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Talenom: Growth in Europe through financial administration automation

Talenom is an accounting, consulting and financial services company based in Oulu, Finland. The company has increased its net sales each year by an average of 16.2% between 2005 and 2021. The focus of its growth strategy has been increasing automation by investing in software development work combined with growth through acquisitions in Finland, Sweden and Spain. The company’s net sales in 2021 amounted to 82.8 million euros and operating profit 14.7 million euros. Talenom CEO Otto-Pekka Huhtala stated in the latest inside information for investors that the company’s medium-term financial target for 2023 to 2025 is annual net sales growth of over 30%. We decided to interview this dynamic accounting firm and our cooperation partner to find out about the tools with which it is aiming for growth.

From ready-made software to its own software development and a unique customer experience

For decades already, Talenom has sought to automate financial management processes that were previously done on paper and Excel spreadsheets.

“Even at the beginning of the 21st century, many clients operated on a paper basis. We realised at an early stage that we should be actively involved in automation and the development of digital services or else we would be lacking a key element in customer relationship management. In the 2010s, things really changed to the point that all materials between us and our clients started to move in electronic format. Our next goal is to increase the degree of automation in accounting and payroll to 100 percent,” Huhtala says.

In 2021, the company reported that the automation level of its clients’ accounting had increased to 75 percent and payroll to 50 percent.

Initially, amid the changes brought about by the digital revolution, Talenom relied on software developed by partners. Year by year, however, the amount of software development work under its own control has increased, and ready-made services have been replaced by own software.

“At first, our own experts designed the user interfaces, while almost all the coding was outsourced. However, we soon realised that, in addition to the interface, the development process would be more effective if we took it into our own hands. We have since developed our own accounting software, as well as a payment system for purchase invoices and related client interfaces. In doing so, we have eliminated unnecessary manual intermediate steps from financial management processes and made our clients’ work more efficient,” Huhtala explains, describing the phases and goals of Talenom’s software development work.

Talenom current has more than 1200 employees, 100 of whom are experts in digital services, software design and business processes. In addition, some software development work is still outsourced to support all the development work. In the past year, Talenom acquired a software platform in Spain and began implementing its own platform in Sweden.

“During the past three years, we have implemented a change in architectures. This work has involved updating both the client and API user interfaces, for example switching from a desktop user interface to a web version in the accounting system. Next year, we will introduce the next version of our accounting automation. The level of our software development doubled between 2019 and 2020, and even after that we have further increased the share of our own development work,” says Huhtala, emphasising at the same time that when implementing changes, the company also anticipates future international growth.

Ahead of the rest of Europe

“We aim to operate in five different countries in 2025,” Huhtala promises.

The company’s ambitious growth expectations are largely based on the EU’s desire to harmonise and digitalise financial administration practices.

“For example, the EU e-invoicing directive will bring invoicing and payments online. Each EU country has its own plan for when it becomes mandatory. Finland has the most advanced infrastructure, our e-invoicing penetration is among the highest in Europe, and banking connections have worked smoothly online for 20 years. We have succeeded in making a digital transformation in Finland, and we see no obstacles why similar progress would not be possible in other countries,” Huhtala says, describing the foundations of the company’s growth opportunities.

Talenom’s international expansion began in Sweden and Spain. According to Huhtala, it can already be seen that, regardless of the country, the challenges are largely the same. Huhtala nevertheless describes certain differences between countries, as well as Talenom’s chances of success in them.

“Sweden is a few years behind Finland in terms of the degree of automation in corporate financial management. Our clients use a lot of different software, but bank connections are an impediment to development. As much as 80% of clients do not have a service corresponding to our client interface, which means that we are bringing a truly new model of doing things to the market. In Spain, on the other hand, you still come across receipts written in pencil. From a sales perspective, neither of these markets is as competitive as Finland, so we have opportunities and ambitions for strong growth,” Huhtala emphasises.

“Our biggest challenge is not related to the competitive situation or the technical development of services, but specifically to selling new operating methods and ideas to clients and shortening implementation times. A lot of resources, both within our own and our clients’ organisations, must be invested in the systematic introduction of services. However, the benefits brought by these changes are clearly demonstrable as the degree of automation increases and manual work decreases.”

Talenom’s vision is to provide superior accounting, payment account and card services for SMEs. In-house software development combined with expertise in the accounting industry is Talenom’s competitive advantage, making it possible to offer a superior customer experience to business clients and at the same time automate Talenom’s own routines. In 2021, Talenom had an average of 1012 employees working at 52 offices in Finland, Sweden and Spain. Talenom shares are listed on the Nasdaq Helsinki main market.

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