No Stop in Growth: Online Accounting Soon to Be a Sole Ruler

It’s quite unbelievable that barely two decades ago business owners managed their books on paper. And now virtually everything happens online. As the second decade of the new millennium is about to come to an end, predictions show that soon over 90% of tasks related to accounting will be done in the cloud. If you don’t believe us, just open any industry report about the current state of the accounting business: they will all show that 2016 was a highly successful year for cloud accounting companies, out of which every single one closed its financial year with profit and an even bigger subscriber base. In other words: the demand for online accounting is rising at a rapid rate.

Online vs offline: the numbers show a clear winner

And how rapid that growth rate is? In its 2017 annual report, Xero stated that in 2016 the number of its true subscribers (those who pay for the services) finally hit the seven-digit mark: as of March 31, 2017 the company had 1,035,000 subscribers worldwide, out of which approximately 100,000 users came from the U.S. This means an astonishing 43% growth worldwide and 38% if we only take into consideration the U.S. subscribers. QuickBooks Online performed even better: the total amount of subscribers is an amazing 1.87 million (which includes a 49% growth in 2016), out of which almost 1.5 million came from the U.S.

Translating all of the above to a monetary value, the numbers are even more insane: Xero’s net revenue in the 2016-17 fiscal year was $295.4 million (43% growth), while QuickBooks earned $1.016 billion (10% growth). If we take a quick look overseas, we see the same: by early 2017 the revenues of FreeAgent, a UK-based accounting company, rose by 41%, from £5.8 million to £8 million (approximately $10 million).

Abandon ship – there comes a better one

This is all important because of two things: one, the online accounting market is highly profitable and will earn even more money for entrepreneurs and stakeholders in the following years; and two, every year more and more people realize the benefits of cloud-based accounting solutions and decide to drop paper-based accounting for good. Additionally, with millennials entering the labor market – and we know what millennials think about anything related to the ‘past’ – we can firmly say that the days of old fashioned accounting are numbered.

The online accounting industry is more than ready to take in castaways who jumped off the sinking ship of paper-based accounting. Accountants and bookkeepers are entitled to get accounts for free and become qualified online advisors to a worldwide range of clients. Software developers are forced to create programs that are easy to understand and maintain, especially in cases where new competition hits the market. By offering and supporting an API, accounting services become part of a flexible solution where apps work together to further automate tedious processes and reduce the time necessary for data entering. And last but not least, accounting apps are fully embracing the benefits of artificial intelligence (AI), finally transforming accounting from annoyance to a simple, one-click daily routine.