KPMG Closes Small Business Accounting Division: What to do Next
KPMG has confirmed plans to close its small business accounting division, leaving customers to find a new Xero-ready accountancy practice.
KPMG's Small Business Accounting (SBA) division was an exciting new offering when it launched in 2014, but heavy subscription fees made it difficult for the big four accountancy firm to gain traction in the market.
SBA customers have reportedly been told that they will be supported while the look for ‘alternative arrangements’.
In this blog post, we investigate KPMG’s small business offering, look at some of the questions facing SBA customers and announce the launch of 's new switching service for KPMG small business clients. CloudAccountant are offering clients switching from KPMG 1 MONTH FREE ACCOUNTING SERVICES.
KPMG SBA: Rise and Failure
After a trial period, KPMG’s SBA venture was launched in 2014 with aspirations to disrupt and dominate a market predominantly made up of high street firms and mid-size accountancy practices.
The alluring message to small businesses was ‘pay us the same as your current accountant and we will give you more’.
The new venture launched with a £40m investment in two ‘centres of excellence’. The company also invested in streamlining back office functions like billing, client onboarding and practice management to reduce costs for smaller firms.
KPMG’s SBA website advertises a typical package including accounting and bookkeeping as well as tax, payroll and compliance services as costing £425 per month. This included a subscription to one of the small business market leading cloud accountancy software Xero.
KPMG’s Bivek Sharma - one of the firm’s youngest ever partners - was selected to lead the project.
He said that all accountants would be UK-based and that each client would have a dedicated accountant.
When the new venture launched, customers and accountants viewed the new offering with scepticism.
In a UK Business Forum, one user advised someone considering the service: “you must have very deep pockets. Good luck.”
Another replied: “My initial thoughts are they'll promise the world but either not deliver or hike charges to accommodate.”
With expensive city centre offices and salaries to pay for, some struggled to see how KPMG would match the prices offered by other firms.
And as the service matured, reports suggested that some businesses were unhappy with the service they received from KPMG.
One accountant on an AccountingWEB forum claimed to have poached a number of clients from the big four accountant. The user said that complaints 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.”
director Miles Grady said: “I think this move shows that big firms aren’t the answer for small businesses.
“Some big companies can pay £350 plus for an hours consultation with KPMG, but small firms can’t justify these costs.
“KPMG promised clients that they would get more for the price, but it looks as though KPMG have struggled to make this work. Small business customers need to think carefully about what value an accountant can have for their business and choose a new provider that reflects their needs.”
Options for small businesses
A spokesperson for KPMG told AccountingWEB confirmed that the company was proposing to withdraw its small business accounting service in the UK.
They said that the majority of UK staff working in the unit would be redeployed to other roles in KPMG, while a few would continue working to “ensure a smooth handover to alternative suppliers.”
Small firms that are affected by KPMG’s withdrawal from the small business market now need to seek alternative arrangements that meet their needs.
A few things they may wish to consider include:
- Whether the new accountant supports Xero, so they don’t need to migrate to a new system.
- What services they expect from the new accountant.
- What price they are willing to pay for services from the new accountant.
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