Chief executive of RightWay, Greg Sheehan, confirmed to Accountants Daily that the firm will be closing its Australian operations, effective immediately.
Staff were informed of the decision last week, and clients are in the process of being informed.
Mr Sheehan cited cost issues as one of the main factors behind what he described as a “very tough decision.”
“We certainly don’t have a revenue issue in this business. We’ve been going six years now and in every one of those six years, we’ve doubled our revenue,” he said.
“Australia runs at a considerable cost. We’ve been looking to raise capital in the Australian market to fund that, we’ve been unsuccessful in doing that primarily because we’re not a tech company. We’re a fast-growth services business, and that’s a little bit beyond the reach of most investment company mandates,” he said.
The firm is currently in the process of “finding homes” for its clients, and working with its Australian team members to help with re-employment, Mr Sheehan said.
Mr Sheehan doesn’t anticipate this closure will have a direct flow-on effect to its New Zealand operations, which is where the firm original started.
“We are addressing some cost issues in our New Zealand business – we’ve got a much larger business in New Zealand,” he said.
“Some of the costs we’ve got in New Zealand also supported our Australian operations,” he said.
“It’s a really tough time for the Australian and New Zealand businesses, but we’re really optimistic about RightWay into the future and being able to service small business customers,” he added.
RightWay began operations in New Zealand in 2011, and commenced in Australia approximately two years ago.
The firm has approximately 130 staff, 20 of which are in Australia.
Mr Sheehan said the firm remains committed to championing an alternative model to the traditional accounting practice, despite this closure.
“We’ve always been an ambitious business. One of my three co-founders, [Hamish Edwards] is one of the co-founders of Xero, and we are aware of Xero and what it’s done on the software side for accountants,” he said.
“What we wanted to do was tackle the services side, and we felt that the way accounting services were being provided by the practice model, which has built up over many years, [is somewhat of a] broken model,” he said.
While it’s an alternative business model to the traditional practice structure, in effect the firm services small business customers with their accounting and tax needs, but is also “very much focused” on being a business advisor.