Rod Drury announced at Xerocon South 2016 that Xero planned to introduce no-code accounting. This would automatically reconcile 90 percent of transactions, and accountants and bookkeepers would just need to do the remaining 10 percent.
Machine learning would reduce that percentage over time. So effective is machine learning that Xero is keen to prevent business owners from coding their own Xero files because they make so many mistakes.
This is a major shift in compliance. I emailed a sample of leading Xero accountants and bookkeepers who generate revenue from compliance on how they plan to react to this news.
There were just two questions:
- Do you see no-code accounting as a threat or opportunity?
- How will you change your business plan to adapt to automated reconciliation?
Their responses are printed below. (Some have been edited for length.)
Andrew Erkins
Director
DigitBooks
Do you see no-code accounting as a threat or opportunity?
A huge opportunity. When we started Digit 3 years ago, it was on the assumption that cloud adoption and technology would create three outcomes longer term – a transformation and reduction of traditional tasks through automation, the commoditisation of services, and a consolidation of the industry away from sole trader operators (diversified accounting firms, wholesale service providers) as fees reduce. We’re simply seeing this play out.
The way we look at it – the tasks being automated are low value yet high effort. From this, the natural question becomes – what do you do with the spare capacity? For us, as clichéd as this sounds, it’s a case of spending more time working with business owners as partners and advisors to help improve their businesses and ultimately achieve their business goals. We know there is real value and great outcomes possible here. Having practical experience as bookkeepers working with hundreds of different business models and industries on a very granular level becomes our advantage for the future.
In the end, no-code accounting is only a threat if you aren’t willing to change the way in which you engage with your customers. Identify what they value and how you can apply your experience to provide it to them.
How will you change your business plan to adapt to automated reconciliation?
There are three areas of focus for us.
1) Business is about people. Technology simply empowers people to do more. What matters is the relationships we have and the customer experience we provide. We will continue building the ‘Digit’ customer experience to ensure we’re resilient against fee pressures – and it’s not an ‘apples for apples’ question for businesses.
2) Embracing technology to provide a niche service. Before Digit, we had a business building business systems and apps. While many businesses can move to the cloud and gain those advantages, there are still many businesses tied to legacy systems. This presents an opportunity to help those businesses connect to the cloud through custom integration.
3) Identify and attract talented people. We’re always looking for great people, who have strong business experience to be part of our journey. Over time the changes in the industry will make it easier to attract top talent that are tired of going it alone, and want to be part of a larger movement to help build better businesses here in Australia.
Lisa Martin
Exec Director
Go Figure 2005 Limited
Do you see no-code accounting as a threat or opportunity?
Opportunity!!
Don’t say what does this mean for me
Rather say what can I do for you?
How will you change your business plan to adapt to automated reconciliation?
Three things we will do
Re-define Core Purpose
Re-define Org Structure
Re-emphasis on what we can do for you
Jamie Davison CPA
Co Founder
Carbon Group
Do you see no-code accounting as a threat or opportunity?
Opportunity. It means more time for value added advisory work and less time on the data entry, which adds little to no value to a business. It is just the next evolution and no different to moving from bank statements and a ruler to automated bank feeds.
How will you change your business plan to adapt to automated reconciliation?
I don’t think it will change our business at all and will just open more doors to more opportunities for more valuable work for us and better value for our clients.
Jason Andrew
Co Founder
SmartBooks Online
Do you see no-code accounting as a threat or opportunity?
Opportunity – everyone dislikes bookkeeping (haha) so less of it the better.
How will you change your business plan to adapt to automated reconciliation?
This is an interesting point. The term “Bookkeeping” has always been about record keeping of financial information.
What businesses need is bookkeeping of the extended kind, that is the collecting and cleansing of financial AND non financial data (marketing data, sales data, operations etc.) We term it Bookkeeping 2.0.
The challenge is getting that data live, accurate and in a format where it is digestible for advisors/business owners to understand and make decisions from it. This is our Horizon 2 project, currently in open Beta testing with select clients.
Financial records are lag indicators (easy to measure, hard to change). The natural progression for the accounting profession is to incorporate non financial data into their advisory offering, or lead indicators (harder to measure, but easier to change). This is where the real value is re ‘advisory’.
Melanie Power
Director
Power Finance
Do you see no-code accounting as a threat or opportunity?
This is just another opportunity for Advisors and Small Business to continue to benefit from the efficiencies of Automation.
How will you change your business plan to adapt to automated reconciliation?
There are no major changes to my business plan as the model is already in place to cater for further efficiency gain. What I can see will happen is that we will have more scope to take on new clients AND provide more value to the existing ones which is the first point. NO change in revenue structure, we just add more value to the existing service packages.
Stuart Brandman
Director
542 Partners
Do you see no-code accounting as a threat or opportunity?
Definitely an opportunity. Any process improvement that uses machine learning to automate an otherwise manual process will significantly reduce the error rate and increase the customer’s desire to interact with the platform.
How will you change your business plan to adapt to automated reconciliation?
We await to see how exactly this is implemented, however we see this change increasing our needs to examine client files, whilst also providing more update and accurate information overall. This in turn can also lead to increased opportunities for discussion, analysis and additional services.