At a glance
- Subscription software models can create hidden, rising costs for SMEs.
- A new generation of AI tools is driving costs still higher.
- Accountants should track, audit, and optimise recurring expenses.
Are you old enough to remember software’s simpler age? A business needed a tool, so it bought a box, with a CD-ROM for the computer, and maybe even a manual you could use to prop up a wobbly desk. It was a capital expense – a one-time hit to the balance sheet, depreciated over time. Simple. Tidy.
Those days are over. Today, we live in a world of subscription services. From accounting software to project management tools, from data feeds to design platforms, business software comes as paid online services – with monthly fees.
How subscription happened
For the often gigantic corporations sending the bills, subscriptions make sound economic sense. In 2013, technology strategist Ben Thompson set out the rationale for Adobe’s decision to bundle most of its flagship software products into the Creative Cloud subscription package. Thompson argued that the then-standard per-device lifetime license model would no longer serve the software vendor or the buyer. In the next few years, vendors rushed to accept his logic. Paying subscription fees for Software-as-a-Service (SaaS) became the new way businesses bought software.
Even for the businesses paying those subscription bills, the new model offered flexibility, continuous access to cutting-edge tools, and a better chance to trial software. But it also creates a significant, creeping problem for many business buyers: small, recurring costs that, left unmanaged, can slow down a business the way barnacles slow down a boat.
Like barnacles, subscription services soon become hard to remove. Perhaps they are all a crucial part of a business’s workflow. But perhaps some are services that the employee who left early last year had signed his team up for – and payments will just keep flowing until the business acts.
And a new type of creature is now affixing itself to the side of businesses. Artificial intelligence tools are adding a new layer of complexity and cost volatility for which many businesses are unprepared.
The result: the Gartner organisation, which assesses business software, suggested in a May 2025 report that the average US per-employee SaaS spend has now topped £1,000. That would be a 55% increase since 2021, or 12% per year.
This rise in software subscriptions requires a new kind of financial discipline to keep businesses moving unimpeded.
But experts whose advice we’ve gathered suggest accountants can bring the discipline needed to strip away the subscription barnacles from clients’ costs. They suggest systems for tracking, managing, and optimising these costs – systems that can help accountants move towards a broader business advisory role.
“Someone wants to use a new model from a different provider… now the typical number of consumed tokens changes.”
David Tepper, CEO, Pay-i
The costs beneath the surface
The shift to SaaS and other subscription models has been relentless. The convenience is undeniable, but the SaaS services may multiply almost invisibly under a business’s waterline. In 2023, according to software management service BetterCloud’s State of SaaS 2025 report, the average US business was using 106 different SaaS applications. And that was down from the previous year’s 112. Despite the fall, that’s a vast and complex portfolio for any small or medium-sized enterprise (SME) to manage.
This barely visible growth in subscriptions can create significant financial waste. One report suggests that almost a quarter of cloud software spending is wasted. For a small company, the cost could easily run into the thousands of pounds. For a medium-sized one, it can easily run into the tens or hundreds of thousands.
The problem is compounded by a lack of visibility. Finance leaders are often caught off guard; one survey suggests that 78% have been blindsided by software price hikes. When different departments can sign up for tools with a credit card, central oversight vanishes.
These are the dangers that accountants, as trusted advisers, can help their clients to spot.
Unused or underutilised licenses: These are the easiest barnacles to scrape off a business. Companies are often paying for seats for employees who have left the company or changed roles. They may also be paying for more expensive teams to access features their team rarely uses. A quarterly audit of user logs can quickly identify these unneeded licenses.
Overlapping tools: This is a classic symptom of unmanaged SaaS spending growth. The marketing team might use one project management tool while the development team uses another. The sales team might subscribe to a file-sharing service while the marketing group uses Zoom – and neither has realised that the company’s Microsoft 365 or Google Workspace subscription already covers their needs. This redundancy may do more than just waste money; it may create data silos and IT headaches.
The auto-renewal trap: Subscriptions are designed to be sticky. Many contracts are set to auto-renew by default, often locking clients into another year of service at a potentially higher price. Without a centralised calendar of renewal dates, it’s easy to miss the cancellation window, trapping the business in a service it no longer needs.
Unexpected price hikes: As noted, these are a common and frustrating surprise. A vendor might lure a client in with a low introductory price, only to significantly increase it upon renewal. Negotiating price caps or longer-term contracts can provide some protection, but only if you know the renewal is coming.
AI: The New Cost Frontier
Just as businesses are starting to grapple with SaaS growth, a new, more complex wave of technology is arriving: generative AI. The potential is enormous, but so is the potential for cost overruns.
A June 2025 report from consultancy Forrester puts it well: as companies roll out AI tools in earnest, “the associated costs are increasing at an alarming rate”. Unlike the fixed monthly fee of a typical SaaS product, many AI services use a consumption-based pricing model. Such services often measure usage in “tokens” (think of them as small pieces of a word). Every question you ask an AI system (that is, every prompt) and every answer it generates consume tokens. The more you use it, the more you pay.
That Forrester report also notes that many AI systems are coming to market as what is called “black box AI”. Their internal workings and decision-making processes are a mystery to their users, and in some cases even to their creators. Such systems beg the question, “what are we really getting from this system?”
The problem is compounded by the difficulty of measuring AI services’ results. A March 2025 survey by management consultancy BCG suggested perhaps just 45% of surveyed executives could quantify return on investment from their AI initiatives.
David Tepper, CEO of the AI cost-management firm Pay-i, described this process in a June 2025 interview published by Forrester. He argued businesses might be able to forecast AI costs pretty accurately if every employee used a single AI model in a predictable way. “But we don’t live in that world,” he noted. “Someone wants to use a new model from a different provider. Later, an engineer in some department makes a tweak to the prompts to improve the quality of the responses … The model provider updates the model snapshot, and now the typical number of consumed tokens changes. And so on …”.
Tepper suggested that the cost of an AI use case is not a single number but a statistical distribution – which makes budgeting incredibly difficult. He offered a powerful analogy: AI agents are like a new digital workforce, and their token costs are their salary.
“If the true promise of AI agents comes to fruition,” Tepper told Forrester, “then we’ll be dealing with many of the same HR and salary issues as we do today, but at a pace and scale that the human workers of the world will need both tools and training to manage”.
This is a profound shift. Accountants are used to dealing with predictable salaries. Now, they must help their clients manage a workforce of digital employees whose “pay” can fluctuate wildly based on the complexity of their tasks.
An SME accountant’s guide to subscription management
By applying classic cost-management discipline, accountants can help clients push subscription spend down towards the amount they actually need.
Larger businesses can invest in a number of “SaaS management platforms” with names like Zylo, Vendr, Zluri and Torii (yes, realli!) as well as the slightly more prosaicly-named BetterCloud, Stackshine and LicenceOne. (Note that these are different from the many tools available to users of Xero, NetSuite and other accounting platforms to take subscriptions from customers.)
But a business may not want to spend the £2 per user per month or more to subscribe to a service like BetterCloud. Gartner suggests in its May 2025 report that not many buyers are yet keen to subscribe to software which helps them spend less subscribing to software. In that case, several less tech-driven strategies can help bring the situation under control.
1. Create a subscription register
You can’t manage what you can’t see. The first step is to get a complete inventory of every single recurring payment. Business management consultant Rachelle Stirling calls a subscription register an “invaluable tool” to track subscriptions. (Stirling’s Online Business Manager site offers a useful Excel-driven subscription manager template.)
At a minimum, Stirling suggests, this register should include:
- the service’s name;
- cost (per month/year);
- billing frequency;
- the next renewal date;
- the payment method used (such as a particular business credit card); and
- notes on the service’s purpose and usage.
Starting this list can be a chore. You may need to comb through bank statements and credit card bills, or use a budgeting app to automatically identify recurring payments. But once built, it can give you a credible picture of your real subscription spending.
2. Set up quarterly reviews
A register is only useful if it’s used. Stirling also suggests you help your clients to set up a regular quarterly review of all subscriptions. For each subscription, ask the hard questions:
- Is it still being used? Check the usage data. Are we paying for 20 licenses when only five people are logging in?
- Is it still necessary? Has its function been replaced by another tool? Could a free alternative do the job? For instance, Stirling notes, Facebook parent company offers its Meta Business Suite for managing Facebook and Instagram accounts; if those are your two key social channels, it may be all you need.
- Are we on the right plan? Could we downgrade to a cheaper tier without losing essential features? Have new, more affordable plans been introduced?
- What is the ROI? Here is the ultimate question: is the value the business gets from this service greater than its cost?
To make sure each review actually happens, you can set it as a recurring task in one of many project management and workflow systems.
3. Refine the chart of accounts
For better tracking and analysis, subscription costs shouldn’t be dumped into a generic “Software” or “IT Expenses” account. You can work with your clients to add extra structure to their charts of accounts, with sub-accounts for subscriptions by different departments of functions. That should give the business owner greater power to see where subscriptions are driving up costs.
And watch out for what LicenceOne CEO Johnathan Bell has dubbed “shadow IT”, where business subscriptions are inaccurately coded, sometimes appearing as employee expenses.
4. Pay annually
Once you know which subscriptions are making you money, Rachelle Stirling points out, you will also be in a position to pay for longer-term licences. If you extend a monthly licence to two years, you’ll often pay a lower per-month cost.
5. Embrace governance
Ultimately, managing subscriptions is a form of IT asset management. So it requires clear governance that restrains employees from waving the company credit card at every attractive new subscription service.
The goal of this management discipline is to transform subscription spending from a chaotic, decentralised mess into a collection of strategic investments. Accountants are well-positioned to lead that transformation. The tools may be new, but the principles of good financial management are timeless.
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