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Xero partner benchmark
Xero partner benchmark
Xero partner benchmark

Test your firm against Xero's practice benchmark

23rd Apr 2018
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Based on continuing research into what makes its accountant partners tick, Xero has opened an online benchmark site.

The Xero partner benchmarking tool is based on a very simple formula around how many staff and clients a firm has and how much revenue they generate.

Using those criteria, the benchmark positions the practice against a competitive backdrop of 900 other firms (see image above).

Xero has refined this yardstick in a global survey programme among its accountant partners to identify the characteristics of the most successful performers. Perhaps not surprisingly, the software developer has identified a correlation between higher client use of Xero and practice growth and profitability.

Pacesetting practices

According to Xero’s latest UK research, pacesetting accounting firms support 300+ clients on online cloud software and generate more than double the fees from advisory work as average firms. The typical benchmark for a pacesetting Xero UK accounting practice would look like:

  • 14% revenue growth
  • 38 clients per employee
  • £382,700 advisory services revenue
  • £113,200 revenue per employee

Matching findings from AccountingWEB’s practice and software research, Xero has confirmed that HMRC plans to make tax digital have stimulated cloud adoption.

One new area of practice growth the Xero survey identified was in the number of businesses switching to new accountants, estimated to be around 224,000. This group represented just under half (49%) the growth for the participating practices, with another 30% of new business coming from startups; 18% of the remaining new clients were businesses who had been doing their own accounting and compliance up to that point.

Deeper analysis in the Xero partner benchmark report identified that specialist niche services and “urgent care” (presumably including turnaround and insolvency work) reaped the highest annual revenue per client – respectively £4,980 and £4,190. Yet these firms were in the middle of the pack in terms of growth.

Practices focusing on personalised mentoring, holistic coaching and tech advice scored more highly on annual growth rates. Firms characterised as virtual accounting teams (similar to the WeWork concept), achieved a combination of good growth and average annual revenue per client measures.

“Our research shows that rather than putting an accountant’s job on the line, cloud technology is enabling significant growth and as a result, revenue is increasing, teams are expanding and roles are evolving,” commented Damon Anderson, director of partner at Xero.

“Practices are diversifying their offering beyond just compliance into the realm of business advisory and seeing real growth. The cloud has been instrumental in this journey, freeing up time for accountants to develop their skills further as they do more to help small businesses prosper.”

The Xero benchmark is a useful way to test your firm against these growth figures. If your figures indicate that your practice is keeping pace with the competition, why not enter the Accounting Excellence Awards to let the wider world know? The findings from all these initiatives can boost your profile and help the profession as a whole find new ways to improve and grow.

Replies (1)

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By mjshort
24th Apr 2018 17:49

I'll join Xero to be a Pacesetter and earn Average Advisory Revenue for "Pacesetters" £382,700

That should give a nice boost to my average £152,689 revenue being a sole practitioner.

Job done.

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