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Xero sets sights on payroll and final accounts

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8th Jul 2014
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Cloud accounting software firm Xero is planning to expand its offering for practitioners with payroll and accounts production applications. Rachael Power reports. 

Xero's plans to expand its practice offerings is being mapped out at a series of roadshows this month to launch its new Practice Manager module. AccountingWEB attended its Bristol event last week.

During a product update session, Xero gave an update of its roadmap, which included: 

  • A payroll product planned to go live in April 2015
  • Two new bank feeds for Natwest and RBS customers (it already has an HSBC feed)
  • An overhaul for its dedicated smartphone app and a new version for Android users
  • The launch of Smart Lists, a CRM system for small businesses.

In addition to these forthcoming product announcements, Xero said it had "finally nailed VAT" in the UK. Managers also hinted that Xero was working its way slowly but surely towards delivering online accounts production software. 

Funded through a listing on the New Zealand stock exchange, Xero has been growing rapidly around the world as a bookkeeping challenger to market leaders such as Sage and Intuit. Since 2012, the developer has shifted its focus from small business customers to practitioners who can themselves become an influential channel to the wider SME market. By making it clear that it's going to move into payroll and accounts production, Xero is now stepping up to take on the UK practice software giants Sage and IRIS in their own back yard.

A new "build your own" reporting engine will provide the foundation for Xero's final accounts mechanism. This report generator is expected to be released by the end of 2014. In addition to the usual UK report packs it could be configured to produce a set of final accounts, but won't be iXBRL-ready until next year. 

Accountant Olly Evans, from Bristol-based Evans & Partners, said the Xero roadmap included some real "game changers".

"Adding UK payroll and accounts production will really shake up the accounting software market – often seemingly driven by slow and complacent software providers. The Xero approach is engaging and collaborative where Sage seem to just continually put the price up and never ever speak to me.

"How about allowing businesses to press their own accounts production button? This means that accountants will have to stop relying on the compliance workload, but focus on more useful advice and help services for clients. An exciting challenge I think," he said.

Xero indicated it has no plans to provide a personal tax product to the UK at the moment as it would be a "huge task". But a solution for corporation tax is on the horizon, which pleased several attendees including partner panel member Paul Miller of Cornish Accountants. 

Turning to what's available now, Xero's Practice Manager system brings new workflow management capabilities to its Practice Studio. The main user dashboard includes a 'time summary', daily and weekly to-do lists and a productivity wheel. Time can be measured any way you like or not at all - it's fully customisable. 

The day's jobs can be opened using the 'plus' symbol. which presents a breakdown of how long tasks are expected to take, completion boxes, and space for any notes. 

Other interesting features include:

  • The ability to collaborate - Users can assign jobs to staff and include a partner and manager to oversee them
  • Custom filters - to allow users to view whatever segments they choose, for example completed quotes
  • A Leads section that includes graphs on current leads by staff, month category and won. This module lets you create a new lead, attach quotes to leads and follow up on the 'activities' section underneath
  • Quotes and estimates are easily created - select a template from a drop-down menu, which auto-fills the text box with a description of the service. You can then set budgets and dates. When you click 'next' it brings you to a screen including a task menu which allows you to select which services you'll provide i.e. if it's annual accounts, you can select that you will finalise them, hold a client meeting, etc. You can add and customise tasks to suit you.  You can also add costs or apply mark up. When you're happy with this, you can either save a draft or issue and print, which allows you to customise what parts you want to print out
  • You can then click either 'lost' or 'won' depending on the outcome. When you click 'won', a message congratulates you and you then need to turn a lead into a job. 
  • Creating jobs entails stating its progress (planned, on hold, cancelled) and its start/due date, partner, manager and staff. When you save this, it will then get added to the job manager
  • The Job manager holds  job and schedule information, milestones and tasks. Other tabs on the menu include timesheet, notes, documents, costs and financial, which covers billable rates, invoices and purchase orders. 
  • A report builder that lets you create  custom reports
  • Work in progress manager gives you an overview of work in progress by month, and a breakdown of time, estimated billings and disbursements.
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Replying to Matrix:
Locutus of Borg
By Locutus
15th Jul 2014 14:01

Good points made by ireallyshouldknow

ireallyshouldknowthisbut wrote:

@bob, building a business for something that might or might not happen in the future is a very poor strategy for today. 

As is being a consultant on something you haven't done and don't understand. 

If there are existential threats to my future income, they are just too vague and nebulous for me to plan for.  If a legislative change effectively outlaws one-man-band contractor companies then so be it.  A third of my income might have been wiped out, but I'll just find something to replace it.

As for moving into "wealth management" or something like that, the barriers are: -

1.  Me knowing what I am doing;

2.  Getting clients whom have sufficient funds worthy of management;

3.  Getting those clients to pay me for wealth management.

Small business accounts and business / personal tax is what I've been trained to do, it's what I like doing, it gives me a reasonable living and I see no imminent threats to my livelihood.  So I think I'll largely stick to that unless things change.

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By Bob Harper
15th Jul 2014 12:49

Better results

@YouReallyShouldn't - expect that the strategy I am suggesting produces better results today.

@JustSoTax - it is not just about lower fees but significantly less work.

Bob

 

 

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By kirstiej
15th Jul 2014 13:58

Most accountants (as opposed to bookkeepers) do claim to provide a business advisory service.

I imagine that many small businesses will be interested in taking greater control of their books and simple statutory reporting, however, that is more within the role of a bookkeeper or accounting technician.  Having said that, given that many people are terrified of numbers I think there will still be plenty of people who want to pay somebody else to deal with them.

Can't imagine that they will be so interested in replicating the experience and CPD hours of a qualified accountant.

On the other hand maybe the next government will be the one to 'cut the red tape' and simplify tax, instead of promising to do so, ending up making the legislation longer, creating more loop holes and getting very, very cross indeed with big business…pigs…flying...

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By kirstiej
15th Jul 2014 14:27

Also, this is nothing new - stone tablets, pen and ink, slide rules have all come and gone.  Your average over 50 accountant will have started work in an office that didn't contain desk top computers.  Intelligent people adapt.

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By Bob Harper
15th Jul 2014 15:39

@Lucutus - I agree, there are too few clients for wealth management but I do think there is a market for lifetstyle reviews/forecasts.

If and when the changes come you will not be the only one looking for new revenue streams. And, in my experience it takes years to develop coaching/consulting/advisory knowledge/skills.

@Kirsiej - yes, many accountants "claim" to offer business advice. I am not sure how many can deliver on the promise.

However, I think you underestimate the amount of change required...until now it has all been fairly modest and focussed on more efficiency. The change required now is radical and all about being effective. This means improving business results, not just taking care of paperwork and helping the client some tax.

Bob

 

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By ireallyshouldknowthisbut
15th Jul 2014 16:58

Odd Bob isnt it, your franchise with its sharp fall in members as above seems to be firmly focused on pure compliance with its branding squarely focused on transactions (and area I think is unprofitable myself, its technician stuff not accountant stuff) ,and yet you are preaching for accountants not to touch routine bread and butter work with a barge pole?

Why not focus on this big growth area of  "life style reviews and forecasts" which us regualar accountants are clearly too stupid to follow through on?

There is presumably a huge and growing market for that, and you can leave us dinosaurs who clearly don't know a thing about our clients or our business to die.

Or would that mean the old heating would be on a bit low this winter?

 

 

 

 

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By kirstiej
15th Jul 2014 19:53

Maybe… a different kind of accountant...

Except there must be hundreds of accountants with websites claiming to be a different kind of accountant - all complete with black and white photos of accountants jumping around in crazee non-accountant poses, and all presumably offering the advice that all members of accountancy bodies are trained to give - which tends to go a bit beyond book keeping otherwise it wouldn't take so long to do all the exams.

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By justsotax
15th Jul 2014 22:30

Bob....most

'good' accountants already effectively coach/consult/advise - the only difference is that compared to many business 'coaches' they don't charge £300 an hour to talk in buzz word speak.  (buzz word bingo does indeed take many years to master)

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By Bob Harper
16th Jul 2014 09:00

Buzz word

@YouReallyShouldn't - one step back to take two forward.

I think accountants should take care of the compliance but that should not be the reason for the relationship. This work is profitable but not very marketable so the added value increase marketability and profitability.

We are not focussed on self-satisfied/comfortable accountants...our future is with start-up accountants and those with passion who want to make a difference.

@JustSoTax - I don't see too much evidence of effective coaching/consulting and advisory within the profession - for me the start-up failure rate is an indicator of how good the profession is. 

Bob

 

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By ireallyshouldknowthisbut
16th Jul 2014 09:24

.

@Bob, again you fundamentally mis-understand what the client wants. The client primarily wants compliance.  Thats how you get 'em.  You keep 'em by giving them a lot more than that. Usually all bundled into the annual fee. And yes the "value added" stuff as you would call is free. Yes free (well sort of, you stick up the annual free to cover what you think they will need over a 3-5 year period)

I can only assume you work with fairly low level bookkeeper+ types who *just* do the compliance and dont realise what the 'proper' ones do.  You dont have the 'evidence' because you have never run a small practice or worked with people who run a decent one. People who do will see through you in an instant. 

Accountants are not magic, you cant stop a business failing, to think so is really naive, but you may able to make a difference in some areas, sometimes  big one and sometimes a small one but fundamentally unless the business owner is good the business will fail.  

You cant polish a [***], but you can help is stink a bit less and dispose of it safely. 

 

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By Bob Harper
16th Jul 2014 10:03

Wants and needs

@YouReallyShouldn't - client's need compliance, it is a distress purchase.

I do get "it" and I have run a practice plus worked in an excellent one. I've also worked closely with many more.

Your business model seems to be based on making a profit from compliance and giving away the added value. Mine is the opposite.

Bob

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By justsotax
16th Jul 2014 10:56

the leap to

business failure results from poor accountants is quite a leap....(or perhaps it is due to business coaches charging rates that start ups can not afford?) - with that sort of extrapolation you should become an MP.  Unfortunately in my experience most business coaches have the approach of BS baffles brains.

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By Bob Harper
16th Jul 2014 11:09

@JustSoTax - I don't think I said start-up failure is accountants fault. Having said that, I don't see too many accountants doing too much to help.

The question is if accountants had a business model of charging for added value and giving away the compliance would they be more effective.

I believe accountants are the best option for coaching business owners. But, they need to change their model, widen/deepen their knowledge and improve their skills.

Bob

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By justsotax
16th Jul 2014 12:06

you said it

was an indicator of how poor the profession is...what else could it mean?  (although I presume from those stats you have used, you have stripped out businesses that ceased due to finding employment because that is all they ever wanted, those who were testing the market, and the bunch that either never engaged an adviser or engaged one when it was too late). 

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By Bob Harper
16th Jul 2014 12:25

Blame

@JustSoTax - not engaging an adviser or finding one too late is an indicator of how poor the accounting profession is at marketing advisory services.

I always blame accountants because I think we can do something about it.

Bob

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Locutus of Borg
By Locutus
16th Jul 2014 13:11

Government statistics

Bob - look at these Government statistics from 2013

https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

Page 3 shows there were 4.9 million businesses.

Employee numbers can be quite a rough metric to gauge a business, but here goes: -

3.7 million of them had no employees and I suspect would have very little interest in advisory services.  They just want compliance services, if they don't do it themselves.

0.99 million of them had 1-9 employees.  I suspect the vast majority of those were in the 1-3 employee range.  Lots of scope for compliance services, but limited scope for advisory work (other than management accounts), if indeed they can pay for it.

That leaves roughly 0.22 million of all other size employers - what I would regard as serious businesses.  I've worked in and worked with a few like that.  Many want management accounts, if they don't do it internally.  There is scope for varying degrees of advisory work with many.

Is it surprising that most of us accountants focus on a potential market of 4.7 million businesses that want largely compliance services, rather than the 0.22 million businesses that might want some advisory work from time-to-time?

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By Bob Harper
16th Jul 2014 15:39

@Locutus - I am aware of the statistics which is why I think a significant amount of compliance work will disappear. I also know that micro businesses can benefit from business advice.

Bob

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By justsotax
16th Jul 2014 16:48

given 3.7 million businesses

are being well served by accountants because they haven't gone to the wall.  Flawed logic...but then again if the assumption is that it is the accountants fault rather than the business owner I should expect nothing less.  Whilst your opinions may hold some water, it is then completely undermined by the sort of crap you have spouted in the last few comments.  I blame business coaches for business failure because they charge too much for non performance related advice.....that seems to cover it based upon the logic applied above.... 

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By ireallyshouldknowthisbut
16th Jul 2014 16:52

.

"Your business model seems to be based on making a profit from compliance and giving away the added value. Mine is the opposite."

 Indeed, and mine works. Is there a single practice in the UK that sells coaching, wealth management or what ever else you are try to dress up, and gives away compliance for free? There are several thousand that do it my way round.       

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By Bob Harper
16th Jul 2014 19:40

@JustSoTax - I don't know about business coaches, I do know about accountants and I think they could do much more individually and as a profession.

@YouReallyShouldn't - I appreciate your business model does works, it is very common. That doesn't mean it is the best model for now or it will work in the future we are moving towards.

Bob

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By ireallyshouldknowthisbut
17th Jul 2014 08:54

.

I assume as you have not pointed one out there is not a SINGLE business in the thousand and thousands of small accounting practices in the UK that give away compliance for free, but just charges for what you call "value added", presumably at a massive mark up?

Not even your own?

"Fancy that" as Private Eye would say. 

 

 

 

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By Bob Harper
17th Jul 2014 10:52

Mark up

@YouReallyShoudn't - two things:

1. It's the business model that's important...at the end of the day the client gets an "all in price".

We're talking about a different mindset...some firms are looking to be more efficient because they are focussed on making a profit from compliance. Others are looking to be highly effective.

Crunchers are looking to be highly effective which is why we are researching and developing stuff and the time. For example, I am working on a coaching manual for accountants to use with clients rather than trying to find the best/quickest way to do the accounts.

2. With Value Pricing you don't mark up costs to get to a price, you start with value to the client and take a fair cut of that. 

For example, we charge 50% of fees acquired through our lead generation service.

Bob

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By ireallyshouldknowthisbut
17th Jul 2014 11:24

still no answer?

Not a single business doing this in the UK then, even though according to you this is what will work right now and today and all accountants should be doing. 

Despite all the people who actually do it saying its a nonsense.

 

Your franchise certainly doesn't seem to follow your radical model, presumably it would be even worse than it is now.

I did laugh out loud to see you state your  franchise is "highly effective"   You claim when you launched this back in 2007:

"Our goal over the coming years  is to build a network of 350 offices in the UK, each Improving the Numbers with local businesses in their area."

roll on what 6 or 7 years and you have.........5!

That's a complete failure by any measure, and the numbers as you admit have fallen, so the franchisers are leaving your 'brand'. 

 

 

 

 

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Man of Kent
By Kent accountant
17th Jul 2014 12:08

Baiting

@ireallyshould - I think deep down Bob knows he's wrong but won't admit it or back down.

The majority of AWeb members probably form a potential target market for Bob's product(s) I think his failure to connect with his target market indicates he's struggling to make a success of it.

@Bob I'm sure you'll want the last word as you usually do after you've managed to create a bit of a commotion.

Now it's not really my place to suggest it but I think you need some business coaching... 

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By Bob Harper
17th Jul 2014 12:35

Mindset

@YouReallySHouldn't - any firm implementing Value Pricing will have a new business model. The firm I would recommend you look at (if you are genuinely interested) as an example is http://www.obk.co.uk/. 

Lots of people thought the world was flat, doesn't mean they were right. It is normal for people to struggle to accept change because it challenges their world view.

As regards our offices. I'd say we only have one but do you know how bamboo grows? It takes years to put down the grass roots and then it grows 60 foot in less than four months.

When I mentioned/warned about the likes of Crunch.co.uk a few years back it was said here that they would be bust in a year. They are not.

Bob

 

 

 

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By Bob Harper
17th Jul 2014 12:32

Alternative

@Kent - I am pretty sure the majority of AWeb members are NOT my target market. However, I do feel there is a place for an alternative voice, don't you?

I not against being coached but I am firmly against the traditional accounting model.

Bob

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Man of Kent
By Kent accountant
17th Jul 2014 13:29

Here we go again

@Bob - what is the traditional accountancy model?

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Locutus of Borg
By Locutus
18th Jul 2014 12:50

A case study ...

Potential client:  Can you give me a quote for my company accounts, corporation tax return and personal tax.  Records on Xero, we do the bookkeeping, VAT and payroll.  Turnover £450k, 2 directors + 2 employees.

Bob business consultants: We charge nothing for that.

Client: Nothing?!?  Cool.  But what do you get out of it?

Bob: We ask that you invest in our business improvement programme.

Client: OK ... how much does that cost?

Bob: £749 + VAT

Client: Well that seems reasonable.

Bob: That's £749 + VAT per month.

Client: Oh ... What do I get for that?

Bob: Monthly management accounts, business coaching, business strategy for realignment with core growth markets, review of your mission statement and future direction of the company, wealth management programme ... and of course your compliance work for free.

Client: But I just want someone to do my accounts and tax.

Bob: But you need my business improvement programme.

Client: I don't think so - I made £100k profit last year, so I think I know how to run my own business.

Bob: But it could have been £200k with my business improvement programme.

Client: Look, are you going to give me a quote for just the accounts and tax, or not?

Bob: I can't do that, as I believe the compliance market will be dead in 5 years.

Client: I don't care about that, I'm just looking for a quote for accounts and tax.  Actually, don't bother, I'll just find someone else.

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By Bob Harper
17th Jul 2014 13:48

Profile

@Locutus - potential clients come from marketing. Our marketing is focussed on non-compliance topics so the only people who should respond will be the interested in the that.

For example, it looks like the focus of the marketing will be a 12-week mini MBA programme delivered online. 

As regards our fees, they start way below what you quoted because our market is start-ups and micro businesses. But, if someone just wanted compliance there are plenty of accountants (including you) we can refer them to. 

Bob

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By ireallyshouldknowthisbut
17th Jul 2014 13:50

@Locutus, that had me in stiches. it is clear Bob hasn't ever quoted for a job in his life.

All he had I think from memory was 6-12 months as a tax practice which he quickly folded. Make of that what you will.

@Kent Accountant I know Bob probably knows he is wrong it would just be nice, just for once to admit that. 

 

I should point out I dont at all disagree with the general assertion of compliance getting slightly easier with better tech, but that is just technican/bookkeeping end stuff, not what I would call "accounting". However it is pretty slow and pretty marginal. The core accounting Ie what you add up, not adding it up. How you present it, not actually presenting it etc etc that wont change and I cant see the polictical classes making tax simple either they are too fond of their big announcements of tax breaks which we have seen today with the Film Partnerships were "good tax saving" when they came out and are now "bad, tax avoidance" 

I do disagree 100% you can run under a business model or free compliance and all the fluff as a massive premium. 

 

 

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By justsotax
17th Jul 2014 13:53

I get the feeling

the traditional accountancy model as seen through Bob's eyes is one where they still use A5 analysis pads and write everything in ink, type out the accounts and charge by the letter (shall we call this the 'world is flat' believers).  And some probably still do, and some have advanced to a point where they do inadvertently value price, and used fixed fees, and do advisory work, these ones are open to suggestion and will to embrace new technology.  Bob may be doing ground breaking stuff...but we know from history that it is not necessarily those that get there first that prosper...it is the ones who follow, and refine the model....

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By ireallyshouldknowthisbut
17th Jul 2014 14:12

.

@Bob re OBK and your best example of someone giving away compliance for free.

 

Well, I have had a look at their site and it seems to be fairly bog standard stuff focusing on larger clients. The only 'twist' is they seem to have a 'management accountant' hat on and not a 'year end' hat on as the prime focus which is unusual for an accounting practice of a small size.

They only have 50 clients so they must all be quite large ones, not the market I am servicing at all, completely different segment with different requirements. 

Seems a bit like a department you might find in a top 50 firm. 

Chap down the road from me does that too, he prefers the "virtual FD" role to the "year end" role. 

Completely normal service however. 

Apart from a few buzzwords on the site (fixed fees are pretty standard) it seems pretty run of the mill for clients who are too small for their own in-house qualified, or who relies on a green newly qualified as FD and so needs some backup to do all the normal management accounting type things that bigger business do.

 

 

 

 

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By ireallyshouldknowthisbut
17th Jul 2014 14:11

.

Also on Crunch why are you following that through if its a doomed business model according to your own predictions?

Its prime focus is by definition "number crunching" ie the bit you want to give away for free as it has no 'value', so you say, to the end client. 

This basic dichotomy is one the most puzzling aspects of the whole thing.

Had you been sitting here telling us that number crunching in an automated way with unskilled staff is the future, I could give you a decent disucssion on why my niche works quite nicely thank-you against that, but still agree for a certain segment of the market it would do pretty well - if you do it well enough that is.   The various contractor co's show it works for them, if not for the client but that is another story. 

But when with one breath you tell me how wonderful that is, and with the next tell me that business model is dead you have to question it!

 

 

 

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By Bob Harper
17th Jul 2014 14:17

Books

JustSoTax - you move at your own pace.

@Kent - if you want to understand the old and new business models I recommend you start by reading Implementing Value Pricing.

@YouReallyShouldn't - I offered the example of OBK is an example of a firm with a different business model.There is plenty on their Website that people can read that is not standard, not least that they have developed their own MBA programme.

The last I heard their minimum fee was £8,000. Ours will be lower.

Bob

 

 

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By User deleted
17th Jul 2014 14:24

Just killed ...

receiving this thread

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By Bob Harper
17th Jul 2014 14:32

Crunch

@YouReallyShouldn't - Crunch are not doomed. I think they will be the norm for complaince based service, online and low cost.

Bob

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By ireallyshouldknowthisbut
17th Jul 2014 16:45

Line drawn

 

@JC, not that you are now reading this, but fair play, hint taken 

line drawn, Bob to get in the last word of course, which I wont see as I will do likewise!

 

                                                           

 

 

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