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Partner Pages 2020: All in on advisory

Posted 9 months ago in Xero news by Guest
Posted by Guest

By Ben Chandler, Principal, Strategy1, Tasmania

Welcome to Partner Pages: a magazine made up of stories from the Xero Partner community, for the Xero partner community and shared as part of Roadshow Australia each year.

Accountant Ben Chandler left sunny Queensland for the brisk, cool climate of Tasmania nearly ten years ago. But it wasn’t just a change of scenery that he discovered upon his arrival. Following a visit to his local Xero roadshow, Ben was introduced to the wonders of cloud-based accounting and the Xero app ecosystem, both of which entirely transformed the way he did business.

Today, Ben’s advisory-based practice has grown from strength to strength and stands as a guide for those looking to expand beyond the boundaries of compliance. Now, he’s ready to share all that he’s learned about making the leap and finding the advisory sweet spot.

Selling advisory means selling change. And, as humans, we tend to find change a bit difficult. But once you demonstrate to your clients just how much time, money and effort they’re set to save, they’ll come to see that advisory is well and truly worth it. And then some.

Like many accountants, I started my career with a focus on straight compliance. That all shifted when I made the decision to attend a Xero roadshow back in 2012. As I sat in the audience learning about this new cloud-based accounting thing, I was intrigued. So, I decided to give it a try. I soon found that Xero boosted my efficiency and streamlined my processes, especially once I added apps into the mix. I thought to myself, “If this technology can help my small firm, then surely it can help my clients’ businesses too.”

That hypothesis has proven true, and today about 40 percent of my revenue comes from advisory clients who pay a fixed monthly fee. I begin by starting them on Xero and then introduce the right business-boosting apps and add-ons such as Hubdoc, BGL and ChangeGPS. In the process, I’ve moved to a whole new way of doing business: rather than grow my practice by adding staff or clients (why change up the numbers when you’ve found your sweet spot), I’m instead working on growing revenue per client. 

Digging deeper and moving towards advisory

Moving towards advisory is best approached as a gradual process. I often introduce clients to this way of working by making them an offer for tax planning a few months before the end of the financial year. After all, when you can demonstrate impressive savings on their tax return, it’s a whole lot easier to demonstrate the value of monthly fee-based advisory work. What it all comes down to is doing a little digging. 

I find that nearly every new client I meet is categorising themselves under the wrong business structure. For example, I had an established builder who was generating a good turnover. But he was operating as a sole trader, which left his personal assets exposed to creditors in the event of a lawsuit or bankruptcy. So I switched him over to trading through a family trust as a corporate trustee. This restructure helped reduce his risk exposure and protect his family home, and it also lowered his tax rate. All of which meant $20,000 worth of savings come tax time and made extending our relationship into advisory a natural progression.

Tax planning reports are something I would have once thought were beyond my abilities (not to mention, far too time-consuming). Now, Xero add-on app ChangeGPS draws data from Xero Practice Manager to create almost instantaneous client advice reports. And as ChangeGPS and Xero have become more capable and feature-rich, my advisory offerings have grown with them. 

Saving time and boosting business

As a boy, I grew up on a 7,000-acre cattle farm. Which is why I like to think I’m able to see things a little differently when it comes to working with agricultural clients here in Tassie. Recently, a farmer switched over from another accountant who’d had him trading as a company. The thing is though, his profits didn’t warrant having a company for tax purposes. I suggested we switch to a family trust, but this time for a different reason: it gave the farmer access to primary production averaging and the ability to use farm management deposits. 

Not every accountant knows that these exist. But when you have a really good crop year with high profits, you have the option to put a lump sum in a farm management deposit and claim it as a tax deduction. And primary production averaging helps smooth out your annual tax bills. Even some long-time farmers don’t know that this is an option for them. Again, it all comes down to doing some digging.

As part of my monthly advisory fee, I introduce clients to the apps they need to grow their business. The results have been instantaneous, with construction clients telling me that Hubdoc has cut their invoicing time from five days a month to just four hours. And then there are the cash savings. I sometimes encounter resistance from new clients when I explain they’ll be paying me an ongoing monthly fee. But I note that their cash flow will see a significant improvement, both from my oversight and from paying a predictable and reasonable fee for compliance and advisory. When you’re already making monthly payments for your Xero subscription, why not pay your accountant in the same fashion? 

Our advisory goal last year was to save our client base $250,000 in taxes paid. We ended up surpassing that and saving them just over $500,000. When you’re a small business owner, every single dollar counts. The best part of this job is knowing that the work we’re doing makes a genuine difference to their livelihood.

My tips on monetising advisory

  1. Focus on boosting revenue per client, not headcount: Using Xero and ChangeGPS has helped me boost efficiencies, while the array of apps in the Xero marketplace is staggering – the opportunities to offer new lines of advisory are growing almost monthly.
  2. Own your pricing model: Clients are increasingly open to the subscription-as-a-service model. They pay monthly for Xero (and Netflix), so why not do the same for their accountant’s services?
  3. Make tax time your entree into advisory: Tax planning reports are a great way to showcase your advisory offerings. And if done with the help of add-ons like ChangeGPS, they needn’t add a lot of time to your workflow. 
  4. Embrace apps: Whether it’s Hubdoc, Receipt Bank or Spotlight, there’s a good chance the apps that help your firm can also benefit your clients.
  5. Check out your local Xero roadshows: Don’t miss the chance to learn about the latest apps and trends in advisory from around the country.

My top piece of advice on monetising advisory is deceptively simple: always make sure you ask your clients plenty of questions. That way, you’ll actually be able to understand what the problems are that you’re trying to solve for them. Then you’re in the perfect position to work your way towards finding a solution. – Patrick Frigo, Practice App Specialist, Xero Australia

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