What do you do when you are a huge global software company and have a big cash pile? QuickBooks has answered that question with Smart Capital.
Given the pace of new product developments, not least some of those on show at London's QBConnect, Intuit has left us with no doubt that the cloud accounting race in the UK is most definitely on.
But there is more to come, some of which points to a different relationship with small businesses and the ecosystem of services that surround these new accounting platforms.
Last November Intuit in the US launched Smart Capital, a system to provide short term loans of up to $35,000 to small businesses based primarily on the data from their QBO account.
Keeping the money in the bank for a big business is always an option but doesn’t bring much in the way of return, but the 10-26% APR rates offered through this lending makes it both competitive and lucrative.
According to Intuit, “70% of new business -- those in the first five years of operation -- say they need funding to grow, but only 23% of them are able to access it.”
It’s not a too dissimilar story in the UK. Sasan Goodarzi, Intuit’s executive vice president of the small business group, said that Intuit was managing to approve 70% of applications, outstripping many of the traditional lenders.
Using the collective data from an increasingly connected cloud world is giving access to not only new ways to automate processes, surface insights (still loosely and perhaps unhelpfully called AI), but also now helping to develop whole new commercial services.
Putting their own money on the line to fund Smart Capital shows a unusual level of commitment form a company of this type, and an underlying sense of self confidence about how the market is developing and the technology supporting it.
But it does also point to another aspect of Intuit’s approach, and that’s the implication for the wider group of supporting technologies and app partners.
In the last major alternative finance lending report, figures from 2016 put the total amount lent in the UK at £4.6bn. Although this covered the full gamut of options, the rise by 43% year-on-year shows that the new ways to access funds are critical to small businesses, especially as more of the established providers have been around long enough to build a reputation.
Looking through some of the more well known online driven alternative finance providers, it is more likely that you will see connections and technical partnerships with Xero, Sage and FreeAgent rather than QuickBooks Online (QBO).
While this could be seen as not important, as the data is there and can be exported or used to help in applications, it does also point to a possible tendency for QBO to ‘go it alone’. Why have integrations with alternative finance providers if we can in time offer them our money instead?
The same can be said for integrating the receipt handling and aspects of the expenses automation that products like Receipt Bank sell.
Although it will take time to develop the full level of technical capabilities, it is setting out a marker about what may become standard functionality within these new ‘accounting platforms’, and possibly at the expense of the addon community.
In the same vein, the new system of being able to buy and integrate certain apps like Float from within QuickBooks Online Accountant (QBOA) on behalf of a client, points to a new type of commercial arrangement that could lead to some apps being more equal than others.
The outlook here for small businesses should be a positive one. Bringing more of what is seen as core functionality into the standard product will help save costs, and deeper integrations should improve experience. And, if Smart Capital does make its way to the UK (which I’m sure it will), it could be a compelling reason why some businesses choose to adopt QBO over any of its competitors.
The race towards a more MTD world is just hotting up.
About Richard Sergeant
Specialist insight and business development support for accountants and their vendors. Cloud advocate with a pragmatist eye.