With how much they were charging and how little service they were providing, I can't comprehend how they've never been able to figure out the business model.
I wanted some features for shipping and receiving and ability to find closest assets. I'll be importing zip codes which have lat lng needs to be stored and queryable.
We're sorry to hear about Bench shutting down, particularly coming into tax season.
As a company that specializes in solopreneur finance (formation, accounting, tax and payroll) we know that this time of year is stressful as is. If Collective can support or help you and your business in any way, please reach out at http://collective.com, join one of our Q+A sessions, or reach out to me at hooman@collective.com.
If we're a good fit for your business, use the code HERETOHELP to get a discount off of your membership.
We have years of experience working with former Bench customers and our team is working through the weekend to help any small businesses who need urgent help. We're here to support you.
If you're an employee that was impacted, we also have lots of job openings at www.collective.com/careers.
Additionally, they took down all of their accounting articles without notice. They had valuable summaries on various tax topics. Thankfully, Wayback Machine has archives of my bookmarks.
All the more reason to self-host your own archived versions of bookmarks...
is there an easy solution for this? I recently found myself looking through old bookmarks from a long previous project and only about 1/3 worked and it made me sad.
This is really frustrating. I'll admit their services have been going downhill dramatically (all my books Jan-Nov were still open as of last week and usually they would close subsequent month), but I still think shutting down right before the tax year ends is downright scummy.
What are the alternatives that handle bookkeeping and tax filing? Maybe I should just get a local CPA...
My local CPA had previously guided me to using Bench. "Accountant" and "bookkeeper" are separate disciplines. My accountant manages my tax filings and other complicated transactions. The bookkeeper makes sure all our ledgers balance out.
That's a fair assessment. I'd advise hiring a part-time bookkeeper if the transactions are sufficiently numerous or complicated to warrant it. The cpa can handle period closing concerns, trial balances, all that stuff. Many family-sized firms offer this as included, so there might not be much of a difference.
For others reading along, one huge difference is that bookkeeping tends to be vastly cheaper per hour. It would get very expensive to pay a CPA to transcribe your credit card statement into Quickbooks (or previously Bench, or whatever else you're using for your ledgers).
Bookkeeping is sufficiently complex that I'd personally rather pay someone to do a good job of than muddle through on my own, but it's not rocket science. Perhaps most importantly, they understand accounting jargon. When my CPA asks me to send over the Fnord-Smootson report, and that's not the exact name of a report in my bookkeeping software, I have no freaking idea how to get that to him. A competent bookkeeper asks whether he needs that report frobnicated by date or by time-value and they work out the details.
A good CPA makes rocket science look easy. You typically pay them crazy amounts per hour, but for only a few hours a year. They take those bookkeeping journals and explain your situation to the IRS in a way favorable to your interests.
You want a good bookkeeper and you want a good CPA. If you can get both of those under the same roof, freaking awesome! Your life just got easier and more profitable.
Absolutely. I am actually not familiar with Bench, so I'm just talking in general, but I've never heard accounts of good experiences with highly parallel XaaS. Your f&a operation sort of necessarily needs to be close to your operation. It's tough to farm it out. There's a big continuity story in your books.
It seems unlikely they didn't know they were going down until just a few days before having to shut down services.
And given that this happens during the holidays, ot wouldn't surprise me if some customers don't find out about this until after the window to extract your data has expired. Or people have to work on fixing this mess who were supposed to be on PTO.
The investors aren't going to let you burn all the cash just because. They want out now with whatever is left so they can flip the coin to the next bet.
Maybe if the investors could be held liable for the damage they cause for suddenly shutting something down like this, they would be more likely to give customers more warning before shutting something down.
They can though. Dying businesses take time to die. Even if nothing else, they could have decided to shut down _earlier_ so that customers would have more time to deal with the fallout. Or they could have decided to shut down _at the same time_ but just messaged about it earlier.
Local CPA isn't a bad option though it could be pricey. (CPAs don't want to do book keeping either). I think one of the things that makes the bench.co shutdown challenging is that they used "proprietary" software so now you're going to have to migrate soon. Switching to accounting software that CPAs are more likely to be familiar with would be a step in the right direction and working with someone to aid that and help do catch up would be a good idea. I can help with both so that this isn't the catastrophe that it's shaping up to be
You can hire a bookkeeper to work with the CPA. I had a freelance freelancer who would keep books up to date, and then turn over the books to the CPA for tax prep and analysis. I estimate the cost was about half as much as if the CPA firm did everything, and everyone was doing what they wanted to do.
I have a friend who works at Taxfyle and they are a great alternative. They do both taxes and bookkeeping and work with software like Quickbooks and Xero where the pro does everything for you. Definitely worth checking out if you want to check their website: https://www.taxfyle.com/bookkeeping
The company is over a decade old and was not cheap to use, I don't think they could have suddenly run out of money as customers typically pay upfront and are in long term contracts. Could it be staffing issues? Corporate misbehavior? Data loss? Ransomware? Has a member of their team gone rogue? Misappropriation of funds?
We were bench customers until a few months ago, paying thousands of dollars per year for what could only be described as hundreds of dollars worth of service. The service was not very good so moving away was an easy choice but on a per-customer basis they must be making money hand over fist.
I expect we'll find out more eventually, hopefully employees will leak some insight. For now, this is inexplicable.
I'd guess staffing issues, since my bookkeeper would change every month. I'm still not sure how they couldn't afford to hire better staff, though. You're right that it could be something nefarious.
> I'm still not sure how they couldn't afford to hire better staff,
Because they never figured out how to automate enough of the process to scale revenue up without scaling expenses.
All the investments in these VC funded companies is a bet that the companies will develop automation that will allow them to not hire staff, period (relative to the growth in customers).
Anything is possible and running out of money is the most probable explanation but it seems so hard for this type of business to get itself into this type of situation. Customers pay thousands of dollars per year, usually upfront. That’s the type of revenue predictability that most of us would love for our businesses because it makes forecasting so much easier. They must have known months ago that they were running out of money. Failing to become sustainable and going through layoffs is one thing, shutting down overnight with zero warning is another. But yes, you’re probably right, it’s just hard to imagine how they could have imploded like this.
And yet, it's as simple as money ran out. They never turned a profit, investors ran out, the last round of funding was a loan with strings attached that led to a bunch of cost cutting and other poor decisions that explain the poor service quality.
A few staff guessed it might close 3 weeks ago at best though everything was very uncertain, but most of the accountants probably didn't see this coming either.
Not sure if sarcasm, but in case it is not: in theory accountants could see this coming but most benchmates were junior book keepers, with no visibility into their employer's financials.
If I can't see the books I move on. The only reason people hide books is because they are bad. You can't expect a bunch of mushrooms to help you grow a company. Employees deserve to keep tabs on the financial health of the company.
Last company I was at was an ESOP. Talk about a scam. They are under no obligation to let employees monitor the health of their "retirement plan." It's a tax shelter for business owners who want to retire. Coming from a company that had open books I had assumed that ESOP members would have some rights, nope.
Having left that shit show for a startup I'm getting regular financial health and funding updates constantly.
Im betting secured debt was called. Given the "instant" nature, it likely means a debt covenant was broken, that is one of the few things that can shut a company down in 24 hours.
Doubley so if the business isnt really profitable.
I’m a CFO and was a layperson on this until I started having to deal with it. I don’t have any resources other than my work experience with a few companies that have debt covenants. First, they can be rather arbitrary as they’re literally made up for each deal and meant to align somewhat to the growth story that’s being “sold” to the lender during the debt issuance; they’re negotiated between lender/borrower so take a lot of different shapes. The ones I’ve seen are usually 1) a reporting requirement 2) monthly/quarterly/annually frequency is negotiable 3) usually have some financial metric or growth metric that the company should be hitting by a certain time. So, I’ve seen EBITDA margin, gross margin, cash flow, and revenue growth stats as these metrics. But again, it could be anything.
As GP said, usually if the covenant isn’t being met but the company is profitable or has a good excuse the lender will not call the debt. They’ll work with you. I’ve seen tons of flexibility here from lenders. Usually the lender will start having more questions about the strategy and current forecasts if the metrics are underperforming and you’ll (CEO/CFO) will have to start being a bit more transparent than required or maybe just more frequent check in meetings to discuss status. In most cases, if you actually have a good story and have a healthy partnership the lender doesn’t want to call the loan and wants to see how they can help (within tolerance) get you back on track.
The moment the lender calls the loan typically, in startup land, there’s no cash reserves to pay off the debt and so the company is instantly insolvent and operations cease. This is why the lender is flexible, calling is typically a nuke for the business. But also, it can be a bit of a stop/loss. Meaning the cash in the bank can at least be recouped.
One standardized metric used as a covenant is the debt service coverage ratio, especially for commercial real estate. The lender gets to monitor business performance in almost real time, and if it goes below what the borrower agreed to, they can force a renegotiation of terms or call the loan.
Does shutting down mean bankruptcy? My businesses will have real damages from this - both the money that has been paid to bench all year for now no output of annual books/a financial summary as well as the cost of now having to pay to redo my 2024 books.
Not for filing. The hard part is understanding how to find exemptions, deductions, ect. It has already outperformed both my CPA and tax attorney and at this point I am using it to correct them before taking their advice.
I havent been at Bench for over 6 years but it’s always been a business on the verge of failure. The main issue was just the schizophrenic strategy that was being employed. On one hand you have a software company with useful tools and services to automate bookeeping. On the other you had a division of bookeepers that would do a lot of the manual / refinement work. These tasks are at odds with one another. If you automate things you remove power from the teams who are incentivized to scale their org charts. With LLMs, Bench should have been positioned to own this space entirely, and offer a superior or equivalent product with much better margins. Bur they decided to become a services company and not a technology company.
All I can take away from it is a few lessons, because this is a pretty awful outcome for almost every party.
This is accurate (from a former employee). They were not at odds, the platform was simply never sufficient on its own to do the books. Bookkeepers were required to fill the massive gaps.
Tracks with what I've seen from other companies that tout their accounting AI/automation. Never measures up .I was never a customer - did Bench overpromise to their customers directly? They always struck me as the most human from the outside.
Im based here in the US, and unfortunately i signed up yesterday after learning about the bookkeeping special...for a small business $1005 is alot...Square (my bank) basically said they cant do anything about it since i autho the payment...Any suggestions?
I'm not a lawyer, but I'd be filing a fraud complaint. They had to have known this yesterday but still sold you a service. At least, that's the argument I'd be making, and I doubt the Bench team will have the bandwidth to dispute complaints right now.
If you’re a tech startup and previously used Bench, I’d strongly encourage you to check out Pilot.com - we work with literally thousands of startups. (Disclaimer: I’m one of the founders.)
I guess we now know that the price of a bookkeeping and tax preparation service that won’t shut down without warning is the 2x pilot are charging of what bench were charging.
And how does this compare to a local accounting firm?
Hint: ask the salesman what happens in the event of an IRS audit. A good local CPA will go to the wall for you. Will the service you're considering do the same?
I’m interested in migrating over to Pilot. How is the migration process from bench? It seems we can do a data export in a few days. Can pilot do 2024 catch up?
We have a number of folks who have switched from Bench, and as you can imagine there's enough volume here that it's worth building some bespoke stuff for this.
And yes, we can do 2024 catch-up work.
(waseem@pilot.com if folks have any specific questions)
Genuine question: why did you raise $100 million Series C for a bookkeeping company? I'm a Pilot customer, and my heart dropped when I saw your funding announcement on the homepage a while back.
The disconnect you have with me (your customer) is that I don’t want or need a “tech enabled service”.
I just want the service.
Sometimes being a Pilot customer feels like I’m being experimented on. Instead of humans reliably doing our books, now I need to hire a fractional CFO (which you conveniently also provide) to double check your work.
We find errors in our Pilot books at a staggering rate. Things that would never be missed if we just had a human bookkeeper.
The value prop for a “tech enabled service” from a customers perspective is non-existent. It’s not cheaper for the customer (I pay you over $25k/yr for doing very little), the quality isn’t any better, and as we see with Bench (who also raised $100 million) there’s incredible risk in relying on it as a business critical service.
Anyone reading this, just please go hire a human bookkeeper. Don’t believe the marketing spin pitched by these tech enabled services companies.
Hey cj, just created an account here to reply to your thoughts, as they strike home. I own Merrittbookkeeping.com. It's a bookkeeping service run by humans, offering very affordable monthly rates. I'm surprised how many new companies are launching "AI powered bookkeeping", but for more money than we are! Why would the end user care if it's AI, unless it's way cheaper? Same thing you are expressing here. Not sure why companies promote fancy tech unless it is a benefit to the end user, not the company themselves.
Bench was a terrible service in my experience. I used it for one of my startups a few years ago. I personally invested a lot into said start-up. I checked my books and everything seemed ok. Eventually I found that they had hidden my Gusto payroll line items from view and they were no longer taken into consideration in my books. This led to a $300k shortfall from where I thought I was vs reality. Their team just shrugged when I brought the issue to their attention. The impact was immediate layoffs affecting real people who depended on me.
Sure ultimately everything falls upon me the founder. But something so common as GUSTO payroll should never be miscategorized and hidden from view.
What gave you that impression? I always consulted my financials when making decisions. Unfortunately the books were wrong and I made incorrect choices from that bad data.
When I go over my household budget I'd notice if I wasn't paying my mortgage even if someone deleted it from my spreadsheet. It's important enough to me that it's front of mind when I'm thinking about money. I expect to see it on the list. I'd look for it if it wasn't there. Salaries are apparently not that big of a deal in the same way so asking for a higher one seems like a good idea.
This is why you have to do a quick back of the envelope go over of the big numbers and make sure they are at least close. Loosing track of $300K is partly your fault. The scale means you have to be looking at it as part of a big picture summary uncontaminated by technology. With Nuclear Treaties it is called "Trust but Verify" and is applicable to business cash flows. You have to be skeptical of the automated numbers that employees touch as there can be either error or worse fraud.
Generally good advice in general, $10-20k is nothing to even a small business but is probably a lot to you. It's not often an asymmetry works out in the employees favor.
When I was using Bench, they were only doing cash accounting (not GAAP). We had to switch to a different service when we switched over to accrual accounting.
Quick note that cash vs accrual basis accounting is orthogonal to whether the balances are correct or not. IANAA but afaik GAAP does not preclude cash basis accounting, provided the conditions where cash accounting is permitted pertain.
you’re right, although cash basis would only fly under GAAP if you earn revenue at the time of cash receipt. In other words, anyone collecting money for services not immediately rendered (any subscription service) should be accrual
I don't think cash basis precludes having a liability on the books for un-delivered services. It just means you recognize the revenue when the payment is received. Lots of small companies use cash basis because it's simpler and easier to understand. IANAA.
I thought by definition you never have any revenue liability on the books (no unearned revenue) with cash basis because you’re recognizing the revenue on the date the cash is received. Nothing is deferred therefore no liability.
If someone pays up front for a service to be delivered over a period, you have a liability, no matter whether on a cash or accrual basis.
The difference is that you can recognize the revenue on receipt of the cash, but at the same time, you also recognize the liability to deliver the service (based on COGS etc for the liability).
The liability reduces as you expense (and actually pay on a cash basis) the cost of supplying the service.
At least that's my non-accountant idea of how it works.
That’s right. Financial accounting and taxation are not the same thing. Even if you are taxed on a cash basis, it’s prudent to manage your business with appropriate revenue deferrals.
I signed up with Capchase on a 12-month contract, too. Does this mean my contract is with Capchase and I’ll have to pay for the next 12 months even if I don’t get the service? Feels like a great scam. Sign a whole bunch of new customers in 12-month contracts and get paid upfront from Capchase in full and leave us paying off our debt to Capchase. I’m so frustrated.
I’m sure all of this will be played out in spectacular fashion in the courts of British Columbia in the coming months. Directors in BC are liable for unpaid wages to employees. No doubt they pulled the rug just in time to ensure people got their statutory severance. But beyond that, anyone hoping for more will have to get in a long line behind secured creditors. Man this sucks.
In a situation like this, someone with a contract not receiving consideration mere days after signing can probably just not pay. It would be very difficult for a company in the midst of shutting down to fight anyway.
It would indeed be foolish to pay an invoice to a company that has very publicly declared insolvency. Many if not most contracts I have ever signed contain a provision voiding the obligations of the parties if either party is insolvent.
I'd be shocked if you didn't get reimbursed. But if you don't, let me know and Afino might be able to mitigate a portion of your losses with a friendly discount. That just ain't right.
When a company goes bankrupt, there’s a specific order that everyone who’s owed money gets paid out in. I wouldn’t be surprised if “operational costs” like refunds are low on the list.
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[ 3.2 ms ] story [ 299 ms ] threadDoing my best wish someone would help.
>Have CREATE EXTENSION IF NOT EXISTS postgis; installed.
Why is postgis a requirement for an accounting package?
Bookkeeping is easy but labor intensive. Dealing with US tax law... That's when you spend on a local CPA.
We're sorry to hear about Bench shutting down, particularly coming into tax season.
As a company that specializes in solopreneur finance (formation, accounting, tax and payroll) we know that this time of year is stressful as is. If Collective can support or help you and your business in any way, please reach out at http://collective.com, join one of our Q+A sessions, or reach out to me at hooman@collective.com.
If we're a good fit for your business, use the code HERETOHELP to get a discount off of your membership.
We have years of experience working with former Bench customers and our team is working through the weekend to help any small businesses who need urgent help. We're here to support you.
If you're an employee that was impacted, we also have lots of job openings at www.collective.com/careers.
https://www.linkedin.com/posts/hooman_financial-solutions-re...
All the more reason to self-host your own archived versions of bookmarks...
Recently, I've started messing around with vimwiki and saving pages as PDF or as safari web archive.
What are the alternatives that handle bookkeeping and tax filing? Maybe I should just get a local CPA...
Bookkeeping is sufficiently complex that I'd personally rather pay someone to do a good job of than muddle through on my own, but it's not rocket science. Perhaps most importantly, they understand accounting jargon. When my CPA asks me to send over the Fnord-Smootson report, and that's not the exact name of a report in my bookkeeping software, I have no freaking idea how to get that to him. A competent bookkeeper asks whether he needs that report frobnicated by date or by time-value and they work out the details.
A good CPA makes rocket science look easy. You typically pay them crazy amounts per hour, but for only a few hours a year. They take those bookkeeping journals and explain your situation to the IRS in a way favorable to your interests.
You want a good bookkeeper and you want a good CPA. If you can get both of those under the same roof, freaking awesome! Your life just got easier and more profitable.
as if a dying business can magically decide to stay open longer and shut down at a more convenient time
And given that this happens during the holidays, ot wouldn't surprise me if some customers don't find out about this until after the window to extract your data has expired. Or people have to work on fixing this mess who were supposed to be on PTO.
In reality, they had to have known for months. The director were probably just holding out for a Hail Mary funding injection.
This is bad bad business, especially for a financial services company.
I bet they were hoping for a christmas miracle.
We were bench customers until a few months ago, paying thousands of dollars per year for what could only be described as hundreds of dollars worth of service. The service was not very good so moving away was an easy choice but on a per-customer basis they must be making money hand over fist.
I expect we'll find out more eventually, hopefully employees will leak some insight. For now, this is inexplicable.
Where did you move to?
Cronitor uses pilot. It was a little crazy at first but the last year+ feels like they have stabilized operations.
Because they never figured out how to automate enough of the process to scale revenue up without scaling expenses.
All the investments in these VC funded companies is a bet that the companies will develop automation that will allow them to not hire staff, period (relative to the growth in customers).
The simplest explanation is usually the correct one.
A few staff guessed it might close 3 weeks ago at best though everything was very uncertain, but most of the accountants probably didn't see this coming either.
source: I know a few former employees.
I would expect this was the kind of thing an accountant should see coming though.
Last company I was at was an ESOP. Talk about a scam. They are under no obligation to let employees monitor the health of their "retirement plan." It's a tax shelter for business owners who want to retire. Coming from a company that had open books I had assumed that ESOP members would have some rights, nope.
Having left that shit show for a startup I'm getting regular financial health and funding updates constantly.
Don't be a mushroom.
Are you saying that as a software developer, or you work with other things?
Doubley so if the business isnt really profitable.
As GP said, usually if the covenant isn’t being met but the company is profitable or has a good excuse the lender will not call the debt. They’ll work with you. I’ve seen tons of flexibility here from lenders. Usually the lender will start having more questions about the strategy and current forecasts if the metrics are underperforming and you’ll (CEO/CFO) will have to start being a bit more transparent than required or maybe just more frequent check in meetings to discuss status. In most cases, if you actually have a good story and have a healthy partnership the lender doesn’t want to call the loan and wants to see how they can help (within tolerance) get you back on track.
The moment the lender calls the loan typically, in startup land, there’s no cash reserves to pay off the debt and so the company is instantly insolvent and operations cease. This is why the lender is flexible, calling is typically a nuke for the business. But also, it can be a bit of a stop/loss. Meaning the cash in the bank can at least be recouped.
https://www.investopedia.com/terms/d/dscr.asp
All I can take away from it is a few lessons, because this is a pretty awful outcome for almost every party.
And keep situations like this in mind every time you hear some libertarian idiot railing against regulations.
Edit, found it myself: https://www.reddit.com/r/Accounting/comments/1hnhoxq/comment...
Hint: ask the salesman what happens in the event of an IRS audit. A good local CPA will go to the wall for you. Will the service you're considering do the same?
And yes, we can do 2024 catch-up work.
(waseem@pilot.com if folks have any specific questions)
Here's my best articulation of specifically what makes it hard: https://waseem.substack.com/p/tech-enabled-services
I just want the service.
Sometimes being a Pilot customer feels like I’m being experimented on. Instead of humans reliably doing our books, now I need to hire a fractional CFO (which you conveniently also provide) to double check your work.
We find errors in our Pilot books at a staggering rate. Things that would never be missed if we just had a human bookkeeper.
The value prop for a “tech enabled service” from a customers perspective is non-existent. It’s not cheaper for the customer (I pay you over $25k/yr for doing very little), the quality isn’t any better, and as we see with Bench (who also raised $100 million) there’s incredible risk in relying on it as a business critical service.
Anyone reading this, just please go hire a human bookkeeper. Don’t believe the marketing spin pitched by these tech enabled services companies.
I'd think that the last thing a company wants to do is hire an bookkeeping company that seems shady.
Sure ultimately everything falls upon me the founder. But something so common as GUSTO payroll should never be miscategorized and hidden from view.
https://news.ycombinator.com/newsguidelines.html
What sort of accounting books were being prepared where such a function is even needed?
The difference is that you can recognize the revenue on receipt of the cash, but at the same time, you also recognize the liability to deliver the service (based on COGS etc for the liability).
The liability reduces as you expense (and actually pay on a cash basis) the cost of supplying the service.
At least that's my non-accountant idea of how it works.
I may be completely wrong.
This is fascinating. That smells like actual fraud on their part.