Now, a lot of my conversations with finance directors and chief financial officers in recent months have naturally kept coming back to introducing new technology and software. With AI being that elephant in the room screaming, look at me. There was a time when a lot of this wouldn't have affected the finance leader. They'd have to keep an eye on costs, of course, but it wasn't necessarily in their wheelhouse. But there has been this complete shift and it now has to really be a staple of their day to day. At least it should be. And that transition from historical reporting to providing predictive insight and shaping the direction of the business comes with having to know your way around real time dashboards, forecasting models, data insights, a kind of smorgasbord of tools really, which if you put them in front of them 15, 20 years ago, it just would have seemed like an alien world. There's a pressure to automate routine tasks, clawback time, have that impact elsewhere. But that obviously can't happen without the finance leader being comfortable with AI and knowing their way around that software. Cybersecurity, arguably a bigger risk than it's ever been given Those looking to commit the crimes have a frightening amount of tools at their disposal. If a finance leader isn't cyber resilient, doesn't know how to protect their data, uh, it's a situation that naturally won't end well. Talent, constant thorn in the side of finance as they try to bridge that gap to the next generation of workers. But that's a moving target as well. You know, those looking to enter the workforce, doing so with different wants and needs, one of which is the ability to use tech in their jobs. They're brought up on this stuff and they want it to be part of their day to day. And the reality is that a finance leader who doesn't know their way around that kind of technology won't be able to sell a job as well as someone who does. There are of course, some finance folk out there who will be working in an environment where they may have a low level of technology and that works for them. And that's great. But increasingly, Tom, it's becoming a bit of a must, isn't it?

Tom Herbert: I'm not saying that you need to know in granular depth and detail exactly what each product does, but I think you need to know your business and how it works. And then you need to understand what part the tool plays in that, you know, where that fits in, what problems does it solve? You know, I think a lot of this AI implementation that's going on at the moment, it's, it's not quite landing because it's just being bolted on and people are just expecting it to somehow be a wave of the magic wand. And that just never bodes well. So it's a bit like, um, people will often say, oh, how on earth can you be a government minister if you're not, you know, how can you be health Secretary if you've not been a doctor or education secretary, if you've not been a teacher? Well, yeah, you know, an in depth understanding is really important, but it's about knowing what levers to pull, knowing where the problems are, knowing the machinery of government. You know, in this case, it's knowing how your business works and where technology can best apply into that, as it were. So it's not about being the chief technology officer, it's, it's just about working with them, working with the whole team or, you know, uh, there's an awful lot to know, but I don't think people should be afraid of that.

Matthew Ord: And it comes back to this point that comes up again and again where finance leaders need to step out from the four walls of their office, they need to be seen on the shop floor, they need to know what's going on in other parts of the business, have to have such a, such a wider understanding of the world in which they're working. Otherwise, you know, if they stick to that traditional stereotype of just keeping themselves, themselves, they're not going to know what problems to solve or where the money's going or what the tech even looks like. You've kind of touched on a point a little bit for my next question, but is there a world where finance leaders now need to think more like tech leaders rather than accountants? Are we not, Are we not quite there yet or will we ever be there?

Tom Herbert: Yeah, I think that there are clear walls that, uh, need to be put in place. But I think more and more, I mean, both on the industry and the firm side, the accountant as tech advisor is a real thing. Whether they're set up for that, I think depends on the individual. But I think more and more, like it's, uh, so fast paced. There's so much change sort of swirling around. It seems like every day Claude have released something or, um, you know, OpenAI have done this and actually it fundamentally changes. Well, uh, they would claim that it fundamentally changes the way business is done. It's utterly remarkable. Sort of looking back 30 years where your floppy disks would arrive in the post and that'd be your software for the year. You know, you plug them in, you know, you get the big user manual, you don't really need to do anything else. Whereas now with the cloud platforms available, with the AI coming in, there can be changes and tweaks to your software, like every day, every week, you know, and you, you do need to sort of keep an eye on this. It's more about the sort of little and often approach as opposed to that sort of big, you know, oh my God, the envelope's here, let's get this all installed, let's read the manual, let's call the service desk, all the rest of it. So it's a fundamentally different way of looking at tech, I think.

Matthew Ord: Great throwback to a floppy disk. If there's anyone listening who's still functioning on floppy disks, I tip my hat and I worry for you at the same time.

Tom Herbert: Yeah, I have a feeling there were HMRC systems that fairly recently were running on floppy disks. I feel like an insider may have, uh, tipped me off on that. So let's hope that's not the case now. Yeah.

Matthew Ord: Everything crossed. Everything crossed. Well, a quick reminder before we leave for the week those looking to enter the Accounting Excellence Awards now have until the 3rd of June to do so. And like I said before, you can head to accountingexcellence.co.uk to do just that. That's all we've got time for on this episode. Join us next time for a look at all the big goings on. But until then, take care.