Turning cloud financials into results - Xero customers share insights and gotchas

Profile picture for user jreed By Jon Reed December 13, 2017
I'm not a panel fan, but Xerocon 2017 featured a terrific customer panel. Here's what I learned about cloud financials, the challenges accountants are facing - and why one panelist hires for "laziness"!

Xerocon 2017 customer panel in action

Diginomica readers have probably read my stump speech: I am nearing the end of my patience with the "conference panel" format. But that's not always the case.

At Xerocon 2017, the media/analysts/punditry heard from a compelling panel of Xero customers. Hearing unvarnished customer stories isn't as common as I'd like, but we got them this time.

Moving to cloud financials? Great. But there's a crucial twist: all three had to leave their firms or change how they were operating to get there.

So how did they do it? And how do they bring these changes to their own clients? Those were the themes of the panel, moderated by Amy Vetter, Chief Relationship Officer – Partner Channel (Vetter also chaired the accounting diversity panel I wrote about).

The panelists were: Liz Mason, CEO of High Rock Accounting, Shelley Lingor. Director at GCT Technology & Accounting, and Ryan Watson, Principal of  Upsourced Accounting.

The hurdles to accounting transformation

After the intros, Vetter got to the heart of it:

All of us have experience in traditional firms trying to change them. Many of your stories are about how you left because of it. What do you think are the biggest hurdles for firms really transforming, or even in your own staff - even in an advisory practice that you're pushing right now, where are you having hurdles with your teams or partners?

Watson started by saying that the skills modern accountants need is changing. Technical literacy is now indispensable:

It's sort of a two-part question, what are firms struggling with, and what are we struggling with? I think it's similar, which is that the skill sets required are changing. Ultimately, a lot of what makes us valuable to our clients are less about our ability to get debits and credits ready, but more about do we understand how to implement technology to solve specific fiscal problems. We've become technology consultants, which is not what we went to school for necessarily.

If you stick with accounting business-as-usual, it won't be enough:

The stakes are rising, or I guess the bar is rising. It's no longer good enough to just prepare a set of financial statements, or file a tax return on behalf of our client. If that's all we do, then we're going to lose business to somebody else.

So where do accountants go from here? Watson added:

Now it's about: how do we help add value to our client? How do we use the information to actually solve specific challenges, or help management make actual decisions? We look more like CFO's and advisors - and less like preparers of financial statements.

Hiring and training cloud accountants - "It's a different kind of skill set"

But most accountants didn't pick up those skills in school. They must now learn them on the go:

Again, it's a different skill set. We have to find ways to re-educate ourselves and gain those skills on the fly. That's a challenge. For some folks, that's sort of paralyzing. One of the impediments to firms making that change is; "Technology's scary - and I don't know where to start."

Lingor added context to the skills issue:

It's not all about having a CPA or knowing accounting. It's having that tech-savvy person to be able to think outside the box, to think of helping to build a business... It's just really up-selling and knowing your clients.

Then Mason said something you would never expect on such a panel:

I hire for two things: intelligence, and laziness.

Yes, she isn't kidding:

I look for the right kind of lazy - the efficient lazy - lazy enough to figure out a more efficient way to do it, so the next time, they don't have to do it manually. I actually ask people if they're lazy in interviews, and it freaks people out. They don't know how to take it.

Mason knows a thing or two about such alleged "laziness." After college, she found herself entrenched in paper documentation she was required to handle. Guess what she did?

I felt so overwhelmed - so I built a little robot to do half my job for me.

No, not a robot that walked around the office:

A digital robot in the computer.

Eventually, Mason's "little robot" was rolled out by her employer in all fifty states. So yeah - she likes a certain kind of "lazy." Lingor actually has a similar interview question:

I always ask, "If you don't know something, and you have to find out an answer, what resources do you use?"

She gauges the answers based on their resourcefulness, and the candidate's ability to think "outside the box" when they encounter roadblocks.

Helping clients with the cloud financials move

Vitter asked about clients: what are they struggling with, and why do they reach out? Mason said that at first, a lot of their small business clients know nothing about accounting:

They're generally really young and super-excited. They know nothing about accounting at all, so they go to whatever CPA firm their advisor or their mentor or their Dad told them to go to.

But immediately, they realize these old-school firms aren't going to work for them. They aren't interested in firms that file occasional reports and store their files:

They're like, "No, I need access to this immediately. I need to know what's going on continuously. I need numbers; I need reporting."

That's where Mason's firm High Rock Accounting comes in:

They call us and say, "Okay, you guys say 'Accounting done differently. What does that mean?' Because I can't handle the old school way of it. That's not what works for my business. This makes no sense."

Offering Xero is about a new way of working:

Then we talk to them about what we do, talk to them about the Xero tools, and they're like, "Oh yeah- done." I never feel like I'm selling anything. I feel like I'm just talking about things that excite me, and they get excited about it.

Cloud is just an enabler. It's about how real-time access changes the business:

[It's about] making sure that they're actually using numbers throughout their business, which most small businesses don't, because they don't have the data at all times. Making sure that we're giving them that information is huge.

Lingor added another twist: her clients may come to GCT Technology & Accounting because they are having accounting issues. But they soon learn that the problem - and the solution - goes deeper:

A lot of our clients come to us because their accounting's not right. It's not their accounting. It's their operations, and that's where you go from being just an accountant to an advisor. You're advising them on how to run their business, because numbers are numbers. It's cash in, cash out. Recording those transactions [is not the hard part]. They don't even know that there's a process that can solve their issue.

In Watson's case, they are careful not to push tech for its own sake:

We were talking about this in the session yesterday, that everybody thinks they have a technology problem, and the reality is nobody has a technology problem. Everybody has a process problem... In our practice, we start with the idea of: "How do you solve this problem without technology?" When we cannot, then we add an application to automate whatever that last mile looks like.

The wrap - how do Xero customers differentiate?

Mason took the emphasis on process further. She said that even when you have access to real-time info, you have to know what to do with it. That advisory is now at the core of their Xero business model:

You take the business and put them into Xero, and you give them reports. But what does that mean? That means nothing to them - until you actually sit down and educate them on what that is. When I talk to [clients], I tell them, "Yeah, you can hire the robots to put the numbers in, and you can get it coded by a monkey if you really want to, but at the end of the day, how do you use that information?

If you're not going to use that information, what's the point of having it? It's not just for tax reporting. There's actual reasons, and it's the education around that that is what differentiates our firm.

All three panelists stressed the importance of Xero's cloud platform for verticalization. That's a fancy way of saying: you need add-on apps to serve industries. It's always about customizing for a client's needs. They rattled off a laundry list of their favorite Xero partner apps, from Expensify to Gusto (payroll), from Zuora (revenue recognition) to Stripe (commerce/invoices/payment processing). But always with this caveat: no two clients are the same.

What struck me the most: not every small business customer is ready for the modern firms we heard from on the panel And even those that are ready need an advisory approach, vertical functionality, and plenty of education. Cloud and tech-savvy is a given, but only a starting point. You must be able to help customers take actions from data.

The good news: enough companies are ready for a new approach to allow our panelists to thrive.