2023: The Year of PRE-RP

‘Tis the season. For joy. For giving. For rest and relaxation. And of course, for making predictions about what the coming year will hold for accounting technology. My prediction is simple: 2023 will be the year of PRE-RP.

PRE-RP Is New To Me

I’ve worked in accounting technology for a decade now. In the UK, a huge amount of focus has been on the advent of Making Tax Digital for Income Tax: the digitisation of accounting for sole traders and micro-businesses. This will likely remain the case, notwithstanding MTD for ITSA’s imminent postponement . And that’s great.

With Mayday , we’re focused on serving the opposite end of the SMB spectrum: businesses with 1-10 people in-house finance teams. They’ve grown up on Xero or an equivalent SMB cloud accounting system with its associated application programming interface (API) enabled ecosystem. They have the growing pains that come with scale and needing to deliver monthly management information. When I started Chaser back in 2013, Xero had just hit 272k businesses worldwide. They are now over 3.3m. A new cohort of these M of SME businesses is maturing every day.

The most common laX (life after Xero, not to be confused with LAX: Los Angeles International Airport) is to move to a cloud based enterprise resource planning (ERP) system. In our experience, this tends to be NetSuite or Sage Intacct. But no-one wants to make that move if they can avoid it. ERP subscription costs are closer to 100x than 10x greater than the cost of the incumbent SMB cloud accounting system. That’s before the initial and ongoing consulting costs that come with it and the specialist (more expensive) skills you need in your finance team to use those systems. It’s also before the risk that the ERP implementation may fail altogether. One of the most illuminating conversations I had this year was with Matt Paff in Sydney for Xerocon, where he shared that 58% of all ERP implementations fail.

We were chatting with one of our fantastic users recently, Harriet Hope the Financial Controller at Arbolus. We were talking about their growing pains, how they address them as a finance function, and they’re not yet at the stage of making the ERP move. And that’s when the term came to us. They, and all of these M of SMB businesses, are in the same category. They are stretching the limits of Xero or whatever SMB cloud accounting system they use. But they are resolutely at the step before (pre) being ready for ERP, for as long as they can be. They are PRE-RP.

The Changes That Have Already Happened

Peter Drucker said “the most important work of the executive is to identify the changes that have already happened”. PRE-RP may be a new term. But the indicators that the category is already here are numerous.

Look at the burgeoning popularity of Joiin , the consolidation tool; a Xero staff pick this month. We’re excited to be holding our Multi-Entity Month End With Xero webinar with them in January. Look at ApprovalMax , with their automated approvals product. Building PRE-RP software is the second best place to be in 2023. The first being ApprovalMax’s trophy cabinet supplier with their ever increasing haul of Xero App Partner awards. Look at the volume and quality of innovation in the spend management space, for example Spendesk and their 7-in-1 spend management solution. Look at Pento and their automated payroll solution for finance teams.

And of course look at Mayday and our mission to mend month end and bring about real time accounting. We are starting with pain points in having multiple entities as a group: recharging costs and revenues, one entity paying a bill or receiving money on behalf of another, and keeping the intercompany loan account in balance. We’ll then get into single entity pain points at month end: cost journals, revenue journals, business tax estimates, and more. Harriet says “Mayday gives Xero wings” with the way it is enabling them to grow with it as their accounting system. Troy, the Finance Director at SPM has called us “the answer to a larger Xero user’s prayers” . There’s so much great work for us to do.

We have recently published our public product vision : everything we envisage Mayday will become and contribute to the PRE-RP category. There is a short 2 minute survey to help shape that vision, with a potential ￡100 prize for doing so. It would be great to get your input.

The need for PRE-RP tech is only going to get more acute. Heading into a recession, finance teams will be prizing efficiency and cost savings. They will be even more determined to extend the PRE-RP period for as long as possible. That is why 2023 will be the year of PRE-RP.

CFO Techstack

This is another contribution to the PRE-RP space that we at Mayday are making from 2023. My first move out of practice into an in-house finance role was 11 years ago. Back then, the tech stack of my finance team consisted of Sage Line50, Microsoft Excel and my online banking login. I got pretty good at Excel. I could wield INDEX and MATCH with my eyes closed (not really, but you get my point). I could write a mean custom formula with VBA. I could with some justification consider myself a finance tech stack jedi by the yardstick of the day.?

That yardstick has changed dramatically. Now there are thousands of solutions across a wide range of categories. Tech stack is a source of competitive advantage for a finance function in the way it never was previously. But how to keep on top of it? Accountants in practice are lavished with useful content, resources and events on how to best use technology in their practice. In house finance teams have precious little.

Until now. CFO Techstack is our solution to this. The insights you need for a best in class tech stack for your finance team. We’ve taken inspiration from the fantastic CFO Connect and GrowCFO . They provide brilliant insight for in house finance teams. We’re covering the technology specific dimension.?

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