For small business owners that are constantly feeling the pinch of rising cost-of-living expenses, adequate business support can alleviate many of those pressures and are one of the reasons more businesses are turning to Reckon (ASX: RKN) not just for their accounting needs, but also payroll. 

Making their mark as one of the most popular bookkeeping platforms in Australia as a low-cost alternative to more fancied brands, Reckon now has more than 117,000 users for their cloud-based platform. While the bulk of those are bookkeeping users, the tech company is seeing a rising trend in its payroll solutions which now processes the pay for more than 400,000 employees. 

That number has increased by approximately 100,000 in the past year which has been a transformative one for Reckon, adding new features to their platform and eliminating debt. 

For the 12 months ended 31 December 2022, Reckon generated $51.2 million in revenue which represented a 2% increase from the previous year, normalised for the removal of their major asset sale in August 2022. 

The $100m all cash sale of Accountants Practice Management Group to The Access Group has had minimal impact on Reckon’s primary business, their cloud-based SME platform. 

With the sale though, Reckon has slashed debt from their balance sheet by 81% from $14.7m in 2021 to $2.8m in 2022. On top of that, they also paid a special dividend of $0.57 to shareholders, their biggest being fellow fintech company Novatti Group (ASX: NOV) which owns 19.9% of Reckon. 

Factoring in the asset sale, normalised net profit after tax for the year came in at $5m, on par with the previous year. 

“This full-year result caps off a particularly strong 12- month period where Reckon cemented its position as a leading, innovative technology company that has the capability to deliver outstanding returns for shareholders, fund its growth through ongoing R&D spend and strengthen its balance sheet with a material reduction in net debt,” said Reckon CEO Sam Allert. 

“With more than 400,000 Australian workers now paid through Reckon software and a major market opportunity for its practice management software in the US legal sector, the Company has laid its foundation for long-term growth with a subscription-based revenue model.” 

Of their $51.2m, Allert notes that 91% of it is recurring, emphasising the scalability of Reckon’s bookkeeping and payroll solutions where SME business owners subscribe for monthly or annual packages at just a fraction of the cost compared to the likes of MYOB or Xero. 

Growing not just their customer base in Australia, but now also globally, Allert is cognizant of the rising needs from SME owners that are constantly seeking faster solutions and greater automation. While slashing debt from their balance sheet, Reckon has continued to invest in R&D which has enabled new features to be added to the platform over the past year which include automated billing solutions, BAS compliance and Integrated payments solutions with Novatti which have created additional revenue opportunities. 

Going forward, Reckon foresees growth in their SME solutions where the addressable market in Australia and New Zealand comprises more than 3 million customers that can benefit from the integration with Novatti, facilitating faster payments with cheaper transaction costs.