Is Indinero an accounting firm? Or a tech-startup?
Quite frankly, it’s a bit of both.
And I believe this model is something that most firms should be aware of as they’re among the new kinds of competitors on the block.
I spoke to Jessica Mah, their CEO, as part of the Future Firm® Accounting Podcast, to learn a bit more about how Indinero is epitomizing the future of what accounting firms will look like.
We chat about what Indinero is, how they’re different from a typical firm, some of the tech-forward accounting firms they’re acquiring (with details on how firms are valued) & more.
Check the podcast episode below.
What is Indinero?
Founded back in 2010 by Jessica Mah and her co-founder, Indinero actually started as a software company.
They developed a tool that helped business owners get insight into their numbers.
But with about 2 months worth of cash left in the bank, Jessica & the team had to pivot, fast.
She realized that her customers didn’t just want the software, they also wanted a one-stop-shop to get all of their accounting needs done in one place.
So the company moved from being a strict software company to one that also provides bookkeeping, accounting, tax & CFO services on top of their software.
Fast-forward 10 years and the company boasts around 300 employees providing modern accounting services to their clients.
With their own software, they can help better control the user experience, aiding in finance and accounting automation, things that most firms can’t and also supply different data points to help in the company’s decision making.
Indinero is one of the few funded tech-startups out there that are a cross between a tech-startup and an accounting firm. It’s an interesting model.
Services are provided throughout the US, where some of the work is outsourced to the Philippines.
How is Indinero Different?
One of the biggest differences I can see between Indinero and most accounting firms is that Indinero is not run like an accounting firm partnership model. Truthfully, that model is severely outdated. Indinero is run more like a software company where they apply modern business principals to running their business.
For one, they are dead focused on the customer journey. This concept is rarely discussed in most accounting firms (though I point the importance of it here). For most firms, the journey is not what matters. It’s more about churning work out and just getting it out the door. This is surely a recipe for disaster in this day and age. In fact, I wrote a whole post about my terrible Big 4 experience when I was audited, where the customer journey was completely ignored.
Second, they are building their own software to help smooth out the customer journey and improve internal efficiencies. While some of the more forward-thinking firms are using off-the-shelf cloud accounting software to automate workflows, Indinero takes it up a notch to provide a more custom approach to their automation.
While developing software is expensive, and time will tell whether this approach will give these kinds of companies a competitive advantage, this cannot be ignored.
Indinero’s Acquisition of Firms
In addition to wanting to find out more about Indinero, I also wanted to discuss their recent acquisitions.
Normally, a traditional firm would acquire another traditional firm purely for the book of business that comes along with it.
For one reason or another, these kinds of transactions are valued on a 1x revenue basis, or less.
Indinero has been acquired tech-forward accounting firms for the past few years, with likely more on the horizon.
Why are they making these acquisitions?
Well, not really for the book of business, but for the added capabilities and acquisition of talent for the most part.
Jessica opens up about firm valuations for more modern firms. She actually thinks that the value of traditional firms could sink to as low as 0.5x revenue (yikes!), whereas those that are applying technology and have an attitude of wanting to modernize could go anywhere up to 1.5x revenue (and perhaps even above).
We expand on that during the episode.
The Future for Indinero
While Indinero is currently providing accounting oriented services, Jessica sees the future of Indinero kind of like the Amazon for business services. Basically, she believes that Indinero will start to eventually surround their clients with all kinds of other corporate services. This is interesting because I believe there are other players in the space that are broadening their service offerings as well. Could this be the future of what may be expected for firms down the road?
My Discussion with Indinero’s CEO, Jessica Mah
1:35 – Jessica is so busy, that she actually flies airplanes to get to her meetings.
3:37 – What is Indinero? Jessica describes it as a tech-enabled accounting practice and she describes what that is.
7:25 – Why are businesses today looking for a one-stop-shop accounting firm?
8:19 – What makes Indinero different from most accounting firms?
9:40 – Indinero’s team is currently around 300 people. Many are bookkeepers & accountants. But also a fair share of customer service employees and developers.
13:13 – Jessica talks about how she thinks AI & machine learning is a ton of hype in the space. She gives her views that are not dissimilar from what Paul Meissner was speaking to me about when we chatted about 5 hot accounting trends.
14:35 – Indinero wants to take the business from just providing accounting services to expanding across a variety of other services offerings eventually (ex: insurance, investment, etc). This could be a glimpse into what customers may expect down the road.
17:20 – Although Indinero offers CFO services, Jessica says that “I don’t want to be in the CFO business.” A complete 180 from what most other firms are saying. I ask her why.
19:00 – Jessica describes the software platform that’s used at Indinero and why she chose to develop software instead of using what’s out there.
23:35 – Where does Jessica see the industry heading in the next few years?
27:25 – Jessica gets together with her closest competitors every so often to share best practices. Why?
31:00 – We talk about the rise of accounting tech-startups and what they’re in response to in the industry.
32:00 – Indinero has made a few accounting firm acquisitions, primarily of tech-forward accounting practices. Why are they making these acquisitions?
37:00 – What is Indinero looking for in their acquisitions? Which traits? What are the deal breakers?
40:25 – I ask Jessica what sort of firm valuations she sees emerging for modern firms.
44:25 – With 100’s of employees, Indinero has a pretty distributed workforce located in all different corners. Jessica elaborates a bit more on this.
46:38 – What are Jessica’s tips to keep culture together while being so distributed? She has a few of them, in line with how ConnectCPA manages a remote team.
48:13 – Interested in speaking to Jessica or Indinero about a possible acquisition? Contact Jessica at firstname.lastname@example.org to have a chat and get a sense of your firm’s valuation.