The accounting software market - Brazil

1.2 The fast-growing global market

In ****, the global market for accounting software was worth $*.** billion, up nearly *% from ****. Forecasts predict very strong growth over the coming years, with a CAGR of *.*% over the period ****-****, to reach a market of $**.** billion by ****. This strong growth will be driven mainly by the digital transformation undertaken by many companies. Moreover, this transformation will mainly take place via Cloud Computing, through SaaS (***) [***].

World market for accounting software World, ****-****, in billions of dollars CAGR +*,*% Source: ****

In ****, the main region in the accounting software market was North America, with $*.** billion or more than **.*% of the total market in value [***].

1.3 A small, but fast growing market

In ****, the software sector in Brazil (***) was worth **.** billion US dollars, representing a **.*% growth from **** [***].

Size of the software market Brazil, ****-****, in billions of US dollars Source: ****

As the figure above includes a market much wider than the scope of this study, we need to do further calculations in order to understand what is the size of the accounting software market in Brazil.

For this, we first calculate what is the share of the accounting software market of total software market. We do this the following way:

Share of global accounting software market in **** = Size of global accounting software market (***) * *** = *.**%

Therefore, if we assume that the Brazilian market follows the same pattern as the world market, the accounting software market thus represents *.**% of the overall software market in the country. This means that the Brazilian accounting software market can be estimated at *** million US Dollars in ****.

1.4 The impacts of the Covid-19 pandemic

If the market for accounting softwares has already been growing rapidly in recent years, the Covid-** pandemic only helped to accelerate this trend. With most businesses having to employ work-from-home (***) measures in order to comply with lockdown restrictions, the reliance on technologies has never been greater.

Big companies that had already begun their digital transformation in the years prior to Covid-** saw their efforts paying off, and even invested more into newer systems that would further help them in the future. On the other hand, smaller companies (***) saw how crucial new technologies are for their companies, thus investing into these if they hadn't previously.

Accounting softwares are incredibly helpful in times when people are working from home. Below are some reasons why these systems will help companies not only deal with the crisis, but also help them thrive in the future [***]:

Typical accounting practices greatly rely on confidential information that is usually protected by a company's computer network. With employees having to work from home, they need to have access to this information remotely, resulting in potential security issues for the business. By using accounting softwares, companies are able to protect their information. Without having access to the resources typically available ...

2.1 Still a low popularity for accounting softwares

Most of Brazilian companies have not yet evolved to more modern and efficient ways of doing business. In fact, according to a study conducted by Capterra in ****, only **% of Brazilian SME's use accounting softwares to help them with their finances. The vast majority are using systems like Excel or Google sheets (***), while a surprising **% of SME's still use pen and paper.

How Brazilian SME's deal with their finances Brazil, ****, in % Source: ****

In comparison, **% of SME's in the Netherlands are using accounting softwares, and **% in the UK.

Moreover, it is important to note that more than half of Brazilian SME's (***) tend to use external help more than smaller SME's.

Share of SME's using external help for their finances Brazil, ****, in % Source: ****

2.2 The problems encountered by companies

One of the main reasons as to why companies would decide to take on board accounting softwares is because of the issues they face dealing with their finances. In Brazil, one of the main accounting challenges SME's face is managing to keep up-to-date with laws and regulations, which was cited by **% companies surveyed in a study as their biggest challenge.

Main accounting challenges faced by SME's Brazil, ****, in % Source: ****

However, despite the accounting challenges faced by companies, a lot of them still choose to perform this activity without any sort of help (***) is expensive and would require investments to be made from the business.

Because of this, the general rule is: the bigger the company (***), the more likely they are to be using accounting softwares to deal with their finances. This is because of two reasons:

Bigger companies are more financially capable of investing into these softwares Bigger companies tend to have more complex operations and the adoption of an accounting software would simplify this for them

Adoption rate of accounting softwares by service & retail SME's Brazil, ****, in % Source: ****

Problems with the accounting softwares

While it seems like accounting softwares solve a lot of issues for companies, from those that have ...

2.3 A positive outlook for the future

Despite the current relatively low popularity of accounting softwares in Brazil, it seems like the awareness of these among companies in the country (***) is growing.

In fact, according to the same study conducted by Capterra, **% of Brazilian SME's that currently do not use accounting softwares are planning on investing into some system like this within the next ** months. Moreover, of those companies that already have some accounting software integrated, **% intend on investing into a new solution.

Propensity to invest into accounting softwares Brazil, ****, in %

In terms of spending, most companies (***) would be willing to pay anywhere between R$**-** and **% would be willing to pay between R$**-**. It is important to note that the bigger the company, the more they would be willing to spend too.

How much are companies willing to pay for accounting softwares? Brazil, ****, in % Source: ****

On-the-go accounting

Beyond just accounting softwares for laptops and desktops, what many Brazilian companies are also looking for is the possibility to access their accounting records remotely (***). In fact, while **% of the SME's surveyed that already use an accounting software claimed that having remote access is important to them, only **% actually use this feature. This therefore presents a real opportunity for ...

2.4 How companies choose their accounting software

Given the novelty of these systems, companies need to do their research before deciding which software is the right fit for them. Starting with the most important criteria for companies when it comes to choosing their software, we find that the most important aspect is the system's ability to satisfy the needs of the company (***) [***].

Most important criteria for choosing what software to use Brazil, ****, in % of companies surveyed Source: ****

Moreover, the choice of software to be used tends to be mainly made by the owners of the company (***). Only in **% of the times the choice is made by everyone in the business, while only *% of the companies let their employees make the decision. 

Who decides on which accounting software to use Brazil, ****, in % of companies surveyed Source: ****

It is also interesting to see that the vast majority of companies do not do thorough research before choosing the software. In fact, two thirds of the companies only research between * and * different softwares before making the decision. Only *.*% of companies search more than ** different softwares before choosing.

Similarly, the time taken to make the decision is also very short, with more than half of the companies making the decision in less than ...

3.1 The larger ERP market

The accounting software sector is part of the wider ERP (***) market. This is a market that was estimated at approximately R$*.** billion in **** and is controlled by * major companies; Totvs, SAP and Oracle, which controlled **% of the ERP market in Brazil combined [***].

Market share by company in ERP Brazil, ****, in % Source: ****

If we take the leader of this market, Totvs, as a representation of the whole market, we see a market that has grown by nearly **% between **** and **** [***].

Given how the accounting software market is part of this ERP market, we can expect it to be following a similar positive trend. The main difference between these two markets, however, is that the accounting software market is much more fragmented than the ERP market.

3.2 The accounting softwares being used

According to a **** survey conducted by Capterra, below are some of the accounting softwares being used by Brazilian SME's:

Alterdata Quickbooks Conta Azul Sage SCI Notasoft Fortes Contábil Domínio Arquivei eNotas Vfatec

A study conducted by Nibo in **** showed a slightly different result in terms of accounting softwares being used by Brazilian companies in general (***). It is interesting to note that there is a vast number of options of softwares available for companies, therefore this sector is highly fragmented.

Most used accounting softwares used by companies Brazil, ****, in % of companies surveyed Source: ****

While the information above might be representative of the market, the survey conducted by Nibo only included over *** respondents (***), therefore the real usage rates of these accounting softwares might be slightly different.

Moreover, not only is it important to understand which softwares are the most popular, but also which of them are the best according to consumers. Using the NPS (***) are the lowest rated according to Nibo's study.

Best accounting softwares according to NPS Brazil, ****, in % Source: ****

3.3 A market based in the South-Eastern region of the country

It should not be a surprise that the Brazilian region where accounting softwares are most popular is the South-Eastern one. In Nibo's **** study, where only companies that have an accounting software integrated were considered, more than **% of respondents came from three South-Eastern states; São Paulo (***) [***].

Distribution of companies using accounting softwares

Brazil, ****, in % of total respondents

Source: ****

While the map above only considers the respondents of the particular study, it is nonetheless somewhat representative of how the overall market is structured.

Moreover, taking the wider software market in Brazil as representation, we can see the importance of the South-Eastern region. Over **% of the sector's turnover in **** was realised in this region, with the Southern region coming second with **% [***]. 

Breakdown of the software market turnover by region Brazil, ****, in % Source: ****

4.1 The features of accounting softwares

Accounting softwares provide a more automated way for companies to deal with their finances. Below you can see the main advantages for companies of these systems according to Oitchau.

Cost reduction - Given how accounting softwares automate tasks that were previously done by accountants, companies can save costs by cutting down on their workforce. Higher productivity - Accountants will benefit from higher productivity using accounting softwares, given how these systems automate some of the tasks done by them. Reduction of errors - With accounting softwares, human error is less likely, as most of the tasks are performed by a computer. Faster processes - Tasks can be done simultaneously and instantly, reducing the overall time taken for processes to be complete Data security and protection - Accounting softwares offer * safety features; the fact that a back up for the information is always made (***), and also because it can limit the access to the information for some people, making it confidential. Integration between systems - Oftentimes (***), accounting softwares allow for the integration between the various different systems the company uses, thus simplifying the operations.

Moreover, accounting softwares can be split into * different categories according to its features [***]:

Low-end: Softwares with simpler features that ...

4.2 Comparing the offer

Given how there are so many players in this market, in order to ensure that their softwares stand out, companies need to provide services that differentiate themselves from competitors. In Nibo's **** study, various accounting are ranked based on factors such as:

Recommendation; how likely users are to recommend this software to a friend Implementation; how easy/simple the implementation process is Support; how good the system's customer support is Updates; how often (***) the updates of the system are

For all of these aspects, respondents gave scores from *-** (***) to the softwares that they use. For all of the factors above, Nasajon, Fortes and Domínio were the software providers that constantly ranked the highest.

Below you can see the top * companies with the highest average ratings for the factors mentioned above. 

Ratings of accounting softwares in regards to recommendation, implementation, support and updates Brazil, ****, in scores from *-** (***) Source: ****

In regards to the different areas of a business that these systems help with (***), Nasajon, Domínio and Fortes were once again the systems that were rated the highest, with Alterdata and Contmatic also worth being mentioned.

Ratings of accounting softwares in the areas of accounting, fiscal an human resources Brazil, ****, in ...

5.1 Regulations

The Brazilian Accounting Standards (***) are a set of rules and procedures of conduct that must be observed as requirements for the exercise of the accounting profession, as well as the doctrinal concepts, principles, technical structure and procedures to be applied in carrying out the work provided for in the standards approved by resolution issued by the CFC.

The Brazilian Accounting Standards edited by the Federal Accounting Council (***) must follow the same elaboration and style standards used in the international standards and include the Standards themselves, the Technical Interpretations and the Technical Communications.

Brazilian Accounting Standards are classified into Professional and Technical Standards.

The Brazilian Accounting Standards, whether Professional or Technical, establish precepts of professional conduct and technical standards and procedures necessary for the proper exercise of the profession [***].

6.1 Segmentation

• Sage
• Domínio
• Alterdata
• Wolters Kluwer (Prosoft)
• Folhamatic