More than half of Xero accounting partners in the UK are planning to have 70% of their clients online by December 2018.
That's a huge movement in the accounting industry. And if you're not sure why it's happening, just take a look at these findings from Xero:
- Firms with more online clients are seeing faster revenue growth – often three times as high as firms with fewer clients online.
- Accountants with more online clients are adding far more new clients than accountants with fewer online clients. In some cases, cloud-friendly firms are adding four times as many new clients compared to those without clients on the cloud.
- Accounting firms with higher numbers of online clients have a higher revenue per employee – with the most online-friendly firms averaging £22k more a year per employee.
So if you want your accounting firm to keep up with the competition, you'd do well to take on this 70% goal as one of your own.
To help you on your way, we've put together an action plan for the year ahead: what you need to be doing to get more of your clients onto the cloud, and exactly when you need to get things done.
You've got just 12 months to get 70% of your accounting clients cloud-ready.
The best place to start? With a solid plan for client conversion.
From our experience in helping accounting firms get their clients onto the cloud, we know that the planning stages alone could take as long as four months – so it really is important to get an early head-start.
In the first month of planning, you can expect to:
- Select one or more cloud providers that look like they could be the right fit
- Choose and assemble the team for your project
- Create a high-level workflow plan, identifying which of your processes could be affected by the project
- Draw up a training plan to see the areas your staff will need training in
- Build a client conversion schedule – how many clients you could feasibly get onto the cloud each month, and how many months you have to hit your target.
By the end of your third month of client conversion planning, you should have:
- your clients segmented according to their conversion needs – giving you a singular and definitive view of the overall data you have on your clients
- clear definitions of your team's individual roles and responsibilities
- detailed, low-level plans for your workflow, training and client conversion schedule.
By the fourth month, you should be ready to kick your client conversion project into action.
Starting with a small sample of clients as they move over to cloud accounting, you'll need to begin the continual process of quality checking and reviews: keeping tabs on the progress of your project, and making sure you continue to hit your targets as you go.
As well as getting your conversion project off the ground, it's around this time of year that HMRC plans to start its live pilot of the Making Tax Digital initiative.
It won't be compulsory for any businesses until April 2019 – and even then, only for businesses above the VAT threshold.
But once the pilot goes live, smart accountants will keep following its progress.
By keeping up with any published reports and media coverage, you'll get an early look at any issues that businesses might be having with the new scheme. And that means you can start to learn how to work around these issues before they become real problems a year later.
By June, you ought to be ready to start hiring and training – and the development of your current team should already be well underway.
According to a recent report from Xero, cloud-friendly firms are gaining four times as many clients as other practices that aren't cloud-friendly.
We all know that moving online can improve your efficiency and increase your revenue per employee, helping you to serve more clients with the same number of staff.
But if moving online creates this level of high-speed growth, you're bound to need to expand your team. And you'll need to allow time for every new member of staff to get up to speed.
A young or inexperienced new-starter could need as long as 6 months before they become fully adept. And even an experienced new hire could take a few months to get settled with a new team, new clients and new software.
By August – just a few short months before our December goal – you ought to have a solid working relationship with a bank in place.
Xero's report tells us that accounting firms with active links to banks are able to deliver higher value to their clients (such as offering advisory services). In fact, more than 60% of the highest performing firms have these relationships already in place, compared to just 29% of the lowest performing ones.
Firms aren't just choosing the banks they find the easiest to work with. They're also going for the ones that can help their clients out the most – and those banks will be the ones they refer the most clients to.
If everything's gone to plan, you should be close to your goal of having 70% of your clients online.
If things have gone perfectly, you might already be there – or you might have already surpassed it.
But this isn't the end of the road.
With new cloud services popping up every month (and with Making Tax Digital just around the corner) you'll need to be able to keep up with the big changes heading your way.
Don't wait 12 months to find an expert partner to guide you through the process. Get in touch today to find out how we can work together.