NASSIM KHADEM writes: The company dubbed the “Apple of accounting”, Xero, is aggressively chasing financial planners in a bid to move beyond $30 million revenue by early next year.
Xero Australia managing director Chris Ridd said the company signs up 30 to 40 accountants and bookkeepers a week to adopt its cloud-based accounting software for dealing with their small business clients, and is now seeing greater uptake by financial planners.
The company, headquartered in New Zealand, was founded in 2006 by Wellington-born technology entrepreneur Rod Drury. It now has more than 200,000 paying customers in more than 100 countries around the world.
The Australian arm is a big revenue generator. Operating revenue exceeded $30.3 million in the six months ended September 30, from $16.5 million a year earlier. The fastest growth in the first half came from Australia, where customers rose 143 per cent from a year earlier to 79,100.
In its offices in Melbourne, Sydney, Canberra, Perth and Brisbane, Australian staff numbers have risen to 100.
Globally, the company wants to increase its customer base to one million. Total paying customers rose to 211,300, up 89 per cent from September last year.
Mr Ridd, who previously worked for Microsoft Australia, says about 70 per cent of Xero’s business in Australia comes from referrals.
STELLAR GROWTH SINCE LISTING
The company, which listed on the Australian Stock Exchange in November, has enjoyed phenomenal growth on the ASX since its debut. This led to investment bank Credit Suisse dubbing Xero as the “Apple of accounting”.
Mr Ridd says Xero now has about 2200 accountant and financial planner “partners” who refer Xero products to their customers.
They get a 15 per cent to 30 per cent commission for doing so, which is slightly higher than rival MYOB’s 10 per cent commission to resellers.
“Since the beginning of the first of April we’ve signed up 900 new partners,” Mr Ridd said. “That’s a real achievement considering there are 8500 to 9000 accounting practices in Australia.”
What’s more, 58 of the Business Review Weekly’s Top 100 Accounting Firms are Xero bronze, silver or gold partners, totalling 8740 organisations. And of the top 10 firms, eight are Xero partners.
“These numbers verify that the more progressive firms are using cloud accounting software,” Mr Ridd said. It also shows they’ve found a nifty alternative income stream.
Mr Ridd says financial planners, who are increasingly teaming up with accountants, are now also taking up Xero’s cloud software to engage with clients more easily in real time.
“We’ve signed up about 270 financial planners in the past five months alone,” he said. “These are dedicated, stand-alone financial planners who are finding our products extremely useful devising wealth accumulation strategies.”
Mr Ridd says with 15,000 financial planners across Australia, there’s the potential to exceed the number of accounting partners.
“With a major focus on growth supported by $NZ200 million [$179 million] in the bank and no debt, we are moving quickly on market share in the Australasian market,” Mr Ridd said.
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Xero writes: In his keynote at Xerocon Sydney, our Australian Managing Director Chris Ridd announced we’re expanding our partner program in Australia to include financial planners and advisors, and that a Senior Account Manager (me) had been appointed to work with advisors full time.
This new complementary channel – built around using Xero Cashbook for budgeting and money management – has really started to take off and since August more than 250 professional advice firms have applied to become Xero partners. Check out this video of Steve Crawford of Experience Wealth – 100% of their clients use Xero and he talks about the advantages of becoming a financial planning partner.
Why Cashbook?
More than 1500 accountants, bookkeepers and advisors Australia wide attended the financial advisor session of the October Partner Roadshow. Attendees had an opportunity to find out more about our Partner Program; hear success stories from advisors themselves; meet a few relevant Add-on partners; and see Cashbook in action – with a little help from my “typical”, newly married Gen Y couple William and Kate Windsor.
Xero Cashbook is an ideal tool to help advisors classify their clients’ income and expenditure and start conversations around budgeting, cash flow, income and expenditure classification. Using Cashbook, advisors can collaborate with their clients and develop smart money management strategies together, aimed at boosting savings or reducing and consolidating personal and investment debt.
As the channel grows and more advisors begin to use Xero as a collaborative platform for their clients, we expect to see a significant number of new Add-on partners and industry specific integrations to emerge in coming months.
Integrating with Midwinter AdviceOS
In early 2014, Midwinter AdviceOS – a next generation, cloud based CRM, compliance and planning platform for financial advisors – will integrate with Xero. Accurate cash flow information from Xero will flow into AdviceOS prompting the advisor to make more informed decisions and provide higher value services for their client.
“Cashbook aligns client transactions to a Chart of Accounts that can be later overridden or commented on by the client or adviser. This results in accurate client cash flow information coming through to AdviceOS in real time and enhances the quality of the advice,” says Julian Plummer, Managing Director, Midwinter Financial Services.
Now is the time to start the journey
With the accounting and private wealth advice sectors converging, legislative reform creating industry disruption and the demographics of advisors and clients shifting away from baby boomers, there are massive opportunities for partners to innovate and produce compelling service offerings for their advised clients.
If you are interested in becoming a Financial Advice Partner, visit the landing page and apply online. As a Xero partner, advisors can run their own business on Xero for free.
We are running cashbook specific online intro sessions twice a week – and additional training and information sessions will be launching soon.
Firms are invited to become a certified Bronze partner and list on our new financial advisor partner directory.
This is a new channel and we are just getting started.
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