5 things I learnt from Xerocon 2024
Sue Perkins knows more than XBRL than expected.
Xero’s CEO likes to get at least 80g of protein a day, which is hard since she’s a vegetarian.
And totebags remain the swag of choice among vendors – I managed to limit myself to only two.
All things I learned from Xerocon 2024, but probably not the most important.
A week on since hundreds of accountants descending on the Excel Center in London, I reflect on some of the key takeaways from the event.
1. Technology is not just an add on
Unsurprisingly there was a lot of chatter about technology. AI, the metaverse, and quantum computing were identified as key drivers of innovation. AI can automate processes and allow accountants to focus on strategic advisory roles. The metaverse offers new ways to engage clients and visualize business plans by merging physical and digital realities. Quantum computing has the potential to revolutionize complex calculations.
But there were also conversations about the importance of integrating technology as a core component of innovation strategies, not just as an add on or using technology for technology’s sake. This approach can enhance efficiency, create new service offerings, and better meet client needs. It was emphasized that staying updated on technological advancements and incorporating them thoughtfully is essential for staying competitive in the accounting industry.
2. Private equity investment is set to rise
Alex von Schirmeister, Xero’s UK MD, noted in his key note that firms that were not having conversations with PE firms, were likely being watched. The PE investment landscape in the UK accounting industry is changing, driven by factors such as recurring revenue, stable client bases, and strong cash flows. PE firms are strategically investing in accounting firms to expand their reach and enhance their service offerings through consolidation and acquisitions. Cultural fit and openness to innovation are crucial in these transactions, ensuring a smooth integration process and a shared vision for growth.
Technology also plays a pivotal role in PE investments, enabling firms to undergo digital transformation and improve cybersecurity. Access to capital helps accounting firms upgrade their technology, enhancing service delivery and operational efficiency. While PE investment brings opportunities like capital access and streamlined processes, challenges arise from integrating acquired firms and managing constant change.
To leverage PE investment successfully, accounting firms must have a strong business model, strategic foresight, and agility to adapt to industry changes.
The private equity (PE) investment landscape in the UK accounting industry is changing, driven by factors such as recurring revenue, stable client bases, and strong cash flows. PE firms are strategically investing in accounting firms to expand their reach and enhance their service offerings through consolidation and acquisitions. Cultural fit and openness to innovation are crucial in these transactions, ensuring a smooth integration process and a shared vision for growth.
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Technology plays a pivotal role in PE investments, enabling firms to undergo digital transformation and improve cybersecurity. Access to capital helps accounting firms upgrade their technology, enhancing service delivery and operational efficiency. While PE investment brings opportunities like capital access and streamlined processes, challenges arise from integrating acquired firms and managing constant change.
3. From compliance to strategic advisory
A significant shift in the industry is the move from compliance to advisory services. A large number of accountants, about 70%, have already made this transition, driven by the growing demand for strategic business advice among small businesses. This need became even more apparent during the pandemic, with 61% of small businesses crediting their survival to the guidance provided by their accountants.
To successfully offer advisory services, accounting firms need to change their operating methods and pricing models. Moving away from hourly fees, they should adopt value-based billing that aligns better with the advisory role. By utilising existing skills, firms can offer additional services like inventory management, data optimization, and app integration. This transition is facilitated by reinvesting in technological advancements to expand service offerings and foster practice growth.
Despite automation and digitalisation, the importance of human connection remains crucial in advisory roles. Personalised advice and ongoing communication with clients are still highly valued. Accountants are encouraged to leverage their capabilities and continuously update their technology and app stacks to stay competitive.
Furthermore, accounting firms must assist clients in navigating and implementing digital tools to enhance productivity and efficiency. By doing so, they position themselves as essential partners in their clients’ success, strengthening client relationships and loyalty.
4. Accountant should shout about their value
Accounting firms need to effectively define, price, and sell their value. To start, it is crucial to understand and define the unique value your firm provides. By viewing services as investments that generate returns for clients, you can communicate your worth more effectively.
Additionally, tailoring your services to meet specific client needs and preferences ensures satisfaction and willingness to pay for premium services. Moving away from hourly billing and embracing alternative pricing models, such as fixed fees or value-based pricing, better aligns with the value delivered.
ackaging services in a way that highlights their value is also important, with real case studies and client testimonials effectively demonstrating the impact of your services. Simplifying and streamlining month-end processes allows firms to focus on value-added activities. Selling your value requires confidence and effective communication, with engagement letters designed to showcase your value and market potential additional services. Understanding and aligning with client needs through continuous engagement and feedback builds stronger relationships.
Confidence in pricing is essential, as accountants should understand the high demand for their expertise and price accordingly. Using visual aids and structured proposals can help clients better appreciate the value of your services. By implementing these strategies, accounting firms can define, price, and sell their value effectively.
5. It might be time for firms to consider a serious rebrand
Conversations at Xerocon highlighted the numerous outdated perceptions of the accounting industry and the need for a rebrand. The industry is often seen as dull and uninteresting, which affects its ability to attract new talent and clients. To change this, speakers stressed the importance of creating a model practice that attracts and retains top talent. This involves building a strong internal culture and projecting it externally.
Practices can do this by offering flexible working arrangements, well-being initiatives, and promoting diversity. They should also listen to staff and provide development opportunities to ensure they thrive.
To combat the talent shortage, practices should focus on hiring for potential and opportunity, not just technical skills. They should look for individuals passionate about digital innovation and those with transferable skills from other industries. Creating a clear purpose and mission for the practice is also crucial in attracting like-minded employees and clients.
Transforming how clients perceive accountants is vital. Practices should aim to offer value above and beyond to clients with exceptional service and personalised touches. Small gestures like sending congratulatory cards or redesigning office spaces can greatly enhance client relationships. Regularly seeking client feedback ensures that services remain relevant and valuable.
