Why we're stopping statutory accounts

We're staying true to our mission even if that means making difficult choices

Difficult decisions

Last week I made one of the hardest decisions of my business career. I committed Quantico to a course of action that I knew would lose us revenue and upset some of our most loyal partners.

Since starting the business, in fact since starting our careers, filing statutory accounts and tax returns has been something we just get on with. They’re a tedious but essential part of life in a finance team.

Now we are turning our backs on it.

So serious was the decision for the company, that my colleague Sam even checked in from paternity leave to chat it through. I’ve still got the slack messages: “are you sure you want to do this? Last chance to back out!”

I really wasn’t sure but somehow I replied “f#ck it, lets do it”

So how did we get here?

Our story so far

When I started Quantico back in 2019, we were effectively a glorified accounting firm. We did our best to embrace technology but I’m embarrassed to admit that we did exactly the same thing as all our competitors: we charged a fixed fee to take care of a fixed list of services.

Within six months we realised how unsuitable this approach was for start-ups. The fixed fee acts as an incentive to spend as little time with clients as possible. We never really got to become a part of their team.

At that point we rapidly switched to the in-house model, providing experts for a flexible number of days. Our business took off.

Since then we’ve been incessantly iterating our model, tirelessly trying to find the ‘perfect’ way to support the start-ups we partner with.

From deciding to stop offering personal tax services in 2019 to leaving the institute of accountants in 2020 to swapping from monthly to weekly scheduling in 2021, we’re edging closer to that ‘perfect’ way every year. Each of these decisions (although resulting in a painful and somewhat controversial transition) are undoubtedly the moments I am most proud of.

We’ve never shied away from ruffling feathers to create change.

Statutory accounts

For months now we’ve been debating whether leaving statutory accounts and tax behind is the next step in our journey.

On one hand it’s been a great source of revenue. Quantico is an organically funded business so that’s something we don’t have the luxury of being able to ignore!

Filing accounts is also an essential problem that founders look to us to solve.

We know from personal experience that the traditional accounting sector often does a pretty poor job of it, charging high fees for pretty minimal amounts of work. As a company aiming to revolutionise the sector, doesn’t that mean it’s our responsibility to bring about change and get it right?

The problem

On the other hand, it’s been a constant source of friction for us and the start-ups we support.

One of the best things about our model is that we give our partners full control and flexibility over how much time we spend with them. That works beautifully for running a finance team day to day but it’s actually not a great fit for compliance services.

By trying to solve both problems with the same solution, we’ve created an awkward half way house. We’re not being 100% true to our mission and in turn, companies aren’t getting the most out of what we can offer them. Instead of focusing on what we do best, we’re spending time filing accounts, often without sufficient time for a comprehensive review. We risk delivering a service we’re not proud of.

We’ve also encountered a deep resistance to our business model from more traditionally minded organisations. HMRC, tax preparation software, our lawyers and insurance brokers have blocked us at different times for not being structured as an accounting firm.

One of the principles of FinOps is “get clever, not bored”.  We definitely felt bored of being told what we couldn’t do. It was time to get clever.

The debate

We all agreed our current situation wasn’t working. But what should we do next? This led to a lot of passionate debate in the team!

Eventually we realised we had a choice: rethink our internal approach or stop.

If we wanted to keep doing accounts and taxes we would have to invest the time to do it properly. To us that would mean starting with a blank piece of paper and assembling a team to reinvent the accounts process for start-ups from the ground up.

When we asked ourselves where this new team could come from, the only possible option was to divert resources away from the FinOps Academy. This was something we weren’t prepared to do.

It was time to stop.

So that’s how we got here

Decision made, the full scale of the risks loom ahead of us. Statutory accounts have always made up a substantial part of our turnover. Was it wise to turn that work away with a recession looming?

And what about our most loyal partners? We’d been taking care of this problem for them for years. What would they think if we suddenly decided to stop?

If we get this right, we’ll one day look back on it as another difficult, but essential, step on our journey to revolutionise finance.

If we get it wrong, we’ll be turning down money, upsetting our partners and giving business back to old fashioned accounting firms.

What next?

At Quantico, we can’t just do whatever feels right for us. We refer to our clients as partners because for us it is a true partnership. That means working together over the long term and aligning our interests. To protect those interests, we’ve laid out a lengthy transition ensuring nobody is left in the lurch.

It’s too early to draw any lessons from this transition for Quantico but I’m already having a few personal realisations.

Like many business owners, I often find myself laying awake at night, agonising over decisions, attempting to think through every possible variable. In life, and in business, that approach can often lead to more harm than good.

As Jeff Warren says on the Daily Trip, sometimes the best thing you can do is trust your gut and stay light on your feet. It’s not always easy to do but it’s always worth the effort.

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The further we go on our journey, the more we learn the value of sharing and collaborating with our network and community. I’d love to hear from you at dan@quanticofinancial.com