On December 27th, 2024, Bench Accounting a venture-backed fintech company specializing in online bookkeeping services, announced on its website that it is shutting down. (See my LinkedIn Post.)

When a company that raised that much money shuts down that abruptly, its usually because:

• It wasn’t profitable
• It was running out of money and
• It couldn’t find any new investors to keep funding the company.

I am not surprised.

Bench was trying to do two things:

1. Write software to compete with Quickbooks
2. Act as a service provider to thousands of small businesses

Bench did neither one well.

• As a bookkeeping company it should have been profitable from day one.
• As a software company it should have had customers.

Unit Economics Are More Important Than Revenue Growth

For Bench to have raised $100 million and fail so spectacularly it must have believed a bunch of things about itself that weren’t true.

Firstly, it called itself a fintech company.

Bookkeeping is not fintech.

As a fintech it must have poured money into customer acquisition believing its unit economics would get better as it grew. We can be pretty sure Bench’s unit economics got worse over time.

I would surmise that:

• Companies would grow out of Bench. Bench’s most successful customers inevitably would hire a finance team and maybe even a CFO and inevitably move off of Bench’s proprietary software and on to software written by an actual software company. You can’t grow if you churn your most successful customers.
• Bench was reliant on a lot of startups for their growth. A lot of those startups haven’t been able to raise money so they went out of business. Venture backed companies are an alluring market to target but they boom and they bust.
• Competition in the space has skyrocketed. Outsourced offshore bookkeeping has been growing like crazy putting downward pressure on prices and upward pressure on customer acquisition cost for many years. Only a relentless focus on unit economics brings a business to profitability. (See our Detailed Explainer video on the right way to look at Unit Economics)
• Legacy Software in the face of Artificial Intelligence. AI is going to make bookkeepers obsolete and Bench was stuck with legacy software it started writing in 2012. AI is killing a lot of formerly awesome companies.

AI Has Already Eaten The Work of the Bookkeeper

At Weekly Accounting, we expect bookkeeping to be eaten by AI with an inevitable race to the bottom in pricing. 

A lot of companies have announced their AI Bookkeeping technology (finally, Briefcase  , Basis, Numeric, OSOME , Trullion , Docyt, Blue dot, AccountantsIQ and Legix to name a few)

💡Investing millions of dollars to automate bookkeeping is wrong headed from the start.

Bookkeeping is already basically automated for expert users of Quickbooks Online.

Even though it sucks and I complain about it all the time, the Rules Engine built into Quickbooks enters about 80% of the transactions automatically anyway.

Intuit isn’t sitting still on this point and I expect it will continue to consume the work of the bookkeeper and bake it into the price of Quickbooks.

Companies don’t have accounting problems…they have data problems

The intention of the entire accounting industry is to keep you compliant with tax and accounting rules. That’s what kids go to college to study – the rules. That’s what companies pay auditors to do – to make sure they follow the rules. That’s what companies pay tax people to do – pay taxes following the rules. That’s why we say:

💡A CPA is a license to do your books in a way that doesn’t help the business

At Weekly Accounting, our intention is to help you see your business better.

Bookkeeping is important for sure. But doing proper bookkeeping on all your business data so you can see your unit economics every week prevents you from believing things about your business that are not true.

Ironically, I’ll bet a clear understanding of unit economics is what, in the end, caused the investors to stop putting money in to bench.

Bench Customers – reach out. 

If you are a bench customer – please do set up a time to talk, we’ll get you sorted…weekly.