KPMG has confirmed that it will close its small business accounting venture after just five years in the market, says Accounting Web.
The service, which offered cloud-based bookkeeping to small and microbusinesses, launched amid much fanfare in 2015 with a pledge to “disrupt and dominate the SME market”, and promised small businesses that “you can pay us the same as your current accountant, but we’ll give you more”.
However, rumours that the service was struggling gain traction in a crowded market began to surface and this gathered momentum when Bivek Sharma, who headed up the small business accounting unit, was put on gardening leave.
AccountingWEB received word this week that KPMG was writing to clients using the service asking them to “make alternative arrangements,” and earlier today a spokesperson for KPMG in the UK told AccountingWEB that the Big Four firm is proposing to “withdraw the provision of its small business accounting (SBA) service” in the UK.
“This follows the decision by our UK leadership to refocus our business on the services which are core to the firm’s growth,” said the spokesperson. “SBA services continue to be offered by KPMG in many other countries and are unaffected by this announcement.”
The majority of UK staff currently working on the unit will be redeployed into alternative roles within KPMG, while a small number of employees will continue to manage existing SBA clients to “ensure a smooth handover to alternative suppliers”.
“We remain passionately committed to working with fast-growth and privately owned businesses across the UK through our KPMG Enterprise team,” continued the statement, “which provides a wide range of advice and support, including tax and accounting, scale-up strategies, funding requirements and growth via overseas expansion.”
The news comes as profits at the accountancy giant soared in 2018, with the firm recording a 53% jump in profits from £301m to £462m off the back of improved investment returns in technology and Brexit-based advisory work.
No traction in a crowded market
The service launched in October 2014 after an 18-month trial, with the firm offering two dedicated ‘centres of excellence’ and more than 200 staff to handle client work.
Each client was promised their own dedicated accountant with an average of between three and 13 years of experience, and service lines offered in the small business package included accounting and bookkeeping, along with tax, compliance and payroll.
Speaking at the time of launch Sharma claimed the firm had “completely ripped apart and re-engineered” its back-office processes, with billing managed automatically by direct debit, client onboarding digitised and automated, and practice management processes streamlined.
However, rumours began to circulate that the service had not gained the traction KPMG had hoped for, and businesses that had made the switch were unhappy with the level of service provided.
Commenting on the Any Answers forum in 2017, AccountingWEB member NLB stated that they had picked up a number of clients from the service. According to NLB particular gripes were “mainly related to the clients being unhappy about their level of knowledge of their business, mistakes being made and the churn of client account managers who [seem to] change every six months.”
Northeast-based accountant Glenn Martin added that several clients had signed up to the service expecting a proactive, almost virtual FD service, but ended up with a basic compliance service at a price higher than their business could justify.
Commenting on the news Daren Moore, group commercial director at TaxAssist Accountants added: “Servicing the small business market has always been about building a good relationship with the client to provide sound advice alongside the compliance piece.
“Attempting to deliver that service remotely presents a number of challenges which technology won’t always solve alone. Clients want, and rely on, that relationship and the high street accountant has adapted to deliver a best of both worlds approach with local relationships on the ground alongside smart digital solutions to help people run their business.”