The report details the overall business performance for practitioners, ongoing trends and changes in the profession, the progress and adoption of cloud-based software, and how each of these factors affects the service offerings for accountants and bookkeepers.
Three-quarters (75%) of the practices surveyed saw an increase in revenue over the previous 12-month period, with nearly as many (73%) reporting an increase in profit. Of those reporting an increase in revenue, leading reasons for this rise include an increase of clients (58%), the rollout or request for new services (45%) and the use of cloud software (35%).
Cloud-based software use is a key theme in the report, with surveyed respondents indicating cloud adoption is increasing. In addition to the commercial benefits - 75% of cloud users saw a jump in profit, compared to 54% for non-cloud users - practices using cloud-based software reported doing better work for their clients and more positive workforce sentiment. The study found that 66% of practices agree users have higher staff retention, and 68% agree it aids in recruiting talent.
In addition to its technology focus, Xero’s report highlights increased investment in client advisory services (CAS) - which include forecasting, budgeting and financial strategy. Nearly half of all practices surveyed now offer CAS (41%), with nearly one-fifth of those practices having implemented these services in the past 12 months. CAS is an important catalyst for potential growth, according to survey data indicating that respondents offering CAS added more clients than those not offering CAS: 58 new clients compared to 33.
“CAS is not only a vehicle to build better communities, but also an opportunity for firms to bring a strong value-add to their relationships with clients,” said Gustavo Suarez, a survey respondent and founder of JPG, an online accounting and payroll service. “Xero’s State of the Industry Report is a solid reminder for firms sitting on the fence that these kinds of services are worth the investment and can drive radical growth for your practice and your clients.”
Emerging trends in fees and pricing show another avenue of growth for accounting and bookkeeping firms, according to the report. The majority of practices surveyed (more than 60%) charge at least one-quarter of their client base using value-based pricing models, either quoting a fixed amount per piece of work or set a fixed recurring fee in a monthly, quarterly or annual service plan. The report notes that practices were driven to adopt these models because they are easier for clients to understand as well as help increase revenue and profitability, as well as transparency.
“Accounting and bookkeeping practices across the board are reaping the benefits of the latest technology and client engagement trends,” said Ben Richmond, US Country Manager at Xero. “Our hope at Xero is that the State of the Industry Report provides a foundation for firms to spot potential growth areas in their businesses and identify new ways to better serve their clients.”
Xero is a global small business platform with 3.95 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also has an extensive ecosystem of connected apps and connections to banks and other financial institutions helping small businesses access a range of solutions from within Xero’s open platform to help them run their business and manage their finances. Xero is a FIFA Women’s Football partner.
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