Yunzhangfang Focuses on Product Development, Redefines Accounting & Taxation
COVID-19 and China
Automatic tax filing replaces manual. REPLACEPhoto: Credit to Unsplash website

Yunzhangfang (云账房) is a fintech company that uses artificial intelligence to replace the traditional financial and tax work in enterprises with cloud computing as its core technology. Yunzhangfang was established in March 2015, its target market is the small and medium-sized enterprises (SMEs) and the bookkeeping agencies. These enterprises are small in scale. It is too wasteful to recruit special financial personnel for this type of business to be responsible for accounting and tax filing. With additional staff social security and other expenses, the full-time accounting company has weak service capabilities, which makes it impossible for enterprises to balance cost and efficiency. The emergence of cloud accounts has made it possible to assist its clients in completing the automatic accounting, automatic tax filing and other relatively simple but repetitive work that are originally completed manually, thereby reducing the enterprise cost.

In less than four years, Yunzhangfang has been developed very rapidly and won several rounds of financing. In June 2015, it received its angel round investment for several million yuan led by Angle Round (AA投资). In May 2016, it won the tens of millions yuan in the A round investment from Zhonglu (中路股份投资), followed by the Angle Round. In September 2017, Yunzhangfang announced the completion of the CNY 100 million B round financing, led by Gaolingzhicheng Fund (高瓴智成基金). In September 2018, it completed the round C financing of CNY 300 million, led by Hillhouse Capital Group(高瓴资本), with cumulative financing of more than CNY 500 million.

The rapid development is due to Yunzhangfang’s precise grasp of the pain point in SMEs’ ​​accounting and tax filing.

First, the service efficiency is not ideal and the workload is uneven. Every month's accounting and tax filing are concentrated on a relatively fixed date. Second, the quality of accounting services is not high. Accounting practitioners and financial positions throughout the country have always been in a state of undersupply, resulting in an increase in labor costs. What’s worse is that many accounting companies have lowered the threshold of employment in order to save cost but affected the quality of services in the end. Third, the agency's service is poor. In the process of operation, the company will often face the situation of the capital budget arrangement, subsidiary company summary, etc. However, due to the high mobility of the agency’s employees, the agent company cannot provide in-depth services for their client.

In response to these pain points, Yunzhangfang seizes two key ones of bookkeeping and tax filing, providing enterprises with integrated SaaS tools, automatically obtaining electronic data of bills, automatic billing, automatic tax calculation and generation of various tax forms. Synchronize billing at one time and update the built-in tax policy in a timely manner to cover multiple taxes.

As of the latest data, the cloud account market share reached 6%. In September 2018, it launched a one-button for full-tax batch declaration in 23 provinces and cities nationwide.

In terms of competition, Yunzhangfang is not competing with those major ERP companies like Yonyou (用友) and Kingdee(金蝶), whose clients have a more complex need in large enterprises. The main target customers of Yunzhangfang are bookkeeping agencies and SMEs who cannot afford Yonyou and Kingdee. Therefore, the article gives a comparison with its two other competitors Jinzhangshi (金账师) and Zhangwuji (账无忌) based on their fundraising condition and operation mode.

Through comparison, we found that the competitors' profit model is to attract clients through their smart account book APP, obtain customer data, and then profit from the integrated financial services in the APP. Yunzhangfang, on the other hand, is focused on doing smart accounting and tax filing software development.

The products of Jinzhangshi and Zhangwuji are more inclined to build an entrance for clients and then provide related financial services similar to Alipay’s ecology. However, that would require a more sophisticated business model, a stable performance of financial services and management experiences.

In this case, Yunzhangfang chooses to focus on intelligent software, investing capital and manpower into data mining, product development, and focusing on customer experience. This is the concept of “service is marketing” that Yunzhangfang has always adhered to.

XUE Xinghua (薛兴华), CEO of Yunzhangfang, said that the funds raised will be mainly used to further strengthen the technical research in artificial intelligence and machine learning, in order to accelerate the construction of its service systems and attract more SMEs. In the future, with the in-depth research of the R&D team, the functions and technologies of the products will be continuously updated. At that time, the target customers of Yunzhangfang will gradually turn to large enterprises as well.

In November 2018, Yunzhangfang initiated and drafted the “Regulations on Agency Accounting Service” and officially released on the National Group Standard Information Platform. Good companies are setting industry standards, such as Microsoft, Intel, etc. In the agency bookkeeping industry, Yunzhangfang may become the industry standard leaders.

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