The Beautiful Story... of Accounting Tech

[00:00:00] Do you know how I loved hearing your intro though? It just felt like listening to the BBC or is it CBBs? Those are very different vibes with BBC and CBBs. Exactly, it was more akin to CBBs. Bench, a major online bookkeeping platform that sends shockwaves through the accounting industry, raising critical questions about data access and the risk of VC-backed tech companies. Huge repercussions. Who owns the data and what happens if something happens where you are shot out from the account?

[00:00:28] In particular, the first time that AI has shown its limitations. FYI, we've launched a new integration with Companies House. Thomson Reuters has acquired SafeSend. With Otto has been brought to us by an accountant called The Number Ninja. Capitalised. We announced an exciting collaboration with Plaid. Quick access to capital is often crucial for small businesses. OpenTax, owned by AdSun, have now introduced automated client notifications. It's one of those little tools, I think it was Free Agent release, one at the end of last year where you could just reconnect all of your bank accounts in one.

[00:00:58] Button click. It's just brilliant. It looks tiny, but it's a game changer for so many businesses and saves so much time. I really think that was something beautiful in terms of how you read that and how you presented on that. Just they should be so proud. They should take that whole snippet. It was like I was listening to the CBBs. CBBs. It was really just a beautiful story. The word like you've intonated is like the rise and the fall. Thank you. Do you have fun?

[00:01:27] Laura used to be like this one toe. I'm reading as well. I'm not even looking at the camera. Hello, there's a story over here. I do this thing again that I'm forced to do. I show up and think about accounting technology. It's very interesting, but don't let my face tell you any different. All right, let's close this stuff out. The reason that it came about was exactly what we're seeing in the UK today. It was the result of a labour shortage in Norway. Hello and welcome to the Digitals in a Cruel World podcast. The place to go for all of your app news in this digital world of accounting.

[00:01:56] As ever, we'll be bringing you the insights, the news, the little tidbits that we've gathered from your favourite apps around the UK and beyond. And we'll be joined by the CEO of Exledger, who will maybe explain to us the difference between how accountants in Scandinavia do things compared to what we do over the UK. Maybe some of the things we can learn from. But before we get into any of that, let's hand over to Indy, the only person left in this group while John's gallivanting. Indy, how are you? I'm good.

[00:02:26] Do you know how I loved hearing your intro, though? It just felt like I was in a storybook or just back at story time. You know, when we're listening to the BBC, or is it CBBs? And it's like, there's a lesson to be learned here, children. Those are very different vibes between BBC and CBBs. Exactly. It was more akin to CBBs. Yes, that one I could get. I obviously am doing a lot of story time with my very young children. It's now coming out through the podcast.

[00:02:55] Yeah, precisely that. It's nice to hear. Very soothing is your dulcet tone. And good. Now, holding down the thought, we are seeing 2025 kick up now. So we've got a lot more news kicking in. There's a lot more on the horizon again of things that are starting to ramp up. Of course, event season is upon us as well. Not long now. Especially now since we're out of the self-assessment season. So it's looking promising.

[00:03:20] And we're making some plans ourselves to make sure that we've got our next cut of digital disruptors events on the docket. One including the next awards event. So hopefully we'll be able to talk more about that soon. Other than that, all good. All good. Let's go. I'm glad that I'm kicking off. Let me tell you. I've got some big news. So. Do you know how I loved hearing your intro though? It just felt like listening to the BBC.

[00:03:50] Or is it CBBs? Those are very different vibes. It was BBC and CBBs. Exactly. It was more akin to CBBs. Bench. A major online bookkeeping platform that sent shockwaves through the accounting industry. Raising critical questions about data access and the risk of VC-backed tech companies. Huge repercussions. Who owns the data and what happens if something happens where you are shut out from the account? In particular, the first time that AI has shown its limitations. FYI. We've launched a new integration with Companies House.

[00:04:20] Thomson Reuters has acquired SafeSend. With Otto. Has been brought to us by an accountant called the Number Ninja. Capital has announced an exciting collaboration with Plaid. Quick access to capital is often crucial for small businesses. Open Tax, owned by AdSum, have now introduced automated client notifications. It's one of those little tools. I think it was Free Agent released one at the end of last year where you could just reconnect all of your bank accounts in one button click. It's just brilliant. It looks tiny, but it's a game changer for so many businesses and saves so much time.

[00:04:49] I really think that was something beautiful in terms of how you read that and how you presented on that. They should be so proud. They should take that whole snippet. It was like it felt like I was listening to the CBBs. CBBs. It was really just a beautiful story. The word known, intonated, is like a rise and a fall. Thank you. Do you have fun? It used to be like this one toe. I'm an accountant. I'm reading as well.

[00:05:19] Oh, no, you look at the camera. Hello. There's a story over here. I'm thinking again that I'm forced to do. And I show up and think about accounting technology. It's very interesting. But don't let my face tell you any different. All right. Let's close this stuff out. The reason that it came about was exactly what we're seeing in the UK today. It was the result of a labour shortage in Norway. Of course, we've not covered this so far because we're fresh out of self-assessment season. But there was a sudden shutdown and acquisition of Bench, a major online bookkeeping platform

[00:05:44] that sent shockwaves through the accounting industry, raising critical questions about data access and the risk of VC-backed tech companies. Customers of Bench who had relied on its automated AI-driven bookkeeping were left without access to financial records just before the tax season. The company has since been acquired by employer.com, but the disruption highlights the fragility of these types of solutions and the risks of over-relying on things like machine learning

[00:06:14] for critical tasks like tax categorizations. In one case, I think there was some instance where there was a misclassification of the tax. So it showed something like a £25,000 deficit of some kind. So I think that part of it is that the technology in itself was not being validated by a human. And then the other part is obviously in terms of being able to use things like AI and automation

[00:06:45] in the practice. This reliance on them doesn't replace the need to have a strategic or judgment of experts or someone that can actually validate the information. It also highlights the complexities of data ownership and access that I think to date we've really not spoken enough about, but we've only ever touched upon it in the context of when you market to who has marketing rights to the client base, but actually like who owns the

[00:07:14] data and what happens if something happens where you are shut out from the account. Most of the software as a service companies do not then automatically confer a benefit for you to then instantly have access to your data or have ownership of that. So I think that's one, some of the fallouts from this are big lessons learned. I think as VCs continue to shape the accounting industry and the tech landscape, it's crucial then not just to evaluate the technology, but the sustainability and the reliability of the

[00:07:43] platform being used. So it's not just something that in the end that you don't understand the longevity of it can impact your overall suitability with your practice. Because if you rely on something that is VC backed, is early stage, it's not to say it's wrong, but it's about having the right risk model in place for you to then have access to it in the event that something should go wrong. So huge repercussions.

[00:08:11] I think everyone saw that as a little bit of a bolt up the blue. In particular, the first time that AI has then shown its limitations in the landscape. So did you catch any news on that or anything on it, Ryan? I did. I did. It was for probably three to four days on, well, everywhere on LinkedIn. Every accountant in the world seemed to be going, well, if you're at Bench, we can help. And I'm not sure I liked that.

[00:08:40] There were some that were just saying, you know, we'll help migrate your data for free. I thought that was very positive. You know, you're not really benefiting from that apart from getting your brand out there. But yeah, there was a lot of, I don't know, jumping on what was a challenging time for a lot of individuals. And it didn't sit right with me. But I also, I don't get this. So the business bench decided to just fold. They just kind of, they went and just folded. And then within two days had a buyer for $450,000.

[00:09:10] Were they playing silly bogus to get a buyer through? I mean, there's some skeptics that might believe that. It seems, it seems a bit weird. It just seems a bit weird to get an acquisition that quickly. Is that normal, Wendy? I mean, it's possible if someone's buying it because they know that it's just going to be shut off the next day, that then there could be offers on the table that I just chipped in from numerous parties, just as a pun to see if there's something that they're willing to accept.

[00:09:38] Could be that they actually had a sale lined up. I highly doubt that they would have let this go to the wall, but maybe they did have a sale lined up. And in the 11th hour, it just pulled out. And that's not uncommon. But then they can't really get behind that because it depends on how well advanced, I guess, the deal was. It sounds unusual for most AI companies in this day and age, given the type of raises that have been done in this space, for it to go straight to the wall.

[00:10:08] So I do think there's probably more to that story. So let's park it and move on to things that are much happier. So we've got some news from FYI who have launched a new integration with Companies House. Now, whenever, I guess, the system integrates into Companies House, the first thing you think is it's just going to bring down a company name based on the company number, names and directors. But what they've actually done is they've brought down all of the forms that are filed on Companies House. So that's bringing down anything like the PSC, any times new shares, typically being added,

[00:10:37] and you're putting it directly into your client's filing system. So even if you on a different system are filing some information, such as a PSC for your client, you no longer now have to take that document from a different system and move that into your document management system because that will go to come and sell and then back into FYI for using FYI. I got something different. There's also from an OG in this space, Thomson Reuters has acquired SafeSend, a cloud-based tax automation company for $600 million.

[00:11:03] Founded in 2008, SafeSend helps tax professionals streamline workflows by automating the processing, sharing, and the collection of financial documents, including tax returns, e-signatures, and payments. With over 70% of the top 100 US accounting firms using SafeSend, this acquisition is a good way of strengthening Thomson Reuters' stack of softwares that they offer in the ecosystem.

[00:11:30] And by bringing SafeSend under its wing, Thomson Reuters aims to simplify the last mile of the tax return process, helping the accountants manage the complexities of tax prep and compliance. So I think for accountants, this acquisition is important for a couple of reasons. First, it demonstrates growing reliance again once more on automation and AI in the tax profession

[00:11:54] and the fact that we're seeing that becoming the go-to and how these big ships that are like Thomson Reuters are going about embedding that strategy into their ecosystem. SafeSend's AI-powered product, SafeSend 1, automates the entire tax process from document gathering to tax return delivery, which means reduced, in theory, reduced manual work, fewer errors and faster processing for accountants.

[00:12:20] And second, the acquisition builds on Thomson Reuters' 2022 acquisition of SurePrep. So it means that they're offering a more comprehensive suite of tax automation solutions. And I think that SafeSend's integration into the platform will, again, go one step further to adding to the way that they can simplify the workflow even further.

[00:12:46] And also another thing that's interesting about this is that SafeSend will continue to operate as a standalone product. So that firms can continue to integrate the tools they prefer rather than being forced into any sort of like other scenario where they have to close out techs that perhaps say can't, that don't work with the Thomson Reuters stack. So, yeah, it's really good acquisition.

[00:13:10] Shows that it's a bit of a game changer in terms of how they focus their AI strategy and how they want to really corner the space for the tax rep. Yeah, and it's good to hear they're not going to close it out to the others because the SafeSend product connects into CCH Access and Intuit Lacerty. I can't say it. You know, me and pronunciation. But, you know, they're big players in the space. So I did wonder if the reason for the acquisition was to, yeah, buy it, close it out.

[00:13:39] That used to be the old model. Now the new model. Buy it, keep it in place and just try and convince those clients to come over because you have a slightly deeper integration. Moving on, I have a bit of news around a tool called With Otto. Now it's probably one of the rarest style of names called With Otto, W-I-T-H space O-T-T-O.

[00:14:03] But it is an automated bank reconciliation app which has been brought to us by an accountant in this, I guess, UK space called The Number Ninja. You may have seen The Number Ninja on LinkedIn. This is Emma James who is an Eli-based accountant and she was preparing for maternity leave and looking for efficiencies for the practice but couldn't quite find something that could automate the bank reconciliation space. And fortunately for her, she has a husband that is a software developer.

[00:14:32] And instead of them, I guess, trying to piece together things that are out there that couldn't quite meet their needs, they decided to come together and build a tool that could automate a lot of the process for them. Now, how does it work? Well, effectively, it would securely access Xero. That's what it does at the moment. We plan to bring in QuickBooks over time. And using bank rules to start with, it will, I guess, instead of manually crane transactions, each time a recurring, a similar type of bank statement line appears,

[00:15:02] it will tell Xero how the statement lines should be coded and automatically reconcile them. Now, because of this, because you have to use bank rules, there, I guess, is not as automated as some other tools could be. But you do need to code it up at the start. If you do that, you're doing a lot of, I guess, bookkeeping, then this could be a tool that would appeal to you. I know we've had similar tools in this space like Bots for that.

[00:15:28] And so it'd be interesting to know how with Otto compares to that tool. I really think that that was something beautiful, beautiful in terms of how you read that and how you presented on that. Just they should be so proud. They should take that whole snippet. It was like I was listening to the CBBs. CBBs. Doing really well. The information, the pauses. It was beautiful. Right. Beautiful. Thank you, Indy.

[00:15:57] I've got something a little different, not even a little different, hugely different. Capitalised for most people who already know has been big in the accounting tech space for, oh gosh, years now. They're a UK-based financing platform that offer SMEs options for different types of loans or lending through the lenders that are in their marketplace or in their kind of wheelhouse.

[00:16:21] They've announced an exciting collaboration with Plaid, the leader in open banking technology, to bring pre-approved funding to their customer base. They have roughly 150,000 small businesses that then should benefit from the integration. So they have integrated to the open banking technology and then offered Capitalises instant offers.

[00:16:48] So I think what it does signal is we are now full gun-ho into the world of seeing how open banking is going to make a huge difference to credit decisioning and underwriting and making business owners get access to the types of funding that they need that perhaps they probably wouldn't have gotten access to a few years back because they just fell under the radar or not within the criteria of the major banks. Now I think that we're seeing the value of the data.

[00:17:41] They don't really update in the same real-time way. With open banking, we're going to have a very intuitive way of monitoring what happens to not only the financing that you access, but how you also are doing on your repayments, on your defaults, on the general way that you are evolving as a business.

[00:18:05] And it's exciting to see how that then plays into the future of refinancing and secondary markets. This seems such a great idea. It's surprising that it's not been done already. It's taken this long, but I guess, as you said, it's been that evolution of open banking and into the finance space. Yeah, I think it has been. There are elements of how it's been done, but it's usually been done at the individual lender level.

[00:18:31] For example, Capitalise has probably got a rich database that they can leverage that they've built over the last five, six years now in the space. So more power to them. And hopefully this means that for those businesses using Capitalise, they want to have better options available to them. The main bit I took from that, Indy, which I thought was very apt for what we've discussed in the show, was how they're generating a story of the business. I think that's what seems to be the focus of today's show is story time.

[00:18:59] Now, let's close out story time with a little bit of news that I think is a nice benefit for those that use this tool. OpenTax, owned by AdSum, who keep coming up frequently on this podcast, they're always releasing really interesting little tools, have now introduced automated client notifications.

[00:19:17] So this will basically send notifications of anyone that's in the OpenTax platform to their clients when a VAT return has been submitted, when there's a payment reminder, when there's an overdue payment, when there's a refund that's been verified, and when the refund is also in compliance. And what this means is you don't need to notify clients. They don't need to chase you, find out where things are. The system is already on top of that. It's one of those little tools, I think it was FreeAgent released one at the end of last year, where you could just reconnect all of your bank accounts in one button click.

[00:19:47] So it's just brilliant. It looks tiny, but it's a game changer for so many businesses and saves so much time. So we're lucky enough to be joined by Pete Hucker, the CEO of Xledger, to talk a bit about what Xledger does and how it's kind of moved across from its position in Norway. So I could talk about Xledger a lot. I have done on this show, but it'd be really good to hear from you, Pete, on how would you describe the product? Well, thank you for having me.

[00:20:17] My name is Pete. I'm, as you said, the CEO of the UK region of Xledger. We are a multinational company. We did start in Norway, but we're in many countries in Europe and also the US. We are a finance system at heart and we are built for the mid-market.

[00:20:39] So we're not for very small companies that are served by products such as Xero or QuickBooks. We're also not for very, very large companies that might want a highly customized product. So we sit in the middle of that. We are heavily configurable, but we're not customizable. But the key thing about us is we are a multi-tenant true cloud product.

[00:21:07] Well, how does, I guess, the accounting space in Norway differ to the UK? Because obviously you grew up there. You can kind of set yourself there and then come over to the UK as well as the other jurisdictions. Is it more prevalent in Norway that the larger companies outsource more than they do in the UK at present? Absolutely.

[00:21:23] So many, many more mid-market companies are used to using accountancy companies to provide elements of their finance function. I would say then that probably Norway is a bit ahead on that side from how accountants at least are delivering the service. Do you think it's systems such as yourselves that has enabled that? I think we filled a space, right?

[00:21:53] I think the reason that it came about was exactly what we're seeing in the UK today. It was the result of a labor shortage in Norway. There was far less accountants sort of coming through. Companies were struggling to hire. And I think they were looking for the expertise and resource of accountancy companies to fill that gap.

[00:22:13] And, you know, often where you have companies that are very good at sort of utilizing our software, you can get the most out of it. You know, we are a highly automated system, but it's a case of you get in what you, you get out what you put in. Right. And if you have someone who's very, very good at using our system, you can get those benefits. Well, the fact is, the higher profit margin, right? Because you're still charging for a service.

[00:22:41] And if you imagine to automate in the background, the client doesn't necessarily know how much you can do that. You can then make a bigger margin. And that's probably where we're starting to see a better trend now in the UK. And those businesses that couldn't do outsourcing historically, you know, the firm I was just a part of was exactly that. We never did bookkeeping until the likes of Xero came over. And then just by default, now we can kind of afford to do it because we can make some margin where we couldn't do previously.

[00:23:08] And because that is growing upwards, we need tools that can deliver that rather than having a really complex app stack all in one place, use the automation, use the streamlining. So are you starting to have those conversations, have got those accountancy firms in the UK that are using your tool for exactly that? Yeah. So absolutely, it is sort of higher margins. And I think that's, you know, based on the value that companies see in the finance function.

[00:23:36] You know, when you're starting out and you're maybe a small company, a lot of what you're looking from the finance function is to meet statutory demands, right? You need to get your accounts done. You need to get your VAT posted. But when you get bigger and you can't run a company in your head anymore, you start relying on budget holders.

[00:24:03] You start relying far more on the information, the management information that you're being provided to make decisions rather than gut instinct and how much money is your bank account. The value becomes much more. And therefore, those mid-market customers are willing to pay for it. Cool. So obviously, we talked about automation and streamlining and therefore margins.

[00:24:26] But what other benefits does the likes of X Ledger provide for those outsourcing companies that they can enhance their service to the client? So the first thing we do, and you sort of put this earlier, is we allow bookkeepers to be much more efficient in how they are processing transactions across multiple companies or customers.

[00:24:50] We are a highly automated product because we are designed for customers with lots of transactions or accounting companies processing lots of individual customers that on aggregate have lots of transactions. And we are also very strong on reporting because mid-market customers require strong reporting. And what that really means is flexibility.

[00:25:16] So you don't just want to look at a standard P&L, sort of income and expenditure. You want to be able to cut those numbers in many, many different ways, be that by budget holder or project or employee or contribution. And the flexibility of the reporting in our product allows us to meet the demands of mid-market customers. Great. Well, thanks, Pete, for coming on. Really appreciate it. And yeah, we've got a lot of insights out here. Cool.

[00:25:46] Well, thank you very much for your time. Andy, I've had an observation the last couple of weeks. I picked up that Sam Newton from Gravitate Accountant has been using magnesium supplements. They just made me think of you. I've got me. I think he takes them in pill form rather than rubbing them into his body. Yeah, but it's not uncommon, Ryan. We are in the age of health. Well, let's call it health 3.0, which is where we all need to be a little bit more aware of how we can manage our own body needs.

[00:26:14] And, you know, there was one thing that I forgot to mention. Oh, God, I felt so vindicated as well. I listened to a podcast just a few weeks ago. And I was reading and listening to a lot more around breath work, in particular, how we could benefit from hot and cold treatments.

[00:26:34] And, as you know, my very tepid bath that I've had has been something that everybody has taken the mickhouse or because they've said, well, it doesn't count as like a cold plunge or anything that then could contribute towards having the same effect as an ice bath. However, I feel so validated and seen and seen by the fact that there is a podcast.

[00:26:56] There is a prominent speaker that was saying the research behind this confirms that women and men are very different when it comes to experiencing the benefits of cold therapy. And actually, for men, cold therapy works where the temperature is between zero to four degrees, whereas for women, it really only works between 14 to 16 degrees.

[00:27:18] So it turns out unintentionally and totally intuitively on an instinctual level, my tepid bath actually delivers me the same health benefits as if it's a cold plunge because I am a woman. There you go. Like, you've heard it here first. If you're not doing it, tepid baths are the way to go. Exactly. Anyway, so I'm experiencing the benefits of that. And yeah, I've decided to also, as a result of that podcast, invest in some other supplements as well.

[00:27:48] More notably, creatine because of the benefits of how it's absorbed into the lower part of the gut and how it helps the absorption of protein. And it's not really marketed towards women or it hasn't certainly been in my day and age. So yeah, small bit of that per day. And this time, no, no, it's not being rubbed on me. I'm drinking it. Okay. I don't know where to go with that one. But no, I've got me. I'm getting more and more into this.

[00:28:15] I need to learn from you and start taking supplements myself. I'm feeling my age. I'm feeling the impacts that having children's had on my body. What are you now? 54? 70-odd, I feel like. But a lot younger. Might not look it or sound it, but I am. I'm a very young 40-year-old. So supplements are where I need to go. You're a baby. And that brings story time with the Digitals and the Cruel World podcast to a close.

[00:28:43] If you do want to catch future episodes, please do subscribe both to the podcast, to our YouTube channel, and follow us on LinkedIn. We're always interested to hear your thoughts. And if you come across an article you think is worth us covering, drop us a note. We'll make sure we bring it.