When Bench Accounting abruptly shut down operations on Dec. 27, 2024, thousands of small businesses scrambled to recover their financial footing in time for tax season. Even though the shutdown announcement was later followed by news of an acquisition by Employer.com, the entire event raised critical questions for loyal Bench customers. I believe many of these questions offer both cautionary and instructive lessons for all of us, especially regarding business partnerships and vendor selection.

Lesson 1: Vet your service providers thoroughly
One of the first lessons we can learn from the abrupt shutdown is the importance of thoroughly evaluating service providers before entrusting them with critical business functions, like accounting and bookkeeping.

While Bench was a well-known name in the industry, it’s long been a mistake for VC-backed companies to become overly reliant on venture capital and make decisions at the expense of their long-term reliability.

When you’re evaluating a service provider, look beyond their marketing claims and focus on their history of results. After all, it’s easy to make promises before the sale. Ask potential providers for case studies, client references, and detailed plans for addressing your company’s specific needs.

Also, while Google can be a great place to find reviews by current and past customers, you might also consider looking on Reddit. Because of its option for anonymity, Reddit can often provide you with more honest feedback because people don’t have to worry about the legalities or repercussions of name-dropping while describing their honest experience.

Lesson 2: AI is a tool not a panacea
Knowing who to call when you have a question or crisis is invaluable.

Bench’s shutdown left clients asking, “Who do I contact now?” Don’t get me wrong: Technology can be a powerful tool for enhancing efficiency. But even the best technology cannot replace the expertise and insight of experienced accounting professionals. Bench’s hybrid model, which relied heavily on automation with minimal human oversight, left many of its clients frustrated by delays, inaccuracies, and an inexperienced support team.

While AI can streamline tasks like data entry and report generation, they cannot interpret complex financial situations, navigate tax issues, or provide strategic guidance. While AI will continue to improve, there currently is an opportunity cost incurred if you choose a platform that is guided by, rather than supplemented, by AI.

When choosing an accounting partner, ensure they prioritize the human element alongside technology. Ask whether you’ll have a dedicated contact who understands your business and can offer strategic advice. The right provider will integrate technology to enhance, not replace, the expertise and support they offer. As one Redditor pointed out, “I’d guess [Bench] thought tech could automate more and found out that the service needed more people and handholding than they expected.”

Lesson 3: Nobody wins in a race to the bottom
Cheap pricing for accounting services hurts both the company and the customers. Another Redditor pointed out that VC-backed companies often “[give] away their services to scale…”buying customers” with their pile of investor money.” Rock-bottom prices not only hurt the market overall by driving customers away from experienced firms charging higher prices but also the company because the pricing is a VC-backed illusion rather than truly competitive.

It’s only a matter of time before cracks start to appear in the facade that’s propped up by flawless marketing and bold claims. This is why you shouldn’t shop service providers based on price alone. Instead, clearly communicate your requirements and verify that a provider has the expertise and resources to address them.

Otherwise, you might end up with cheap services that don’t match your needs or deliver subpar results. One of the key frustrations reported by Bench clients was a misalignment between the services Bench offered and their actual needs. For example, Bench primarily provided cash-basis accounting, leaving clients without accrual-based insights, accounts payable/receivable management, or knowledgeable tax preparation by experienced professionals.

Lesson 4: Prioritize long-term stability over low costs
Bench’s collapse mirrors a common trend among venture-backed startups: prioritizing aggressive scaling over sustainable operations and a long-term perspective. Soon after the shutdown announcement, former Bench CEO Ian Crosby commented on LinkedIn that he was dismissed by the board a while back because they disagreed with his long-term vision for the company and wanted to hire a more “professional” CEO to come in and take the company to the next level. Ian stated that, “I hope the story of Bench goes on to become a warning for VCs that think they can ‘upgrade’ a company by replacing the founder.”

While flashy marketing and low costs can be tempting, these business models often lack the stability and resilience needed to support long-term client relationships. When selecting a service provider, focus on providers with a proven track record of service quality, rather than those that chase quick growth at the expense of operational reliability and long-term success.

Sustainable providers won cut corners or compromise service standards to manage financial pressures. Stable companies will be able to navigate economic downturns or market disruptions without jeopardizing client support. Plus, they’ll be less likely to disappear overnight, leaving you in the lurch.

There’s nothing wrong with pursuing growth, except when it’s at expense of your customer service, team training, and quality of work.

My advice on Bench’s shutdown
As a CPA and CEO of tax and accounting firm MBS Accountancy, I deeply understand the position that Bench customers are in right now. The abrupt nature of Bench’s shutdown announcement will not be easily mollified by the subsequent acquisition. It’s like putting a “new management” sign on a failing business: you’re always left wondering what exactly will be different under this new manager and whether those differences will be better or worse for you.

My advice to you would be this: Don’t choose services based on cost alone.

Yes, your cash flow can look rough, and high fees can seem impossible to pay, but a good accountant can help you address this with cash flow forecasting. A cheap accountant will only make your current situation worse.

Instead of price alone, consider your company’s actual needs and requirements. Heck, use ChatGPT to turn some scribbles and rough ideas into a cohesive summary of your company’s bookkeeping needs (Just don’t use any sensitive information, of course). Once you’ve found a good accounting partner, communicate regularly with them about your concerns relating to their service quality, timeliness of work, or other areas. Clear communication is a good business practice but constant, ongoing communication is a superpower that often helps you get ahead of bad news like the Bench shutdown.

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Cassidy Jakovickas, CPA, is president and CEO of MBS Accountancy Corp. in Fresno.