The IP cloud

Liquid Accounts is growing fast, but can its IP keep up?

Say you are trading internationally. You deal in pounds, Euros and dollars. You are thinking about opening an overseas office. Five years ago, you would have paid six figures for an accounts package and an infrastructure of servers to support this kind of operation.

Today, you can pay £120 a month to run all your accounts over a web browser. If you are a small or medium-sized business trading locally, you will pay less, as you can turn off all the functions you don’t want, such as multi-currency banking.

This kind of cloud computing is now within reach, says Matt Holmes, founder of Liquid Accounts. "It is going to revolutionise how we use software in the workplace. All you will need is a browser on your PC. Forget any other software. You can access it directly over the web. Security is tight enough now - and you can programme any of the functions you are likely to want."

With his two partners, Holmes spent three years developing an online accounts package. After launching last year, sales reached £106,000. Liquid Accounts is now adding two to three new customers a day and subscriptions should double this year to £250,000. Once they reach £1 million, the business will become highly cash positive.

To reach this position, Holmes knows he has to be sure of holding on to his intellectual property (IP). At an early stage, he thought about applying for a patent, but was advised a software application like his would be unlikely to qualify.

Instead, he has relied heavily on copyright. The programme has been written entirely by Liquid Accounts themselves, so they have not had to clear anybody else’s rights. All Holmes’s team of eight, based in Huddersfield and Exeter, have clearly assigned their IP to the business and put their names to confidentiality agreements.

The worst case for Holmes would be if someone were to lift his source code. "They could buy a browser and be running within ten minutes."

"We make sure none of our users ever see the code. Internally, it is password protected. All our developers have to log in. They check documents in and out, before anything is distributed to servers. Our source code is locked in."

If someone was determined to take the code, Holmes admits, it would be hard to stop them. "Even if they do run off with it, they do not have five years’ experience of establishing the business model. What you cannot copy is the business acumen accumulated in the brand."

Liquid Accounts is well established as a trade mark and a domain name. In five years of trading, no-one has challenged its use of the word Liquid. However, as they grow bigger and into more countries, legal questions are likely to be asked.

On setting up the business, Holmes asked about registering the trade mark. He was advised that he could register it for £2,000, but would need to pay a total of £16,000 to process any legal queries. At the time, he did not have the funds to cover the bill.

He has just been through a second round of funds for growth and marketing. Trade marks are on the top of his list of priorities, though he worries about the legal complications, particularly as he is picking up customers from overseas.

"As we grow, we have to stay on top of our IP," he says. "I know that five years down the line if someone makes an offer, I will have to prove that all our IP is held within the company."

Visit the Liquid Accounts website