KPMG withdraws SME cloud accounting service from UK
Big Four firm KPMG has announced it will withdraw a digital accounting service line targeting small businesses from the UK. The move comes as KPMG UK attempts to consolidate on its highest growth in a decade, dropping aspects of its business which are slower to grow. While the offering will no longer be available in the UK, it will remain on the table for clients outside of Britain.
According to a poll of small and mid-sized enterprises (SMEs) four years ago, 72% viewed digital innovation as important to the future of their businesses, while 43% said it was either high or very high priority as they sought to work smarter and faster in order to make ground on large market incumbents. The research was released by KPMG, and coincided with the firm’s launch a of small business accounting (SBA) service in the UK, which sought to tap into the desire among SMEs to leverage digital technology to improve efficiency.
The service would go on to provide cloud-based bookkeeping to SMEs and micro businesses, and saw KPMG become one of the first of the Big Four to go after the SME market. The move also saw KPMG sink a £40 million investment into a technology platform – as well as 20 Partners and 50 Directors to help grow the offering – to enable the firm to deliver accounting services to small and start-up businesses at a fraction of its usual fees. This included online accounts preparation, bookkeeping, payroll, VAT and corporate tax returns.
After less than five years, however, the project is due to come to an end in the UK offices of the Big Four firm. According to industry news hub Accounting Web, the service had faced closure since the Autumn, and the closure will not result in job losses, as the SBA service professionals will instead by re-deployed in areas where KPMG hopes to grow in 2019. This comes on the back of KPMG UK reporting its highest level of revenue improvement in a decade at the end of its FY19 cycle, with fee income rising 8% and underlying profits jumping up 18%.
The move will likely play a part in the company’s efforts to consolidate on those positive results, especially as KPMG prepares to launch its legal consulting line in the UK. KPMG said it is contacting its existing SBA clients to inform them of its decision. Meanwhile, despite these services being withdrawn in Britain, the Big Four firm confirmed that the SBA line would still be available in other countries.
A KPMG spokesperson said of the news, “Discussions with staff is on-going and we are supporting them and keeping them informed of their options as we wind down SBA. We are looking to redeploy a large number of SBA staff into other roles within KPMG whilst keeping a small number of advisors to work with existing clients until they have found alternative providers for their cloud-based accounting requirements.”
2019 looks set to be a difficult year for UK businesses, with the economic uncertainty brought on by Brexit likely to impact many of the Big Four’s clients. As a result, KPMG is not the only member of the quartet to announce changes to its set up, designed to play to its strengths in the UK, early in the year. A week before, EY announced that it would be relocating its European entity to the mainland, as it sought to circumnavigate potential disruptions in its talent pipeline brought on by the UK’s divorce with the bloc of 27 remaining EU states.
