For most Xero practices, the cloud journey is well underway, but has the digital approach to accounting and business advice achieved its full potential in the UK yet? In short, has cloud become King within the UK accounting industry?
This Spring, we surveyed 297 UK accounting firms to gauge the impact of accounting technology on practices today. Here are 5 of our findings
1.Xero is the UK’s accountant’s first-choice platform
67% of firms recommend Xero. Xero was the platform of choice among the firms that took part in the survey, with over 67% of respondents recommending Xero to their clients, and 45% using Xero themselves.
That’s good news for the future expansion of Xero, especially given Xero’s recent rebrand to the ‘Beautiful business’ strapline and the company’s increased focus on becoming a full-service business platform and ecosystem, rather than just an accounting software application.
2. Cloud helps you grow and drive profits
23% place increased use of tech as a top priority. The no. 1 priority for accountants in our survey is acquiring more clients, with 41% making it their top priority. That focus on client acquisition is nothing new, but what’s interesting is how technology is increasingly helping firms to win these clients.
23% of firms see increased use of automation and technology as a top priority.
With an increased focus on technology:
Firms are seen as tech-savvy and app specialists in the marketplace
Businesses benefit from the efficiencies of automation
Staff spend less time keying in, and more time with clients
Firms can offer deeper insights and value-add services
Client:Bookkeeper ratios are boosted, increasing practice efficiency
Fees are lower due to increased client numbers and economies of scale
Scaling-up your accounting firm is only possible with these technological foundations in place, as Xero Head of Accounting and The Wow Company founder, Paul Bulpitt, recently noted:
“It’s a no-brainer to have Xero for the accounts and apps like GoCardless and Receipt Bank providing a platform that we can operate from as a business. The time and efficiency savings of having something like GoCardless to collect our fees automatically is insane – we’d probably have grown more quickly and earlier if we’d had Xero and Receipt Bank etc. in place sooner.“
3. Client adoption still needs improvement
of the average firm’s client base use cloud accounting. According to our survey, on average, 53% of a firm’s client base is using cloud accounting. And of that 53%, only slightly more than half (57%) are using the firm’s preferred software.
Having half your clients still unconvinced of the cloud approach may sound surprising in 2018. But it’s less surprising when you factor in that 85% of firms don’t make it mandatory for clients to use their preferred software – whether it’s a single platform or multiple software options.
So how can firms do more to boost client adoption of cloud?
At base level, there are 3 key things to get right:
Communicate the benefits of the Xero ecosystem
Make it easy to switch to cloud
Provide onboarding and ongoing education
That’s a methodology that works for Xero partner, Wilkins Kennedy, as Simon Woodhams, Head of Cloud Accounting Software, explained in our recent panel discussion at the UK Accountex event.
“If we’re onboarding, we’ll always tell you about what software we’re going to provide for you. Then in 2 or 3 weeks’ time there will be a free training session. We give clients the software, we follow it up and we do regular updates. That continuous learning is more the way forward now, rather than just getting certified.”
4. Staff need more cloud training
of firms don’t provide compulsory internal cloud training. An impressive 73% of our survey respondents said they had adopted cloud accounting well or very well. But of the firms we spoke to, only 40% provide compulsory cloud accounting training for their accountants, and 32% don’t provide any at all.
Having the right technology sets the foundations for a scalable cloud practice, but it’s your people that are the defining factor in making the strategy succeed – and that means providing the best possible training, education and support for your team.
With online training like Xero U available, it’s easier than ever to train your team, as Sharon Pocock of Kinder Pocock mentioned at our Accountex panel session:
“Our staff tend to have done their Xero certification before they join and then we do regular monthly updates. Most of the software providers we use have really good help centres with quick 2 or 3-minute videos – so you can train up as you need to.”
5. Cloud payments unlock time and cash
of the average firm’s clients pay by Direct Debit. Our survey found that 42% of the average firm’s clients pay their fees using Direct Debit - and more importantly, that there is a clear correlation between Direct Debit usage and a firm’s average debtor days, as well as the time they spend chasing payments.
The higher the % of client fees taken through Direct Debit, the lower a firm’s average debtor days are likely to be and the less time they tend to spend chasing payments.
It’s one of the reasons that many firms choose Direct Debit to collect their own fees – and advise their clients to do the same. This data also shows that uptake matters: firms who move a greater percentage of their payments to Direct Debit are really feeling the benefits.
Having an automated cash collection process really does unlock both time and cash, as Ben Nacca of Cone Accounting explained to us recently:
“Most accountancy firms have a debtor list with a lot of money on the table; with Direct Debit we’re never owed any money, which is really good for business. The set-up process for GoCardless is pain-free – and once everything is set up, cash collection takes care of itself”
What’s next for the cloud?
So, is cloud king? Based on the findings of our benchmarking survey, UK accountants are embracing the online approach and using it to deliver a more efficient, attractive and profitable kind of accounting firm. But there’s still work to do.
Staff need better ongoing training, more clients need to switch to cloud and firms need to increase their use of automation to help them achieve the full potential of the cloud. We’ll be running the Accountant Benchmarking Survey every year, so we’re looking forward to seeing how cloud progresses over the next 12 months.