Xero Pacesetters – Review Part 1

In amongst the plethora of accountancy related books released at the moment, we have Pacesetters from Doug LaBahn and Josh Drummond of Xero. It covers the story of 16 bookkeepers and accountants from the UK. As the title implies, these are the firms who have adopted cloud technology early and have reaped success on the back of this cloud adoption.

The book has a good structure; ten chapters covering different aspects of the path of cloud adoption, which include the mistakes that have been made and the best practice approach to take. Comments and the individual stories from the pacesetter firms are included at the end of each chapter. There are also statistics and charts included from the Xero Accounting Industry Performance reports – data provided on an annual basis from Xero partner firms, which was a total of nearly 1,000 accountancy businesses last year.

Quite rightly there are the stories from firms that were at the bleeding edge, not cutting edge of cloud adoption in the UK; Paul Bulpitt of The Wow Company, Emma Fox of Fresh Financials, Alex Falcon Heurta of Soaring Falcon and Will Farnell of Farnell Clarke.

These firms have, quite rightly, been covered by Xero extensively in case studies, so apart from stating that they wanted to offer a new service to clients, based upon utilising technology, I’ll focus on some other firms, who are new to me.

Armstrong Watson are a traditional firm, with 4,000 clients, spread over 14 offices, in Cumbria, Leeds, Glasgow and principally the North West of England – not regarded as the most thriving of geographical areas. One partner, Grant Smith, got the Xero concept quickly and started to move his clients across. He ran Xero events back in 2013, but struggled to bring his partners across. Eventually, he managed to advise them to attend Xerocon, and then this very proactive firm “got it”. They have since had a Big Bang approach, where they have trained all team members and now have all the 2000 clients affected by MTD for VAT on Xero – i.e. unaffected. What does shine through, is that even though this firm is very go ahead, there was a lot of initial resistance to change.

Paul Lodder of Sagars, Leeds was seeing clients leave them, as they did not offer any cloud accounting tools. Devising a strategic plan to the partners, which had clear ROI, enabled Paul to get ownership of a firm wide plan to deliver Xero to their clients.

Jonathan Bareham of Raedan Limited left a large firm, where he was tired of creating Excel spreadsheets. Leaving without a job to go too, Jonathan has created a Central London based firm, that makes heavy use of technology, based upon the Xero platform.

So, what are the key takeaways from the book:

·       Expect resistance from colleagues to new projects – most accountancy firms are doing OK, why change. I can’t believe that this opinion is still prevalent today, because if you have not made your accounting platform choice, you are well behind the curve, with MTD for Vat due in April 2019.

·       Give your team time to be trained properly. Introducing any new piece of software is about change management. Training time, collaborating with colleagues is essential to build up skills and confidence. Start with internal jobs, before you start rolling out to clients. Training is essential, if you want to build capacity within your business.

·       Have your plan, segment your client base and use tools such as MovemyBooks to move client data across.

Don’t have an app frenzy on Day One. Choose your key apps, such as:

Expense capture                        Receipt Bank, Hubdoc, Auto Entry

Practice Management                Onkho – workflow is free, Senta, UsePixie, AM.

Then when these are embedded you can look to roll out additional apps such as Business Forecasting payables.

As you build up knowledge, you can start to roll these out to clients at a greater scale.

Do not appoint a Cloud champion to own all the knowledge of apps, that only leads to bottle necks, but appoint a Cloud Champion to manage the team. My own view is that you should not have a separate cloud division with in the firm, the whole firm needs to adopt. Xero, along with a couple of the most popular apps within the eco system has its own accreditation and as many people as possible, need to be accredited.

Big Mistakes are:

                                                   Just “testing” the Cloud

                                                   Over reliance on Cloud

                                                   Using the wrong apps

                                                   Allowing clients to choose the accounting platform.

Advice is available from your peers, Xero Account Manager or an independent consultant.

Data from the Xero Accounting Benchmark is spread liberally throughout the book. It confirms that:

·       Xero users are winning more clients than non Xero users

·       Xero users are able to look after more clients per average team member

·       Xero users are more profitable firms than non-cloud users

·       Xero pacesetters have a much higher % of revenue that is advisory compared to non Xero users. Nigel Adams at AD Valorem has 25% of revenue compared to an average of 4%

The most stat for me, was that 224,000 small, medium sized businesses switched accountants. So 40% of all newly, acquired clients from the 1,000 firms in the survey had switched. Presumably from a non-cloud to a cloud accountant. Early anecdotal noises from Australia, suggest that cloud accounting, does deliver a reduced level of customer loyalty.

So, the additional time that cloud accounting delivers, has to be delivered in spending more time with clients, understanding their desired outcomes from their business and making sure that the relationship is rock solid.

There are 2 chapters on advisory, but I’d like to cover those in a separate blog.

It’s a decent read and worth the investment of ￡14.99 from the Xero store. Lots of practical advice from firms that have done it, lots of reference points for additional learnings. Can’t help thinking that the people who need to read this i.e. the accountants supporting the 1.85 million small, medium size businesses still to purchase a could accounting tool, will be the ones who will not purchase.

I am currently working with ambitious Accountants, looking to grow their, using the principle of "Acres of Diamonds." Ideas to help your clients grow, include running Business Clubs at your premises.

I have worked in the accountancy software sector since May 1996. I worked at IRIS ( Corporate Sales Director: 1996 – 2006) and Thomson Reuters Digita (Sales Director: 2008 – 2011). Since working for myself, 2011, I have consulted with Nomisma, onkho and PANALITIX, amongst working with many firms directly.

I can be contacted via LinkedIn, @LangdonHamblin or [email protected]