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Beyond proposals: Socket aims to transform accounting firm data

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The team behind Xavier Analytics has returned to the accountancy software market with a new proposal product targeting gaps in the existing market, which will ultimately help firms understand each service’s profitability for each client.

4th Apr 2024
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“As firm owners, we need the information provided in the onboarding process,” chartered accountant and founder of accounting firm FD Works Jonathan Gaunt told AccountingWEB. “Practices often don’t understand the profitability of the work they do, and there’s so much scope creep. 

“So how do we understand how our firms make money? And how do we define the relationship between accountant and client? The spearhead is usually in the proposal.”

Gaunt was part of the team behind the data-accuracy product Xavier Analytics. After selling Xavier in 2020 and being part of the team as the product rebranded to Dext Precision, Gaunt and his fellow Xavier co-founders left Dext in 2022 and returned to the software drawing board. 

“One of the good things about having FD Works is that we can use it as an experimental hub,” he said. “We spent six months playing around. It wasn’t pretty at first, we used lots of spreadsheets and random code, but this has enabled us to evaluate what’s needed out there.”

The team ultimately came to realise that existing proposal and onboarding tools don’t always meet accountants’ needs when it comes to providing the information firms need to grow or be more efficient, and set about designing Socket.

Still at an early stage in its development and not available to general accounting users, Socket aims to solve some of the problems Gaunt outlines above by enriching the data from proposals and engagement letters, and ultimately helping firms understand the profitability of each service for each client.

Collect the data once

Initially, the team behind Socket had hoped to work with the existing proposal, onboarding or practice management vendors to help them streamline their processes for firms. However, we quickly realised that we couldn’t get the data that we needed.

Instead, they started with a blank sheet of paper aiming to expand the scope of what is covered in a typical proposal or engagement letter without adding time or complexity to the process.

“We want to collect the data once, populate the fields we need to populate and get started,” said Gaunt. “To do this, we looked at existing data sources. For example, when you start a proposal are you getting data from Companies House? Otherwise, you might not be starting with clean data. With a Companies House integration, we just need to know the name or number of the company. We can then pull in publicly available information and the firm can then tailor the activities they offer off the back of this.”

Gaunt added that in the proposal, onboarding or practice management market at the moment there was nothing out there where an accounting firm could ask: ‘We’re doing reporting accounts, what data points do we need? Authentication code, UTR etc?’ and follows up to check they have been collected.

“Scheduling shouldn’t be particularly hard if you collect the right data points,” he added. “For something like a VAT return, as long as you know it’s quarterly and which cycle it is, you can schedule it out for eternity.”

By making resource planning easier for firms, Gaunt aims to help them get a couple of steps ahead through increased automation and find time to make their practice more efficient.

“Through my own experience in practice, I found lots of opportunities leak from that initial conversation through to sending a proposal because we were just too busy and couldn’t spare the time,” said Gaunt. “We want to capture those leads, make it easier to follow up with them and make client onboarding as seamless as possible.”

Set expectations, manage scope creep

“When meeting a potential client, we need to know more than just ‘I’d like a VAT return done’”, said Gaunt. “We need the size and scope of the work needed – information we could get from a proposal but isn’t included in many of the products out there in the market today.

“Things like frequency aren’t often primary data fields,” he continued. “We need to answer basic questions like: ‘How often do you need that job done?’ or ‘Do you need bookkeeping or payment runs on a weekly, fortnightly or monthly basis?’”

According to Gaunt, more detailed information helps plan employee workload and is also key to setting client expectations and preventing scope creep.

“If you have not set clear expectations of what you’re going to do for a client, and when, then you’re at risk of doing more work for the same fee – the scope of work creeping wider.”

Profitability and pricing difficulties

Gaunt also believes that the gap between software costs and accounting firm revenue is widening as time goes on, with accountants left flat-footed and unable to respond to rising prices in good time.

“This comes back to the fact that it’s currently too difficult for accountants and bookkeepers to apply price changes,” said Gaunt. “If you want to apply an inflationary price change it’s not always possible. If Xero changes one price does it flow through? Practices don’t have the ability to  manually change every single proposal. It’s 2024 – why can’t we make things simple?”

Socket has yet to be made available to the general public. Accounting firms interested in finding out more about the product can sign up to join the waitlist and receive notification when the system begins testing in earnest.

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