Head of Insight AccountingWEB UK
Share this content

Come Place Your Bets in the Data Capture Casino

With the London fintech casino in full swing at the start of 2020, data capture app market-leader Receipt Bank landed an extra $73m in round C funding from a consortium of new and existing investors.

Feb 7th 2020
Head of Insight AccountingWEB UK
Share this content
Mobile News
Tero Vesalainen_istock_mobilenews

Receipt Bank’s chief product officer John Connolly told AccountingWEB the investment will help the company develop new features to get “rid of admin from both sides of the bookkeeping equation” and fund further expansion into Europe, Australia, South Africa and North America.

In the US, Receipt Bank said it was looking to build strategic partnerships with firms that wanted to strengthen their client relationships and expand their revenue by bringing bookkeeping services in-house. According to the company the new funding will help Receipt Bank build that partner network and differentiate itself further as the leading pre-accounting tool with new innovations that eliminate day-to-day drudgery and give accounting partners a holistic picture of their clients’ habits.

The deal presents a good opportunity to take a fresh look at the expense capture scene, which has been growing rapidly while also going through a period of consolidation during the past two years. Receipt capture tools were the first add-ons to gain a significant following within the big cloud ecosystems. And they continue to dominate the app rankings.

Accounting firms that offer a monthly subscription service combining online bookkeeping with receipt capture to create a seamless digital data flow have played a big part in that surge. AccountingWEB’s recent reader survey indicated that around 30 percent of respondents were using an expense capture tool.

An early mover in this market, Receipt Bank is (arguably) the acknowledged?leader and now boasts of supporting 360,000 businesses, which include 50,000 accounting partners.

Receipt Bank’s rapid growth pointed to the expanding opportunities for capturing and managing accounting data before it hit the general ledgers. The potential market prompted Xero to move in on Toronto-based Hubdoc in 2018 and Sage responded by buying AutoEntry last September.

Despite continuing speculation about its acquisition intentions in this market, QuickBooks is currently focusing on its developing its own receipt capture tool, according to UK commentator Nick Levine.

Feature Wars

While all this high finance consolidation has been taking place, product managers and programmers at Receipt Bank, Hubdoc and AutoEntry have been locked in a feature race to capture not just travel and expense receipts, but accounts payable and receivables documentation too.

Hubdoc and Receipt Bank can both “fetch” utility bills from online sources, but Hubdoc has the lead on other data sources and document types such as bank statements and tax paperwork.

In recent months, Receipt Bank added sales invoice data extraction across both accounts receivable and accounts payable workflows – the territory where AutoEntry first made its name.

Everybody in this sector is investing heavily in machine learning-based auto-categorisation to the point that it’s losing its power as a differentiating factor. Receipt Bank has been working on capturing receipt context, Connelly explained, to “read what is not on the paper. A receipt will never tell you why you bought something. It doesn’t tell you whether a printer was bought as inventory for resale or as a tool for use in the office”.

Along with beefing up its line item extraction and context capabilities, Receipt Bank recently added a Bank Match feature where inbox items are matched with unreconciled bank payments. This functionality has been one of Xero’s competitive strengths for nearly four years.

With the might of cloud accounting software houses with multi-billions in capital lined up against them, what’s the motivation for Receipt Bank’s round C investors?

Are they putting their chips down hoping for a big payout when Intuit comes calling, or are they betting that the agile independent can beat the big boys to developing the agnostic, comprehensive client healthcheck dashboard that all the cloud accounting platforms want to create?

That’s the stance that Receipt Bank managers are taking. Product manager John Connolly said his mission was to “capture all parts of the cost cycle for small businesses, rather than just expense capture” and provide accountants and bookkeepers with “real-time visibility” over the finances of their small business clients.

“Our series C raise of $73m is a real vote of confidence in that strategy,” Connolly said.

Evolving Data Landscape

In the UK, Levine has been studying the dividing line between data capture (or “pre-accounting”) apps and expense management and identified a number of app developers that are incorporating elements of both.

This relatively new category, led by Soldo and Pleo, lets companies and their employees manage expenses by purchasing them with prepaid debit or credit cards. Like data capture apps, these apps integrate with accounting platforms to make reconciliations easy. The developers also make money on any transactions that flow through them.

Expensify has created a similar payment card and Receipt Bank carried out a brief experiment with this approach. After initial trials, however, Receipt Bank retired the branded expense credit it issued through Capital On Tap and instead link now links to a card issued by Visa to pick up and match bank feeds within the data capture app.

Ben Martin, director of user adoption, explained Receipt Bank’s rationale for the switch: “As a company, we needed to focus on global solutions. And due to differing regulations around the credit card market, the association with Capital on Tap was never going to fulfil that global ambition.”

The new funding round would enable the company to move forward on a number of other global projects linked to payments, he added.

These initiatives hint at the overlaps that are increasing exponentially as the app ecosystem expands, along with the territorial plays that accompany them. While flying the flag for “agnostic” data capture apps that would work with any accounting platform,

AutoEntry founder Brendan Woods predicted as he sealed his sale agreement with Sage that there wasn’t likely to be much room for standalone data capture apps as the market consolidated. His advice was to stop thinking these systems as individual products, “Because if you do, you aren’t using them properly.”

So, the first step of the modern fintech practitioner is beginning to think about payments, expenses and even access to funding as a seamless accounting data flow. That wasn’t so difficult. The hard part is to identify the optimum selection of underlying components and connect them up into a working process that suits you and your clients.

As the ecosystem evolves and matures at an increasing rate, those decisions are going to get a little more complex.

Related Articles

What Sage's Purchase of AutoEntry Means

Explaining the Xero Hubdoc Deal

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.