FreeAgent has had a good run of being pretty much the only credible SaaS player for IT freelancers and contractors looking for an easy to use accounting solution. I’m not saying that cuz I was involved in the early days but because it gets rave reviews from its customers. FreeAgent’s allure lay in the fact it works out pay and CT figures. According to a recent briefing from the company, ramp up of users is coming along at a healthy clip and much of the public feedback I see is positive. Enter inniAccounts.
This post views the service from the practitioners’ and broader market perspective rather than representing a deep functional dive. That may come later.
Notified to me via Twitter (smart move) the similarities between inniAccounts and FreeAgent are uncanny – at least at the feature/function level. There is a crucial difference that explains in part why to me at least, this has been very much under the radar. The company kicked off by solving the payroll problem rather than the accounting side of things. I have mixed feelings about this. Payroll is a highly technical issue for any company. While it is not rocket science to code a basic payroll, it is all the detail around P11D and potential complications with employees where life gets really difficult. It is however an excellent subscription business because once you have a trusted supplier, there’s no real reason to change. That’s one area where Sage has done really well. Back to the plot.
inniAccounts stopped at developing HMRC P14 and the like test cases so no P11D here. Instead, it progressed by creating a full service similar to Crunch. In recent times it has re-engineered to offer ‘Lite’ and ‘Plus’ versions of its offering. If you sign up for the Lite version before 31st January, it is free for life. Regardless of how good the software may be, that’s one heck of a tempting offer. When you look at the features you’re getting for that money, it doesn’t make a lot of sense to stick with the freebie unless the business is very simple with few transactions. While there is almost enough to give you the option of signing on for a low cost accounting service in the hope you’ll be OK, the real deal is the £74.95/month offering that includes basic compliance work, quarterly accounts and some advisory. This was something I picked up with the company earlier today. It’s the ‘sprat to catch a mackerel’ approach to marketing while recognizing that switching accountants isn’t always going to be on the agenda of those interested in the service. The Plus service looks good and will give FreeAgent a run at the functional level. That’s a good thing because it should spur both vendors to do more and better.
inniAccounts is effectively a partnership between developers/marketers and an accounting practice steeped in the IT/engineering freelance niche. It’s a good niche to be in since, according to inni’s calculations there are around 150,000 such limited company businesses in the UK. It’s not a number I would argue. Take into account that some 40,000 of those have already been captured by specialist providers like SJD (albeit the core team are SJD refugees) and you’re still looking at an attractive market.
The company has boot strapped to date and this puts it in a strong position to achieve a healthy valuation should it choose to take funding. It is perhaps indicative of the way SaaS development is going that a small team is able to put out a remarkably complete and relevant service without needing to make revenue. It has competitive product in the marketplace, a motivated accounting partner, customers and a nicely balanced team. Restricting itself to one partner at this stage is not something I would contemplate but then the user choice of using Lite or Plus is a valuable addition to the market.
In considering the full service offering, inni is priced aggressively against the likes of SJD which insists on clients completing spreadsheets. That gives it an edge but also a placeholder for overall service pricing to this niche. It wil be interesting to see how this unfolds because as we discussed on the call, removing grunt work for practitioners is fine but from the customer standpoint, are they really seeing value in the price differential? This is a tension that will exist and be worked out in the coming years. My sense is that longer term, the providers who get the SaaS value will be winners. They will have to subvert the SJDs of this world. It will take time. Even so and with an accounting partner in tow inni will need to market every bit as aggressively as the SJDs if it is to become a recognized ‘face’ on the SaaS scene. The company says it is working on that in the niche networks it understands. I’m not convinced that alone will deliver. But then I’ve been plenty wrong before.
One surprise is that inni plans to restrict itself to the UK market. The rationale is that tax coding is tough and there is more than enough to go at with the UK market. It is a sensible strategy given the depth of offering. But then we live in a flat world (so they say) and I wonder whether a version that at least handled sales taxes and multiple currencies for other territories might give it a broader appeal.
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