Learning from the collapse of bench.co

The sudden demise of Bench.co, once a rising star in startup accounting, has left thousands of founders scrambling to manage, and even just access, their financial information. This collapse serves as a stark reminder of the risks startups face when outsourcing their accounting without retaining control over their data. For the startup accounting sector, it’s a wake-up call about the need to balance automation with service, insights, value, and partnership. For founders, it underscores the critical importance of vigilance in managing their financial data.

Founders Must Take Charge of Their Data

The Bench.co fallout has revealed a glaring vulnerability: suspended access to financial systems. Founders relying solely on third-party platforms now face the daunting reality of limited access to their own financial information. Bench’s promise to reinstate access at a later date—and even then, only temporarily—is cold comfort for founders who need that information now to meet payroll, engage with investors, manage tax deadlines, or make final decisions on transactions for the 2024 financial year.

At Startup Partners, we believe financial data is the lifeblood of any business. I’ve written about this in a previous post. Founders must expect and demand full, unrestricted access to their financial systems and data at all times. It’s not just a matter of convenience; it’s about ensuring operational continuity, meeting compliance requirements, and making real-time decisions.

Full-Time, Real-Time Vigilance

Managing a startup means staying on top of financial data on a full-time, real-time basis. Founders cannot afford to be passive. They need systems and partnerships that empower them with immediate visibility and control. This means:

Cloud Access: Financial systems should be accessible 24/7 from anywhere in the world. If you need to ask for your financials, or wait for an email to tell you the state of affairs, you are at risk.

Data Ownership: Founders must retain ownership of all financial records, ensuring they are not locked into proprietary systems. Data access should be provided on non-proprietary platforms, and a full read-access account should be provided to at least one key person at the startup.

Backup and Portability: Regular backups and the ability to migrate data quickly are non-negotiable safeguards against disruptions like those experienced by Bench clients. The fact that founders are having to rely on the goodwill of Bench employees who are now out of a job, to restore their financials, reveals a massive financial risk that could be mitigated by eliminating firms who can’t, or won’t, provide full data access.

Proactive Monitoring: Founders should expect alerts and reports that highlight critical financial metrics without having to dig through raw data.

At Startup Partners, we use non-proprietary systems and processes that give founders this level of control and transparency. Our clients own their financial data, and our approach ensures they’re never at the mercy of suspended systems or opaque processes.

Does the employer.com buyout change things?

If anything, it makes things worse, other than in the very short term. According to their own website, “Employer.com is based in San Francisco and offers workforce management software for payroll, compliance, and more.” They are not an accounting firm, are not focused on the startup sector, and have only invested opportunistically in the aftermath of failure, not driven by a strategic mission. I see no reason for any founder to take comfort in the employer.com acquisition, and would encourage any founder to take the opportunity to look elsewhere for their strategic finance and accounting services.

Lessons for the Industry: Balancing Technology and Trust

The Bench.co collapse is a cautionary tale for the industry. While automation and technology can drive efficiency, they cannot replace the fundamentals of service, insights, and partnership. Moreover, service providers must ensure that clients always have full access to their own information. Anything less erodes trust and leaves startups vulnerable.

At most risk are those firms backed by Private Equity investors. Their relentless taking of shortcuts and cutting costs perpetuates a “race to the bottom”. This has been widely discussed in the media and will be the subject of an upcoming article I am researching now. Any founder should be wary of any accounting firm with Private Equity backing, and make sure that before signing, their diligence reveals a thorough understanding of their ownership structure and their success metrics.

Moving Forward: A Call to Action for Founders and Service Providers

For founders, the Bench.co situation underscores the need to stay vigilant. Take ownership of your financial data, demand transparency, and work with partners who prioritize your needs—not just their processes.

For the accounting services industry, the lesson is clear: technology is a tool, not a solution. The promise of automation must be backed by robust service, proactive communication, and an unyielding commitment to transparency and data ownership.

The takeaways

At Startup Partners, we’re redefining what founders should expect from their financial partners. Our systems are designed to ensure full access, real-time visibility, and tailored insights that empower founders to make informed decisions. We don’t just deliver data—we deliver trust, clarity, and value.

The Bench.co collapse need not be the norm. By embracing a balanced approach and staying vigilant, both founders and service providers can build a financial foundation that supports innovation and growth—without compromise.