Xero reveals practice software vision
Among a welter of announcements at its Xero on Air digital event this week, cloud software developer Xero unveiled its “next generation” vision for tax and practice software alongside new final accounts templates for Xero Tax.
Xero head of product Anna Curzon said the company had consulted more than 1,000 accountants around the world about their needs for practice software. “They told us they wanted a platform that could provide a unified experience and a single source of truth. That’s our next generation practice vision – allowing them to provide high value advice,” she said.
The tax and practice announcements focused more on the underlying concepts than specific tax or practice functionality, but Curzon promised, “Xero HQ will transform over time to become a powerful client relationship management [system] for bookkeepers and accountants. It collates all the relevant client information in once place to get their work done. You’ll spend less time on admin and more time on conversations with clients.”
Xero’s marketing strategy has been heavily affected by the Covid-19 pandemic this year, so there were announcements for business users too, with limits removed from the Starter edition so that new customers and startups can reconcile an unlimited number of transactions against bank data feeds and issue up to 20 invoices a month before having to upgrade.
“We wanted to democratise access to small businesses,” Curzon said.
As part of a long-term focus on cashflow, Xero had been piloting a short-term cashflow reporting tool in the UK when Covid-19 hit. After getting a positive response from UK accountants, the company decided to roll it out for free to all its global customers, including those on the Starter plan. The cashflow view is able to integrate with the Xero Projects dashboard and pull in payments made through Xero’s integrations with Stripe and GoCardless.
Tax and practice enhancements
Xero has added FRS 105 and FRS 102A templates to the Xero Tax accounts production menu, but UK accountants will still have to wait until after the next self assessment deadline for Xero’s personal tax module, according to Xero’s UK director of operations Damon Anderson.
“We’ve always seen this as a multi-year journey,” said Anderson. “Xero Tax is orders of magnitude more complex than what we have done before [VAT filing]. The large majority of Xero customers are micro-businesses and small companies, so we have pretty much ticked the boxes for them.”
The company recognises that personal tax will be a big trigger for wider adoption of Xero among practitioners, and asked about their requirements as part of its broader product research activity. “We want to make sure the product achieves everything customers want it to achieve and will roll it out in the new year. I’m pretty confident it’s not just going to have functional parity with traditional software, it’s going to bring all the benefits of the cloud to bear as well, so that you’re not just able to submit a return, but can pass it back to the Xero core subscriptions.”
Corporation tax, trust returns, partnerships and estates are all on the product roadmap along with Making Tax Digital, Anderson said: “We’re really confident we’ll be in a position to have all business in MTD well before mandation takes place for VAT and income tax in 2022-23.”
Reimagining practice management
Xero Tax was just one element in the company’s broader strategy to simplify practice management, added executive general manager of practice Gareth Cronin. The latest release includes the first version of the Xero HQ client list, which can sync data in Xero’s Practice Manager, Tax and Workpapers modules to information across the platform, including which banks are connected and how many unreconciled transactions are sitting within each client’s ledgers.
When pushed, Cronin acknowledged that other developers already offered many of these features, but added: “Where Xero is a bit different is that we’ve built an ecosystem that goes beyond Xero itself. All those tools and private integrations that push into the cloud create capabilities that no single software provider can bring together. We’re not just unifying our own products, but also bringing together data from the ecosystem that practices and bookkeepers can consume it so it’s immediately useful.
“When you asked Damon about why Xero Tax might not be moving so fast – we want to make sure we do it right. Accountants don’t like syncing data. Xero Tax was designed was to work over a master tax record, so there is only one place to authorise that data. That’s where the ecosystem makes difference. The integrity is there, but when you get ecosystem linkings, that’s when you will really see the difference.”
AccountingWEB member and Xero user Glenn Martin watched some of the announcements at Xero on Air and has had a look at some of the new functionality. “It still seems a bit short of the mark, so I’ll be renewing my existing tax software subscription for another year,” he said.
“I won’t be jumping in right away, but will go with Xero Tax when it’s ready – it’ll be a significant saving,”
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