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Forecasting software adoption returns to slow burn

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After a spike in the use of cashflow forecasting tools during lockdown, the rate of adoption has fallen back to a slow but steady upwards trend, with new service lines like virtual finance driving the rise.

7th Jul 2022
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The latest data from AccountingWEB’s insight team reveals that following the surge in numbers using cashflow forecasting tools during the Covid-19 lockdown periods, adoption amongst accountants has returned to pre-pandemic trends.

“Measuring the prospects for forecasting software has been fascinating over the past four waves of our research programme,” said State of the Nation report author and AccountingWEB head of insight Julian Green. “In Spring 2021, everybody was anticipating fast adoption driven by behavioural changes in the way businesses needed control of their finances and cashflows.”

However, by Q4 2021, Green observed that 70% of accountants surveyed in the report felt this behavioural change was short-lived, and driven primarily by the need for access to covid support funding. For the majority of users, sustained visibility and control of finances seems to no longer be the priority.  

Early indicative results from the latest survey covering Q2 2022 show that for most accountants, fewer than 30% of the client base is supported by this service line.

Despite the fall in numbers when compared with the boom years of 2020 and 2021 for forecasting tools, figures gleaned from entrants to the Accounting Excellence awards still show a steady upward trend over the past seven years - albeit growing from a low base.

This rise coincides with equivalent growth in tech-driven service lines such as in-house bookkeeping and virtual finance function offerings. The graphic below shows service lines offered by entrants to the awards with reporting and forecasting software grouped together and highlighted in red.

Accounting Excellent entrant data showing rise of forecasting tool use

Best of breed vs embedded app (vs Excel)

Statistics from AccountingWEB’s insights team also show that rather than use best-of-breed cashflow forecasting solutions, accountants prefer Excel or the forecasting app embedded in their accounting platforms. 

However, Green added the figures also show that specialist best-of-breed forecasting tools are making slow but steady progress with market shares, with Float and Futrli catching up with Fluidly as the three leaders.

 The flood of interest in forecasting tools during lockdown saw the likes of Fathom, Float, Fluidly and Futrli all grow in popularity, but according to Green this increase was outdone by tools embedded in accounting platforms such as Xero or QuickBooks Online, or even the accountants’ favourite software tool Excel.

“There’s a general trend where users of accounting software tend to prefer specialist, best-of-breed solutions for their greater functionality,” commented Green. “This trend is bucked when it comes to forecasting and planning tools, where users prefer the accessibility of this function in their main accounting platform.”

This, along with the post-lockdown dip for forecasting tools, has hit the specialist providers, and the market seems to have currently switched to a consolidation phase. December 2021 saw Oaknorth Bank acquire Fluidly, then in May this year Futrli joined the cloud revolution over at Sage.

While the short-term forecast may look gloomy for the remaining specialist providers, Green believes the data shows cause for optimism. With the government’s current plans to digitise the tax system, the continuing evolution of open banking and the rise in complimentary service lines such as in-house bookkeeping and virtual finance functions, it could be that we will see the trend lines continue to rise for forecasting tools over the next few years.

We want your opinion. Any accountant can contribute to the findings of the AccountingWEB software reports by completing our regular surveys. This interactive project is community-powered and in return for completing the survey you'll get access to our insight reports and the chance to win a £500 Amazon voucher. Take part in the latest quarterly survey.

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