Back in 2017, Xero released their ‘Digital or die’ report, a research piece into the ‘digital accounting renaissance’. Amongst many interesting statistics, one of them stood out more than others…
It was found that digital practices running on Xero, grew their year-on-year revenue 4x faster than the industry average.
Sounds great, right?
So why aren’t more firms doubling down on their digital strategy instead of just dipping their toe in the water?
Digital firms aren’t as digital as you might think…
In a more recent study completed this year, Co-founder of Appacus Academy and Cloud Accounting expert, Matt Flanagan, looked at the Xero accounts for 350 businesses from 10 digital accounting firms.
Out of those 350, only 9 were found to be at a ‘quality standard’. A whopping 2.6%. But what does a quality standard mean?
According to Flanagan, this standard which he refers to as ‘Cloud Accounting Platform 1’ (CAP 1) means having:
- Automated bank feeds set up
- Invoice automation e.g. Receiptbank
- Monthly processing at a minimum
“If you don’t have this set up for your clients, then you’re leaving them open for attack from firms who set up Xero with client experience in mind” he says.
He used an example of a shop using a till system that integrated with Xero. “Imagine the shop uses an app like Vend for till management. This feeds data into Xero every single hour. Now imagine if that shop’s accountant was only looking at this quarterly, or even worse, annually. The shop owner can see this live, yet they can’t get an up to date picture of their business finances because the accountant is lagging behind. As soon as that shop owner speaks to another whose accountant is doing this regularly, they’re going to want to change.”
But the implications of having this set up not only impact your clients, it also affects the types of additional service an app advisory you might be looking to provide.
With a huge range of Xero add-ons available for cash flow forecasting, virtual credit control and management reporting, these are only as good as the data that goes into them. Without up-to-date, accurate data in place, using these apps to help your clients businesses becomes challenging to say the least.
How can you double down on your digital strategy?
So if CAP 1 is the minimum we should be striving for, what steps can you take to double down on your digital strategy?
Start by prioritising your clients. Highlight your top fee earners and focus on those first. Make it a project and set clear KPI’s and targets for getting them set up. “Even if you offer it to them, and they say no, at least you’ve offered it to them. They can’t say they haven’t been told about it before if they get speaking to a competitor accountant” Flanagan says.
Then it’s just a case of working through the rest of your client list bit by bit in order to get them properly set up.
It’s a project that will take time and focus. But one that will reward your firm with greater efficiency, profitability and client retention in the long run.
With the introduction of Making Tax Digital, lots of firms have thrown clients onto cloud accounting packages for the sake of having them on there. Is this really making the most out of the software that’s available to you and your clients?
If you want to find out more about the different technologies, apps and processes now available to the UK accountancy profession,and how to double down on your digital strategy, go and check out the Digital Accountancy Show.
What is the Digital Accountancy Show?
Taking place next March in the new, state-of-the-art Tottenham Hotspur Football ground, the free show is bringing together the world’s leading accounting technology and apps all under one roof.
Founder of the Digital Accountancy Show, Dan Cockerton, said “the technology and apps available to UK accountants has the power to dramatically change the future of the accounting landscape like never before. There is so much potential for both practice owners and their clients to enjoy the benefits that this technology can bring to their businesses.”
With an App Village where 40+ leading apps will be exhibiting, an App Advisory hub run by Matt Flanagan and the team at Appacus, and a number of bite-sized lightning talks given by leading world experts, the show is the perfect place for you to discover the benefits technology can bring to your firm and your clients businesses.