Saas accounting tools («automated») for the self-employed and (micro) SMEs as of today, don’t still work properly. The problem with them is that they are sold as «automated» tools, but the accounting is very manual; there is a repetitive part that can be automated, but there is another part that needs to be done by a person who knows how to do the accounting.
In other words, although they have improved a lot, they do not solve the client’s problem.
The niche market for these solutions is still there, for example in Spain 98% of companies are SMEs, 90% being micro-SMEs (huge niche). You can outsource accounting while your company is very small, but after a certain point you have to internalise it as a strategic tool to use your information for decision making every week.
There is a dilemma; either the solutions are very «digital» (e.g. Holded, Quaderno) but very limited at the accounting level, or they are very «for accountants» (e.g. Sage, A3) but are difficult to fit for laypersons. The company that manages to do both will win the market.
It is interesting to see how some digital banks have completely pivoted their business model to Saas accounting (e.g. Quonto). The value proposition of many of the new neo-banks is small (they don’t add anything compared to the more traditional bank), but they are very good at attracting purely digital customers by putting the customer at the centre with a data-driven philosophy and they are turning to Saas accounting because there is a huge space to make money from business (B2C to B2B).
It is an interesting niche because it interconnects everything, but to be useful it needs professional accountants.
One of the problems for these companies is that local advisors are very competitive in price and provide a good service. You may find that the Saas accounting subscription is equal to the cost of an accountant… and you have to account for it yourself.
In one of the projects I worked on as fractional CFO we had this problem. The company was doing the accounting in a Northern European country on a Saas accounting solution in a standard package. When the company started to grow we needed the accounting up to date (and well done, accurate), we wanted to pay more for a more customised service but it was not available; moreover, they charged us more but did not provide the service. In the end we decided to look for a local consultant from a village and it was the best decision we made; he works with cloud software as a consultant, is efficient, very good value and manages a heavy accounting software to be connected to a lot of APIs.
Perhaps this is where the evolution of saas accounting will go, collaborating with local specialists in a hybrid model. I think Xero or Quickbooks are doing this quite well but in IFRS (Europe) enviroment doesn’t work. Europe = opportunity.