Practice Success Podcast

Ben Richmond talks about the benefits of the cloud, working on your business, and the future role of accounting

• Ben Richmond • Season 1 • Episode 11

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In this episode, Ben Richmond, the U.S. Country Manager for Xero talks about the benefits of shifting your accounting firm to the cloud. He also delves into the difference between working on your business instead of for it, the positives of outsourcing, and how accountants are crucial to the future of business.

KC Brothers:

Welcome back to Canopy's Practice Success podcast. Today, we're talking with Ben Richmond, Xero's U. S. country manager, about using tech to overcome limitations, the benefits of the cloud, and how tapping into your network is a great way to learn new things. I'm KC Brothers and I am here with Ben Richman from Xero. Ben, will you tell us a little bit about yourself and give a little professional introduction as well as maybe some personal highlights as well?

Ben Richmond:

Yeah, absolutely. Thanks for having me. Yes, I'm the country manager for Xero in the U. S. A., I've been with Xero for About ten and a half years. So six, six up here. Based in Denver, Colorado. And the first one was leading growth down in our New Zealand market where we founded the business from. So originally from the deep South, hence the accent. The deep South, the deep South. So my, yeah, my career kicked off was a chartered accountant. So I was still, still a chartered accountant, did five years in public practice. And then spent some time in telco it was a big corporate telco, which was exciting because it was US listed and then found Xero about 10 and a half years ago. So it was pretty early. We, you know, Xero was founded and born in the cloud back in 2006. And so jumped across, we had just about a couple of hundred people at that point. Just had gone over a hundred thousand customers. And so it's been a pretty fun, exciting ride, both you know, everything that every sort of cloud startup goes through in those early days, having to explain the name people mistake you for working for a photocopier company. Back then it was explaining the cloud and what accounting go into the cloud. So it was pretty awesome taking the New Zealand market through to mass market adoption, you know, obviously building out our accounting and bookkeeping channel which is our sort of core way we go to market. And then jumping up here six and a half years ago. So it feels like I'm through the same. Your cloud adoption in that part of the world is much more advanced than, you know, just here when you look at the amount of small businesses running their GLs on the cloud, it's over 50 percent now in Australia, New Zealand, up here in the US, it's still hovering around 20%. It's still a long way to go. So it's like going through the same movie, just a much bigger movie. So yeah, and more complex.

KC Brothers:

So why I mean, this is something I have approached and conversations inside Canopy, even like through our copy to accountants is the why the cloud is important. What are your thoughts on that?

Ben Richmond:

Yeah, I think it's kind of funny that we're still, there's still a lot of people that haven't made that, that jump. I think actually number one is security for me. I think that, you know, they're running in, you know, when you look at the vendors that you're running in the cloud, the it's, I've always said to people right from the beginning, we're all comfortable with online banking. This is online accounting or online practice management. With banking grade security around it. And so I think for a lot of, you know, it was the biggest challenge when the cloud first kicked off. I think most people now realize that they're you know, again, with the checking with your vendors around how they're using data and what their data principles are, making sure the way in which they're storing your data is, is, you know, got the right levels of security around it. Then in that case, it's more secure than, than the laptop on the backseat of your car. If I think about the practice I worked in, All our servers sat for our practice management in a, in a filing room and we would do backup tapes every day that someone, you know, when you were a junior in the firm, someone would have to run to the local bank to put the backup tapes into the the bank's vault overnight, which is kind of great. But if you think about where we were, that was the bank was like four blocks away. And we lived in a city that was on a fault line. So if there was an earthquake. That server was going down and so was the bank's fault. So I think business continuity, security is critical. And I think the way in which we work in these days. So if you think about the labor shortage being able to set up your practice so that you can run from anywhere at any time, it's just so important. And get the talent you need. Totally. Yeah. And that may not be in the building that you've got downtown, which has been what people have experienced traditionally. I think many films. And the pandemic experienced that, right, when we suddenly had to go and lock ourselves in our basements for a period of time. You know, most firms didn't even have laptops that they could give to their people. And so firms were rapidly trying to work out how do we actually operate the practice remotely, get ready for a tax season, all those sorts of things, and you know, firms that were running in the cloud remotely were just able to immediately embrace it and then be, and then focus on supporting their clients really quickly. So business continuity, I think security is actually one of the key reasons why you want to do it. And just the, you know, the data friction of that gets removed of being in the cloud means that you're just getting to, whether it be accounting software or practice management, all of that stuff is just automatic, the tedious stuff that we used to spend time. Whether it be billing for the practice, whether it be coding your clients bank statements, all that stuff sort of magically happening now, you know, the systems are doing a much better job at doing that. So you're spending more time with these cloud systems, looking at actually how the business is performing. So there's just media, it's to me, it's table stakes. And when you look at the next phase of technology coming down the pipe, if you're still sitting in desktop or. a whole sort of confectionary mix of different systems that aren't talking, you're going to find it really hard to to be efficient and to be competitive.

KC Brothers:

Yeah, you're going to end up doing business more than working on the business. Correct. And, and working on the business kind of work is what projects you forward, upward, saves you time, gets you to greater efficiency, more the kind of work you're wanting to do, maybe even like identifying the clients you're wanting to work with. So on and so forth. Yeah.

Ben Richmond:

Yeah. It's simple. I think, I think too, like time is, is our greatest asset, particularly in a, in a profession that's traditionally been time based billing and yeah, I always had these systems and operating like this is going to give you time back and then you choose what you want to use with that time, right? And so for some practices, it's a, you know, I want, I want to take on more clients. I want to grow for other practices is actually. I'm not having a sustainable life right now as it is. So for me, that time is I can actually go and work from my lake house on a Friday'cause I have the flexibility to do that, or I wanna have the weekends back properly. So time is the greatest thing. It's gonna save you and then you, you, you choose what you wanna do with that time.

KC Brothers:

Well, another thing I've seen a lot of accountants do to help gain back time is outsourcing talent. Whether that's locally, I mean, we talked about that just by the nature of having the cloud. That, you know, you're not limited to talent within a certain radius of an office but you're also not limited in terms of like overseas as well. Or even market opportunity and serving people who might be living overseas, I'd love to hear your thoughts around. how accountants are, can manage outsourcing or even how whichever one of these is more appealing to you, how they can take or identify opportunities internationally.

Ben Richmond:

Firstly, accounting has become truly global. And so I think even if you look at the states, right, People tended to look after clients within the state they operated in. So now it's not that hard to look after clients right across the states. We see many Xero partners that are operating internationally. So and we, and actually one of the great things is a lot of competition in the profession as well. So I met a firm out of Atlanta that works closely with a firm in Australia. And the UK that often has subsidiary companies operating here in the US. And so they, they partner up around the clients that have international you know, different international subsidiaries and, and work together. We're seeing, we're now Xero cons that we have annually, we have firms travel into the U. S. from all around the world, we had them in Australia, we've got the Australian one coming up in August with over 4, 000 people going to it, and there'll be firms from all around the world that'll come to that as well, so it's truly turning into this global community, which is awesome, and small business is becoming more global, which is It's kind of weird because the political situation globally, everyone seems to be pulling into being more national focus, whereas the the actual business community is still operating more global because of technology, which is probably a good thing. Outsourcing is to me, it's just a no brainer. I think there's that emotional heart string it pulls on of, you know, if I outsource am I taking American jobs and offshoring them? You know, to me that's kind of rubbish. It's the, reality is there's, I think right now for every one accounting job that's open. So for every one accounting for every two accounting jobs that are open, there's only one person.

KC Brothers:

Well, and even people who are graduating with a degree in accounting aren't necessarily, that is down, but they're also not necessarily taking jobs. Yeah. In accounting. Yeah. There might be a data analyst.

Ben Richmond:

Yeah. Yeah. So I think it's funny. We work with lots of firms and, you know, building on CAS services, client advisory services, which is taking on more of the bookkeeping and building on advisory, everyone wants to do that, but everyone's struggling with the capacity of just getting through these tax seasons. So, you know, I've worked with firms in New Zealand and Australia and the U S. I've worked with big practices that have outsourced big chunks of their compliance work. Not one of them I saw go through any mass layoffs of staff through doing that. Actually, what it did was it took the sort of, I mean, I started accounting. I didn't, you know, I didn't go into accounting cause I was really pumped about reconciling bank accounts and checking and tying data, right? So if like, if you can outsource that work. The work that's left for the practice is the higher, higher value work. It's the more engaging work as well. And so it actually creates a higher engaging work for your people. And there's so much more opportunity of things we can do for our clients. that we can't get to. You know, you used to, we do a lot of research with small business and you know, their accountant sort of disappears for two to three months of the year because they're swamped on tax. And so if they're needing help. When there are still other financial needs. Yeah. Yeah. Could you imagine if your doctor just for three months of the year couldn't see you? Like, so I think it's, it's, if we can use technology to smooth the workflows use outsourcing where it makes sense. And in that way, we're actually going to create higher engaging jobs. In the country and free up our accounting firms to do more for small business.

KC Brothers:

Tell us more about what Xero is doing right now, any new and exciting things in that space and how you would approach or how businesses might approach the change that would come with some of these things.

Ben Richmond:

Yeah, absolutely. So we're we're about 16 years old now. We're over three and a half million customers. We operate in New Zealand, Australia, the UK, Canada, the U S South Africa and Asia. And we sell, we've got clients now in about 180 countries around the world. So it's been a pretty exciting ride that we were born in the cloud. We were founded by basically it was a tech entrepreneur who was working with his accountant back in Wellington, New Zealand, and he was traveling the world. Every time they need to do tax, it was sort of, can you send me a stuff or I need, I need a shareholder report. There was this friction of sending stuff backwards and forth and so. That's how we sort of kicked the vision off of Xero, which was a single source of truth in the cloud that small businesses could operate on. We, we could, we could take a design first approach to accounting software. So in the past, accounting software had been coded and then skinned. And so most accounting software did not look fun to deal with. And so we took a design lead approach to building the general ledger and the bookkeeping software that small businesses use. And then from that sort of single source of truth, we built out, you know, an ecosystem of over 1200 apps. And those apps include everything for apps that our partners can use to run their practice, apps for specific industries you know, whether, if you're a farmer now you can run a farm management software that's integrated with Xero, and that software's also integrated with the John Deere software. On farm that's actually, so if you think you're connecting, you've got a tractor going along, getting production data that's feeding it into the industry specific software that's valuing it off live grain prices, which is then updating the accounting software, which connects to the bank. So, you know, really truly connecting up these ecosystems so that you get a true view of how the business is running. So it's exciting for us. North America's a, a, a big growth market. For us, obviously we're the leaders in Australia and New Zealand and, and leading in the uk. And then here, this we're the, the C Challenger here in the, in the market. Our, our big focus really is you know, we truly believe in the, the power of the accounting accountant and bookkeeper in the equation. So one of the things I said yesterday at the conference was small business survival rates in the US are about 50% in the first five years. Our data shows, if you're using great technology like Xero, with the advisor regularly engaged in the software and the client, that survival rate lifts to 85%. And so, you know, we can all build great technology, but it's actually what the advisors do with it, working with small business. And so our big focus right now is obviously we've, you know, a lot of work in the AI space around and we've done a lot of this stuff around how we coding transactions because obviously no one enjoys coding transactions. So the, the system now is suggesting a lot of. Where things should be coded. Our vision is to get to a world of almost code free accounting where, you know, you're only coding by exception. So that business owners and their advisors can get much more faster to, what is my actual software telling me? So what are the insights around you? Historically, people spent more time doing accounting or bookkeeping in the software, versus having any time to look at what is, you know, how is the business actually performing. And then we've done things like our cashflow and analytics dashboards, which starts look at and suggest to the business, Hey, this is how things are looking from a cashflow perspective in the next 30, 60, 90 days. Here are some leavers that you should think about pulling. So yeah, so we, we are, we're pretty passionate about helping accountants solve their workflows and make their practices more efficient, help them much more, be much more connected to the client. Because our view is if you, if you give accountants time and capacity and you make them much more connected to the small business. They'll use that connection in time to do more of the advisory work, which they haven't, you know, historically at the time to do in the US, we've got a lot of stuff going on. So, you know, we. A lot, a lot of stuff in the, in the banks bank feed space. So we've just built out a bank statement extraction tool for some of those. If you think about those regional banks that you can't, you can't often, often get a good bank feed from. Where our system at OCR Xero, where a bank may not have a direct. We're, we're doing a massive upgrade to our sales tax experience powered by Avalara. So and then we acquired a business called Locate out of California last year. You know, I think the, the, the team there were like some of the leading minds on inventory and e commerce inventory for, for small business. So we'll be launching that at our roadshows coming up in, in July and August, that is, you know a big step forward for our inventory product in core Xero particularly in the e commerce space. So lots of new product coming out now, lots of new product for the U. S. Probably the biggest thing that's been the most exciting for the last two years has been the reporting. So, you know, we build firms, the ability to do all their report templates that they use for other management reporting or schedule C reporting or gap reporting with their clients that connects onto the, so they're, they can easily run, you know, if I've got a hundred real estate clients. If they've all got different charts of accounts, we map those all to a common set of report codes. Yeah. So they're able to build one template for the firm for real estate clients, then roll that across, across the whole lot. And so a lot of us specific reporting is being built. So lots of product coming and of course we have teams on the ground across the US. So we pride ourselves in showing up to our partners. So we're all, you know, building the Xero community of partners is a big focus for us.

KC Brothers:

Lots of really. I. My brain is reeling with thoughts in response to everything that you just said. Talking about SMB and enabling people to Survive and to remain as a business and how accountants are a huge part of that and the services that they can provide through Xero as well as the ecosystems and wow.

Ben Richmond:

Yeah, it's, it's kind of exciting. I actually, you know, we talked before about the, the number of grads coming out of the accounting professionals dropping the number that are going into accounting jobs. I do think we need to do a better job at rebranding what the profession is now because it. It's not what it used to be, you know, you meet some of the partners here and that it's a type of work they can do. And then I think a lot of them still don't realize the actual role they play in helping a small business because they're out there doing it on their own. They didn't go into small business cause they're an expert in accounting and having someone that can work with them alongside them, you know, people are not feeling in control and confident. They are scared of growth, you know, no, no one wants to take on a punt or invest more money and try and grow their business. If they're already feeling un underwater and nervous. And so I think we just partners and you know, the profession can play a massive role in helping really get a small business, help them get things under control and help'em navigate tough times, but also help'em capitalize on growth. And so I think there's a, you know, the profession is the number one trusted advisor to small business. Yeah. You know, my challenge is that I don't think we fully capitalize on that. And so there's just so much more we can do

KC Brothers:

And depending on, you know, who the accountant is, their context within their firm. They can, could likely really relate to their customers and that, Hey, I have this knowledge, these soft skills that helped me do this thing, provide this value to the world. But my business acumen, not so high, but as you work through that and you, you push through those barriers. You then are able to not just provide accounting knowledge, but business acumen knowledge to your small business clients to help them work through and, and push through some of these challenges or to avoid some altogether.

Ben Richmond:

Totally, and this is where I think the practice management thing comes in, you know, I've challenged a lot of firms historically on you know, firms that want to grow into advisory, which means there's more soft skills that come with that. It's not like following a job process checklist of doing a tax return. You know, you've got to, you've got to get to know your clients. There'll be personal elements to their, to their goals and intentions around them achieving what they're trying to achieve. So you've got a lot more questioning, there's a lot more subjectivity in it. And so yeah, there's upskilling that's required. The biggest thing I say to a lot of firms, and I see a lot of firms that aren't doing this stuff on themselves. So my big challenge is, it's actually New Zealand saying, but like, you've got to eat your own dog food. So if you're out there saying, hey, I want to be an advisor and I'm going to help businesses understand their strategy and how they're going to track lead and lag indicators to that strategy and, and regularly be alongside them coaching for growth. If you're not doing that on your own practice that's a good, that's a good place to start first. And, and, and that's where I think practice management comes into it. Like, are you using practice management in the right way? Yeah. Are you thinking about your firm strategy, the key pillars of that, how you track success on that? And are you using those tools to help measure that you're being successful and make pivots as needed? Because if you're not, I mean, that's doing advisor on yourself.

KC Brothers:

Yeah. And it's a less prescribed method of work where like you might have clear steps when dealing with a 1099, but no one's necessarily giving you. That kind of an outline that you get with tax forms for advisory work that you would manage within a practice management solution and finding the time to slow down to then speed up and benefit your future self and assessing how, how do I want to manage these aspects of my practice? How can I record them, templatize them, outline them? And democratize that information within a system so that anybody working from anywhere utilizing the cloud can, can still perform adequately reliably, productively for your firm in those business efforts.

Ben Richmond:

Yeah, yeah, it's getting better. I think historically most like the partner level of the firm, particularly in the bigger firms, a lot of the client interaction happened at the partner level. And I think if you're really going to run an advisory practice, you need to open up that client. You know, particularly in the business development and advisory space, drop that down to the next levels in your firm. Like if you're the bottleneck that needs to meet every client, that doesn't scale. And so you need to create that sort of frame to your point, democratizing the whole process so that, and that's what again, it creates more fulfilling, engaging work for your teams than just being stuck in the back of the office processing data. So yeah, I think it's exciting. I mean, we've watched so many things go through it. I think my last piece of advice for firms on that is. Yeah, we all go to these conferences. There's lots of thought leaders out there in the U S and it's sort of like everyone's trying to out innovate anyone, everyone. So, you know, I was engaged a couple of years ago and this partner came up to me and just walked out of the blockchain session. Brain was totally fried, was terrified of like, how do I prepare for this? And I asked him about his practice and it was 95 percent on desktop. And so I think there's this whole, you know, we're talking about blockchain and crypto and chat GPT, and we like to sort of, but actually most of the profession is still stuck on desktop. And so I sort of, we're making the quantum, if we make the quantum leap. Seem too, too far. None of them are going to make it. And so what we've tried to do is actually break it down into steps. So I coach practices to go, let's just focus on your practice as it is today and think about as you digitize it and use cloud tools, that is the first step to building most of the efficiency. So you can build, that will create two things. A lot more efficiency in the work you're doing today. And it's not scary because you're doing the same work. It'll create a lot of more connectedness you haven't had before. And then as we think about advisory, well, let's break that into two steps. Simple advisory and complex advisory. You know, simple advisory is. More regular interaction with the client, doing tax planning, doing budgeting and forecasting, you know, using some of the dashboarding tools that are out there. That's stuff that's not scary to accountants. We've all done that for decades. We've just never been able to do it at scale because we had to use Excel and could only do it on our big clients. And so, you know, practice efficiency first, that allows you to step into the simple advisory. We did some research three years ago across firms across North America and 65 percent of the revenue uplift. From doing advisory services was just in that simple bucket. Now, what, and so once you've nailed that, then you can work out, okay, do we want to go into complex advisory to me, complex advisors, where you're picking things like let's pick a vertical niche and go deep on that. Let's start doing more education and manage services around maybe building out ecosystem stacks for small business vertical types. Let's as a startup mentoring or capital raising assistance. So. Sort of breaking it down, but what I find is the profession just gets bombarded with all this Futuristic stuff and they come away without actually what's the first step they need to take to actually get going.

KC Brothers:

Yeah, the barrier to entry that that of that change just seems way too high too complex and unapproachable.

Ben Richmond:

Yeah, we were trying to literally saying hey, You should be flying to the, to the moon and they haven't figured out how to put wheels on a suitcase yet. So we just sort of, you know, and if we, cause I think there's a massive opportunity for the mass market of the profession. All of our role is how do we work together to take the profession on this journey that's step by step and get them going versus if we, if, if it gets too terrifying, then people just don't make that step. My favorite story was working with a seven year old partner who had was, was splitting with the other partner that he worked with in the firm. And so he can't, you know, he was looking for cloud practice management. He was looking for cloud GL. He was going to just maybe do a year. Another year before retiring. He was forced into a compelling event because the, the practice management server based thing he was with, if you change the firm structure, you had to buy separate licenses, which is quite expensive. So he decided maybe go cloud. I'll be able to sell the firm for more if it's cloud in a year's time. He went through all that change and then, you know, it was actually, we went back to New Zealand. What have been four years ago and he's, yeah, this is, this is like five years since he did that he's growing his practice. He works from the beach house three days a week. His teams all work remote. They meet on a cafe in Oakland on a Monday morning. And so he said, yeah, he said, I just was going to retire, but. We got on these tools, the interaction with clients became more fun. Our teams had a great time. We started growing and you just, and I could balance work life balance and sort of this old notion of, you know, start work at eight 30, finish at five, sort of really work life integration in a technology world. So it was like, you know, go. I could leave the office for a few hours on a Thursday and he said I just had this freedom to run the practice, but also live a life through it and say, so yeah, he's five years still going and is not talking about retirement because it's just having so much fun and he's also doing the things he wants to do with his family. So yeah, that there's a big, there's a big chunk of the profession that is with the succession challenge coming, but you know, my, my advice to them is. Two things. One, like, still, still embrace technology because you're actually protecting the asset you have to sell. Like, we're already seeing it out there for firms if, you know, firms that are, that are still very traditional in nature and the technology stacks and services are starting to sell well below the dollar for, you know, the sort of metric of a dollar for a dollar of fees. They're starting to sell in the, you know, 70 to 80 cent range. Whereas firms that have made the technology transaction, transition and are running with this more efficiency are starting to get up to 1. 20 so even if you're thinking about, Hey, I've got two years left in me, I don't want to rock the boat. Actually making that change is going to help make, you know, the asset, yeah, make an asset that you built over decades that you want to sell and have a great retirement off. You've got to make sure that's, you know, can sell for a premium.

KC Brothers:

Yeah. Well, so it sounds like there's plenty of opportunity and exciting things, whether it's getting into the cloud or if you're in the cloud. Working more flexibly, identifying the customers, you know, getting more niche, whatever it might be. But there's, there's lots going on that no matter where you're at, like you can take risks in a safe way because there's just so many good things out there that your return on investment is going to outpace that risk.

Ben Richmond:

Totally, and there's always a bit of change pain, but nothing comes easy that's worth it. And yeah, and the other exciting thing, and this is my. People coming out of university, going into firms, the barriers to entry to starting an accounting firm are pretty much nothing like what they used to be. Like, you don't need a server, you don't need a fancy office or a boardroom, nice laptop and a car and the right cloud tools, and you can run an accounting firm. And look, most of our clients don't, you know, if you talk about the average small business client. Are they really impressed by the fact that I'm wearing a suit and tie and I'm sitting in a a fancy boardroom that they've had to drive and pay expensive parking to see me?

KC Brothers:

And leave their business or leave their family, you know, when they can more conveniently take a video conference call from the back room.

Ben Richmond:

Totally. Or us go and see them at their place of work. Yeah. And so yeah, so no, I think it's exciting. I think the. Yeah. The profession is, yeah, soft skills are more important than ever. Yeah. I think like, yeah, it's good to see the CPI exams that are now building much more education and sort of knowledge around technology. But I think we've got a long way to go around making sure we're educating people on soft skills. Because to be an advisor, it's emotional intelligence is the biggest thing. Yes. And, you know, we're still not really teaching emotional the, you know, I don't think we're teaching emotional intelligence and, and how to manage. And, and thrive in that environment to accounting grads because those soft skills are critical if you're going to be an advisor.

KC Brothers:

It's an exciting time to be an accountant. It is, yeah.

Ben Richmond:

Thanks Ben. Awesome, thank you.