Influencer Gate, the Rule of 40 and the Xero AGM || Be In The Loop

[00:00:00] Hello and welcome to another episode of the Digi-Tools In Accrual World podcast brought to you by The Loop. This is Ryan Pearcy and I'm back. I feel like I've not been here for ages, so I'm listening to my own voice, I guess. Anyway, I'll stop talking about me. We've got a bumper episode today, so please bear with us. It is quite long, but that's because there's been a lot going on in the community over the last week or so.

[00:00:25] As you'd probably expect, we're going to be focusing a lot on Xero. There's been a lot happening. Obviously, you've probably all heard about Influencer Gate, probably been involved in your opinions. Well, we're going to try and bring some of the insights, collect them and bring them together. But it's not just that. They've got some things that I guess have been marketed directly to business owners from Xero, as well as some changes and some information regarding the CEO and the shareholders' opinions on that.

[00:00:53] But it's not just me going to be talking about any of this. I also am joined by the wonderful Heather Smith to get the opinion from not just the UK. So, Heather, thank you for joining us. What are you going to be bringing to the table? Thank you so much, Ryan. Well, I think I probably talk about the lack of bikinis and why I'm not an influencer.

[00:01:14] We have some really explore what the influencers have shared in terms of how they work. That was really interesting and that actually blew my mind. I had no idea that that was actually going on. And we kind of run through the various things that have been happening in the world in terms of Xero has been in this cycle of making a change. And we noticed the change and then we fixed the problem and then they apologize.

[00:01:45] And sort of some spicy conversations around that. But very interesting noise. Wonderful conversations. Looking forward to that, Heather. And also joined by the amazing Indi Tatla. Indy, what are you going to bring? If Heather's bringing the spice, what are you bringing today? The salt and the sugar. We left out some of the sodium beef that we spoke about from last week. And this week we've moved on. And actually, it's not just all Xero heavy.

[00:02:12] So there's a couple of things that I thought was really interesting was the changes to the employment rights. And also we discuss Cresco and their hidden superpower of just integrating into everyone. And also we are talking about Puzzle. And Accrual, if you haven't caught that one, is a huge news story. It just seemed to have completely tanked in the UK this week. But it's one that we should all pay attention to. So it's good to be able to go and revisit that.

[00:02:40] Well, I'm excited for this because this is a big one. So let's just crack straight on with it. Listen, if your clients are still drowning in manual HR and payroll admin, you need to tell them about Employment Hero. It's an AI powered platform that actually takes action. Automated candidate screening, smart payroll, real time compliance updates, the works. HR, recruitment, payroll and benefits all in one place. And here's a bit you'll love. It integrates with your accounting software.

[00:03:08] So no more chasing down payroll data. Your clients and their team get time back. You get clean data. Everyone wins. Head to employmenthero.co.uk to see why thousands of UK businesses and bureaus have already made the switch. Our social feeds have detonated with conversations and talk about an influencer who sits in the brand story space.

[00:03:35] And she released a reel stating that she was spending 120,000 sterling on accounting and on Xero and 800 sterling a month on an accountant. And she plugged her Xero into Claude and no longer needs to spend that money.

[00:04:01] And the community, rightly so, the Xero community and beyond have sort of blown up and said, why are you telling people to use AI and to not use accountants? And so many things have come out of this. I was astonished, have been astonished at how many influencers there are out there and would like to declare.

[00:04:28] I am not a paid, I have not been ever a paid influencer or never ran ads for Xero. I don't even own a bikini. Do you own a bikini, Ryan? I don't, but to get paid, I'm tempted to get one. You have the straw hat. You have the straw hat. I do, I do. Yes, she was wearing a straw hat. It is probably the most shared image I have seen on LinkedIn ever.

[00:04:57] It just went crazy, right? Absolutely. I've seen a lot of Amelia Sordell articles. Oh, I've seen a lot of Amelia Sordell's content. And I have to admit this, it just surprises me that it blew up quite as big as it did. In a way, you've got to have some pity for the influencer. Just the fact that that's not quite what, that it didn't land well. I agree.

[00:05:27] And we'll come on to that, but Heather, I'll let you finish because it's about hearing more about how it's been received in Australia as well and New Zealand and coming onto your radar. Well, a lot of people here do own bikinis. We had no idea who this influencer was and there has been a lot of weight there. You have been selling to accountants and to bookkeepers and we are partners.

[00:05:54] We are in a relationship and we have been promoting the product that way. And so to suggest AI is going to replace an accountant, well, when all the narrative has been that AI will not replace an accountant, it will make the accountant richer conversations and richer advisory work.

[00:06:17] So what has happened, what I've seen over the last few days is tons of comments, but the Australian, Angatsoin, the UK, Kate Hayward, and the New Zealand, Bridget Snelling, MDs have all written very, they've written apologies about it. They've addressed it directly and there's sort of been some to-ing and throwing to their comments on their apologies.

[00:06:45] I think they, I absolutely believe, and I have no insider knowledge, I absolutely believe they had no idea it was going out and that it was going to happen. And I think that they're somewhat being kept out of the loop of things that are happening. Yeah, I mean, it's so big, you're not going to know everything. My two cents on this is that I have no sympathy for the influencer.

[00:07:14] Maybe I'm cruel in that, but I think if you're being paid to talk about something, you get it wrong. That's on you. You suffer the consequences for doing that. But ironically, she has had so much attention that surely all of her paid-for content now has skyrocketed. It's based on views. So she's benefited, ironically, from it, I'd assume. I don't know for certain, which is frustrating. But I think the biggest fallout from this has not been at her. It's been at Xero.

[00:07:44] And there's been a lot of assumptions, as there always is in this, that Xero have changed their policy, that they don't support accountants. And I think what you're saying, Heather, is that actually Xero did something. They'd set maybe some boundaries. They weren't potentially followed. And that's kind of led into big mistakes. But the biggest thing, the biggest thing that I think will come from this is that my view is that Xero have been, there's been a lot of pent-up frustration that's been growing over time with Xero.

[00:08:12] And this thing was really not huge. It was frustrating, but not huge, but blew up because of that frustration. And hopefully, and from what I can tell from what I heard from Xero, is that actually this is what's triggered them properly listening. And if that's the case, I'm glad it happened, because I think they do need to properly listen on certain things. And if that's triggered this and we get some really positive outcomes from that, then great. Accountant community going absolutely mental for a long time.

[00:08:42] It's like one day it's grown up just constantly on the feeds for days. I was fed up with seeing the image. Let's talk about something else. We live in a cruel world here, not a cruel world. So let's not be mean. And I agree that, you know, it can be frustrating to see something released. But let's also look at some other perspectives that were brought in from a couple of people that are paid influencers or have been paid influencers from Xero.

[00:09:12] That's not obviously on this podcast, but there's a couple of responses that we were chewing through, right? So we've got one that we saw from Rachel Harris, and she talks really about that process of the comprehensive and rigor around the advertising standards as a brand partner of Xero. And how that is usually quite prescriptive in terms of being a brand partner, what you can deliver, what is commissioned, what is covered as an advert.

[00:09:42] And then also the deliverables on that work to the audience and how much quality control is around that. So the concept, the scripts, the first cut, the final copy, etc. And then also she goes a bit further to talk about the Xero's explicit tone of voice that does not include any language that refers to replacing accountants or bookkeepers. In fact, it's the opposite.

[00:10:04] So she's come out quite defensively to say, well, actually, I've done this before and this didn't follow suit. So that was one response I thought was interesting. An alternative response to that was from Alex Falcon, which got to love the Falcon always. And because she is just someone that says, ride with the tide. This is the way that the world is going. It's not against you. It's not against it's not a personal thing.

[00:10:34] This is business. And everybody needs to level up. If these are the statements being made by the business, then you should be taking that, understanding it and saying, how am I going to level up? Because what she points out quite well is we don't know if it could be Amazon. We don't know if it could be Google that's eventually displacing any form of accountancy or technology that supports accountancy and enables it. It could be the banks.

[00:11:02] And we've seen encroachment from that before. And we've heard a lot about it. So her main ask, I guess, and reason for putting herself out there is that people should see it as an opportunity to really embrace the technology and see how they can also level up to deliver better value. And then the final piece that I quote was from Damon Anderson on A to Z accounting.

[00:11:28] And I thought what was really interesting on his piece was he talks about the idea of these different clocks and the fact that they all work on a different speed, I guess. So you've got things like the capability clock, and that's super fast in terms of what's happening in the market right now and technology. None of us are able to keep up with it.

[00:11:51] The accountability clock, which is like an insurance clock, a regulatory clock, which is and also a trust clock. So they all are moving at different paces when we look at how fast the technology is going versus how the institutions that are behind it, like the bodies and the insurers, the HMRC and the regulation side, and how those clocks are out of whack.

[00:12:19] They are unmatched in some way, which we know that to be the case anyway. So I think that's one of the things I took away is that we're all kind of living in a very unique, unprecedented time. When things like this happen, there are going to be mistakes.

[00:12:34] And those mistakes are probably an opportunity for us to learn how we can better get our hands around either the relationship that we need to have with the clients or also how the client understands what the value is of having an accountant in the first place.

[00:12:52] And if they think that at some point, and I reference this as an example to someone yesterday that runs a number of practices and has been shortlisted for our deity of the year award at the Disruptor Awards this year. And we were talking about how there was the loan scheme charge a few years back.

[00:13:11] And HMRC had recognized a number of schemes that were essentially, they had recognized a tax loophole. But those schemes took that wording and said, we are, that HMRC recognized means that we have some sort of stamp of approval for this is the way that you can be paid. And it circumvented the tax obligation. But we all know what happened.

[00:13:39] Most of those people that accepted those payments through the loan scheme were social workers and council workers in some cases that were contractors. HMRC came back and said, no, no, we're settling up with all of those. So in the end, those individuals still had to pay back the money as well.

[00:13:57] Why we think that won't happen with a system that might be HMRC recognized in terms of the submission, but the quality of that and the rigor and if it's tested and challenged, it doesn't matter if HMRC recognized that technology system. It still means they can come back and do a true up, which is what's been, we've seen that happen time and time over. So, so those were the pieces I caught this week. And I just, again, massive download, but good to get your perspective. Ryan, you seem like you're frowning.

[00:14:26] So tell me what the frown's about. I was just impressed, Indy, on how we've gone from zero to HMRC filings. I thought that was quite a good loop. I mean, I've got one other opinion that I picked up. And that was from, I think, Aaron Patrick was one of them, but it was a few people saying the same thing. Is that, yes, this influencer was frustrating. What they said was frustrating.

[00:14:53] And the take on it is, because some people are like, oh, accounts are just scared. Accounts are scared for change. To some extent, yeah, we know change is coming. We are a bit tensed about it. But we're not, that's not the biggest frustration. The biggest frustration is that software vendors at the moment are going, you can automate everything. And then the client goes and does that. And then they come to us at the end of the year and we go, what have you done? And then we've got to go and say, well, we need to charge you more now. And now we're having those very difficult conversations.

[00:15:21] We're trying to unwind everything that they've been doing. And the biggest frustration, I think, for some accountants in the community has not been this kind of influencer-based advert, but one around the bank rec, which has been done by people, recognized people in the accounting industry. We're auto bank rec, where they're saying, yeah, you can do this. It's great. It's applying. And it is. In certain instances, it is great. I do it on my own business. 60, 70% of all transactions automatically banked and sold.

[00:15:48] But for some clients, absolutely doesn't work at all. And it's that balance and not just going, yes, apply it. You really need to be doing something with the accounting industry where actually it's smarter. It's using it in the right way and how and train them and educate them on how to use it. And then they'll want to promote it like you did with cloud accounting at the start, right? You educated the accountants. The accountant sold it for you. Educate the accountants on these tools. We will sell it for you.

[00:16:14] Don't go direct to business because what happens is they do it wrong and then we have to resolve it and we're frustrated. So that's my other take on this is that the route to market seems to have been bypassed the accounts now because we can go straight to the business users. I just don't think that's actually helping. It's just annoying everyone. So my take on it and another opinion from the communities that's going around.

[00:16:39] And can I just jump in and reiterate that I think it's confusing about who is an influencer and who isn't an influencer. And I think and disagree with me if you wish here, but I think that we are fiercely and aggressively agnostic and independent. But still, we love a lot of this technology and we are supportive of a lot of this technology.

[00:17:08] And that's why we're having these conversations here today. But no one filters my voice. No one changes my voice. I used to create like hour-long training videos for Xero. So, yes, they would come in and maybe change some things in that. But that's a training video, not a buy something video. I write the Xero for Dummies books. They don't get any say. And they actually sometimes disagree with what goes in them. But I'm like, this is actually what happens.

[00:17:36] You may think it goes that way, but it doesn't. This is what happens. And I go with community sentiment over the direction from a staff member. As you say, we're fiercely impartial. But there's always tools that we just end up coming back to more because of how they work and how they fit, how we operate. And that doesn't mean that we're going to say you have to use this because every tool should be matched to the business and the situation they're in.

[00:18:02] Before we wrap up on some of the other ball-dropping moments, So, obviously, the thing that we also caught this week from Aaron Patrick around the reports being fired out. So, I think you guys also picked up on that as well, the reports that were sent under his practice's name, although he had not approved them. And he had seen that it had been auto-scheduled monthly.

[00:18:30] Probably something that if you haven't already checked out and it is something that you didn't catch on his post, then there's a performance overview analytics report for clients that was fired out without his consent on the 5th of every month. So, just something to flag in case you wanted to check your own settings. And obviously, just speaking to the same end point, which is, is this the direction of travel that Xero wants?

[00:18:59] I think we'll hear from them on that. So, that was coming out through SIFT Analytics. And in the last 24 hours, they were notified. And apparently, the switch has been turned off. It's been, the schedule has been unscheduled for now. So, hopefully, you don't need to worry about it, but be aware that that's an option there for you. But yes, we don't want reports.

[00:19:27] Of course, we don't want reports associated with unreconciled data going out to clients with our name and branding on them. Yeah. I mean, this has been a week, right? So, you've had the influencer gate. We've had this erroneous report going out, which seems to imply the same thing. And then there was the whole direct accounts and tax filing from Xero, where I'm not sure if this is quite as common, but it has really said.

[00:19:54] In the back in March, essentially, Companies House removed the ability for businesses to file direct. So, Xero gone, okay, well, we want to help businesses. We want to allow those businesses to file their accounts and tax direct through the Xero platform because accounts can do it. So, great, that's good in principle. But they've gone and marketed this directly to the clients, not through accounts and firms, not basically advertising that this is something your clients can do.

[00:20:20] They're marketed it directly to the clients without really giving our firms, in the UK at least, a heads up that this is happening. So, it all feels like it's linked. I don't think it is. I think it's all independent. Some of it's just errors, right? They're trying to be helpful to release something. It hasn't really happened. But, yeah, it's just why did it all happen at once, right?

[00:20:45] And there needs to be, and you're saying, you know, they're starting to do this, some clear change in momentum back to accountancy focus. I think it needs to be, you know, when you need to go above and beyond to kind of prove a point. I think that's where we're at now with Xero. Yeah. And to that point of what was happening, that happened, and that was happening a few years ago in the Intuit world in the US.

[00:21:11] And Ben Richman, who was the CEO MD of Xero at the time, stood on the stage at New Orleans XeroCon and said, we will never sell directly to your clients. We will never. And he was very reassuring about that. He now works for a Canadian company, a Canadian payroll company. Yeah. And I think that's what's annoyed people the most, right? Because they did that in the UK.

[00:21:40] They've done that around the world. We are your friends. We will not go direct. We're going to go through you. And then they started back, and this is the thing that Will Fennell always brings up. They started back and they said, no, we're going to, even if you hold the license, we're going to market directly to your clients and uproar an account community. But they're doing that now. They're basically going, we don't respect, even if you're controlling it, we don't respect that we're going through. And I think some of this needs to change. It's frustrating. But who are we? We're not influencers. We've just got a voice.

[00:22:10] We just say our opinion. And hopefully at some point someone goes, ah, they're onto something there and makes a change. So I heard some spicy tea. Do you want me to drop it? Yeah, yeah. So this was from a good source that he was speaking to some people in the Xero leadership team here in Australia.

[00:22:32] And they said that they start the day looking at Facebook to work out what's going on in the Xero world because they're not getting communication, clear communication from the US. Oh, dear. Spicy. So maybe. Facebook page. Wow. Yeah. Can you understand what you're on in your own company? Oosh.

[00:22:58] Maybe this will help the conduit of communication and maybe it will help the US communicate better with everyone. Yes. Maybe. I don't know. I think there's a whole communication issue in the US anyway at this point. Yeah. It just feels like war is a departure from conventional wisdom that Xero had when it started and its roots.

[00:23:24] And that I've said it on previous episodes before. There is a different culture that exists when you're working with an American organization. They're very quick to say yes to what they want to do with a business or an opportunity. They're very good at saying yes straight away. But the second that something doesn't quite work, they also are very good at managing costs and managing their downside risks.

[00:23:51] So I feel like that's just the way that the negotiation styles are very different. The approaches to market are very different. The overall risk appetites are super different as well. But it's a shame to hear that the only way that you can be updated is through some social pages. That speaks volumes. Oh, it doesn't speak at all, actually. Yeah, absolutely. Absolutely.

[00:24:17] So another post that happened was from a gentleman called Eamon Conahan. And he's based in New Zealand. And he worked at Xero under Drury, Famos and Cassidy. And he has written this big post called E-Shittification Supercharged. So apologies for the swear word. We're going to bleat this stuff. Oh, God.

[00:24:46] We've become non-PC anymore. When did that happen? I don't swear, but you've got a swear word. I've never heard you swear, Heather. I'm shocked right now. Shocked. I was given this article to talk about. I'll say it again. E-tification. There you go.

[00:25:11] And so what he is talking about, and he's got a brief article and then extends to a very, a much larger article talking about how the board swallowed a management meme of Rule of 40 and then used it to draft an executive incentive structure that diminished the customer. It led to chaos, recurring price hearts, price engineering, margin theft, desertion of micro businesses. Yes, that's the thing that we're seeing.

[00:25:39] And the centering of the Xero HQ in its smallest and most expensive market. And even the shareholders who the strategy was designed to benefit have lost their shirts. So this guy that you said, Heather, he's worked under three different CEOs and really feeling it then because he's calling this out. Does he still work for Xero? No. No, he doesn't.

[00:26:05] But I think the Xero alumni chat is hot, hot to trot. And a number of the alumni are contacting me and sending me messages and saying, talk about it, talk about it, you know, bring it back. I kind of think that we're sort of in, everything was going well and now we're in the last season and it's turned into Lost or Game of Thrones and we're trying to get the writers in the room to figure it out. It does feel like Game of Thrones.

[00:26:32] And I think, I can't remember the timing of this, but I think he did this before this whole week of craziness. So it was like... He did. Yeah. It's like he said it and then everything went to hell. And I guess it's not just him ranting. He's talked about the rule of 40, which, you know, I think has led to some potential issues, I guess we see. And following the fact that the share price has dipped and they think it's because of AI, so now everything has to be about AI.

[00:27:01] You know, there's lots of decisions that are being made at top level, board level, that's really impacting everything else that's going on. But something that was a big frustration around, I guess, even those shareholders of Xero is the change to the CEO pay. So Sakinda sold her shares. She was trying to renegotiate. She has. It's now she's being paid more. And that's, I think my understanding is it's a reflection of where Xero sits in the business. That's what the board is saying.

[00:27:31] It's gone from being the 25% quartile to now the 50% quartile. So she's kind of average on what she should be paid. But the fact that all of this is going on, the share price has halved. So the shareholders are not seeing anywhere near what they expected to see. The cultures obviously dramatically shift. Ex-employees are ranting. The community is frustrated. Yet she's managed to, through amazing negotiation skills, secure a better pay rise.

[00:28:00] This has led to 70% of shareholders voting against that pay. Now, I don't think that's legally binding. It doesn't actually impact what's happening. They've just basically said, we don't like it. 70% have said, we don't like it. And there's been a lot of defense coming out. The board have said, well, she sold her shares for tax reasons. She's still dedicated to Xero. None of that I can comment on. I don't know her. I don't know. There's probably very good reasons. But the timing of all of this, all happening at once,

[00:28:31] we like to feel safe. We've got a safe pair of hands handling things for us as accountants. It doesn't feel safe at the moment. It feels like there's just so much disruption, not only in what's going to affect us, but in the software partner that we've put a lot of faith in. Yeah, I think that's just being felt everywhere, including Xero's own shareholders, regardless of strategic decisions made by the board. Defense in numbers is what you're telling me. Because I will still ride on that horse that says,

[00:29:00] actually, I think that when compared to most of the CEOs, she's probably underpaid on some level. And also this is a much bigger ship. But I do think that the article that Heather mentioned is super interesting around this rule of 40 and the tech bros and the fact that they have then said, OK, this is the number we need to pay attention to. It is like, you know, the culture of it's quite American. They haven't looked at all the things that made them great,

[00:29:28] like customer engagement or customer satisfaction as metrics. And therefore, the shareholders are just in some way voting with their feet in saying, OK, they disagree with it. I still probe that and say, actually, I think that this conversation would just not happen if this was a male counterpart in one of the other big tech companies, any tech company, but even in particular in accounting tech.

[00:29:57] So that for me is still just an uncomfortable truth that irregardless of what's happening with how the share price has been impacted, we've seen in other companies all across corporate America that has continued to happen where the share price is tanked and the CEO has received a very big payout. Even in the UK, we've seen it with the water companies here. The CEOs continue to get major, major payouts,

[00:30:24] despite the fact that we are having water shortages and leaks all over the shop. So why is that all? But I think if you're, I mean, that's not the best example because I think every single person in the UK does not agree with that, apart from the person that made that decision, right? And I think if you go, is it a male versus female thing? Possibly. I think it's reflected, right, that she was underpaid because she was in the 25%, they bumped up to 50% on par. She's not been paid excessively, just on par.

[00:30:52] And it's really just a restructure because she was being paid through share provision. Well, that's not going to happen now because it's plummeted so much. So now it's just restructured into actually being paid. I understand all that. If that re-incentivizes her to drive it forward, it all makes sense. I think the frustration is share price halved, CTO left, CPO left, accounting community in disarray. But some of this, some of this was always inevitable because it was a high growth company not making money.

[00:31:19] She was brought in to change that and pivot into a profitable business. Not everyone was going to be happy from that. There was always going to be fallout. I think it's just there needs to be a change somewhere. Either she needs to change what's going on in the approach because something isn't working, or there needs to be some changes in leadership somewhere, herself or other people around, because we've kind of felt this for a while now. And I'd love it if everyone stayed and they just changed what they were doing,

[00:31:49] you know, because then they've learned, they've showed they can adapt. But it isn't working at the moment, let's be fair. This is just the tip of the iceberg. We've hit a peak, right, of, as I say, buses where everything comes at the same time. But it's been growing. That sentiment has been growing for a while and something needs to evolve to try and to get that back. That lovely feeling was here. Well, let's put a nice bow around that for a moment, put a pin in it, because we've had some feedback from Xero directly

[00:32:16] and they want to share it with us on the podcast. And we've asked them some uncomfortable truths just about all of these things that we've covered on the podcast today. So we're going to throw to that now just so that we can give a balanced view on everything across the board. And let's see how that lands. For those of you listening in the podcast, you're probably waiting to hear the dulcet tones of Kate Hayward. Unfortunately, we were unable to get Kate Hayward on this week.

[00:32:45] The team have been very overwhelmed with the responses and have been proactive in being online about it as well as visiting some of their partners. One of the things that they did share with us is that Xero has been saddened by what has happened over the last few weeks. And they feel that because they truly do care. The actions that were taken were not a reflection of how they see the ongoing partnership with the community that they've built. And they still stand by their mission.

[00:33:14] They want to reflect that in their engagement with the community directly. And while there has been some change and uncertainty with the recent mishappenings, it's a reminder to Xero to be more deliberate and more consistent and more collaborative with the community. We're very keen to share some of the updates on this podcast and we hopefully welcome them on to join us very soon. But for now, it's a reminder to everyone

[00:33:42] and to ourselves to be kind at this time because we're all human. Mistakes have been made. And we hope Xero can pick up in the aftermath to make sure that they reach out to all of those affected in their community. One of the things they also wanted us to talk about was who the tax and accounts updates were targeting and in particular, a sector that was around ex-CATO users. So that's for very small micro entities

[00:34:12] that had relied on HMRC's company accounts and tax online service. Historically, this cohort in their businesses suggests that the median revenue of our customer is £33,800 and less. So this is a very small sector. With Cato no longer an option, these businesses are actively looking for alternatives. And while the vast majority of this DIY market is not on Xero,

[00:34:42] they do have tens of thousands of existing customers or existing users who fall into this group. And these businesses have already taken the time an effort to set themselves up on Xero. If they don't offer the solution, then they are aware that those users may try to set something up for themselves on a different software. By keeping them in Xero, Xero sees it as an opportunity to encourage them to work with accountants or bookkeepers as they grow. And it will also help Xero

[00:35:12] to capture that small proportion of the hundreds of thousands of brand new companies that incorporate each year who have DIY filing intent. So servicing this segment is not a new step for the industry. We have seen many other GLs in the space offering a similar type of solution that has been available for several years now. That is Xero's official position on it. And hopefully we will speak to them very soon about the rest of their updates that they are making to the system.

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[00:36:38] Start at join.co. That's join with two I's. J-O-I-I-N dot co. Sage Payroll customers can run payroll and pay employees directly from Sage Payroll using their existing bank accounts. No wallets, no extra logins, no fuss. And there's a partnership between Cresco and the Sage team.

[00:37:05] And it is really interesting to see the evolution of Sage from afar. And to also, I'm seeing some wonderful people from the Xero community move in and working for Sage. So they're one to watch. They are. They are. You know, if you look at what happened in the UK at least, market leader, massive,

[00:37:34] huge dip in anti-Sage sentiment back up now, especially with MTD. They're back up trying to lead in that space and it's exciting. What I like about this one, twofold. One, Cresco seems to be powering all payment engines. So they power zeros, they power implicit, they're now powering Sage payroll payments. Great work from Cresco as being that underlying engine for this. I do wonder what's happened though with Modular who did power the payments for and were the big partner for Sage payroll and Sage 50 payroll. I have asked the question somewhere,

[00:38:04] but now I've got a response in time for recording on this. So I wonder how that partnership has changed. It might just be running in parallel, but Cresco is definitely getting more traction. And I love the team. I love how they've done it and how they've built that. So really good to see that they are becoming the go-to engine for all payroll payment, all payments, supply and payroll payments in the UK. Yeah, absolutely. Silent infrastructure. I'm going to move away from that and talk about employment right changes that are coming through

[00:38:34] because it's one of those things that sounds like HR admin until it lands in a small business and no one knows what's going on. So this would be something that maybe you want to be aware of or so your clients want to be aware of. The government is phasing in a set of workplace reforms. Some are already live and there's more to come in October. So the bigger unfair dismissal change arrives from January 2027. So if you haven't already caught that, then where have you been? What's changing? Statutory sick pay has widened.

[00:39:03] Some family leave rights are now day one and there are stronger protections around whistleblowing and sexual harassment. So employers have new holiday pay record keeping duties and a fair work agency is also being created. Then from October the 1st, the time limit for bringing an employment tribunal claim moves from three months to six months. And then from 30th of October, we get trade union reforms including rights of access to workplaces,

[00:39:33] duties to tell workers they have the right to join a union and more protection around union activity. And on top of that, employers will need to take all reasonable steps to prevent workplace sexual harassment and third party harassment comes into the scope too. So not just staff on staff behavior, but it can be customers, suppliers, contractors, visitors, anyone that's enrolled with your team. From January 2027, then it moves a little bit more

[00:40:02] to the unfair dismissal protection changes. So the qualifying period gets shorter and the compensatory award cap goes. So my instinct on this is pretty simple. I think a lot of this is very good in some way. The workplace has changed and people move jobs more often. Families look very, very different. So hybrid work, contractors, outsourcing, offshoring, platform work.

[00:40:30] It's made employment messier. So I think the law needs to keep pace with that. And I think also speaking with Employment Hero on this side of it, they're doing a webinar this week on some of those changes. So if you haven't already caught a webinar on this, they are talking to some of the changes that are upcoming. I think this is really good. It's not anti-business. It's a good process to protect everybody.

[00:40:58] I think the only thing that makes me slightly nervous is this unionized thinking in general has sometimes been a bit of a barrier to growth. Sometimes the two agendas don't always meet and mix very well. And so, yeah, that bit is a slight watch this space, I guess, but it's one for accountants to be aware of because obviously small business clients will ask you, possibly, before they ask an employment lawyer. That's usually how it goes

[00:41:28] and that's a great honourable position to be in, but perhaps it's worth flagging things that might change their payroll, statutory sick pay, holiday pay, contractors, costs, redundancies, and any staff disputes that come. So you don't need to be an employment lawyer, but it's good to know that the risk level has changed. Yes. Great employee staff. Well, I think the number one thing this is highlighting, and I'm glad you referenced Employment Hero, is that it's become more and more critical

[00:41:58] to have HR and payroll platforms that talk to each other so it's all kind of managed and you can't do all this manually now. You're just going to miss something. So make sure that you're using a modern system, whether that's Employment Hero, whether that's Bright Pay, whether that's many other payroll and HR systems that are out there, which we're starting to see more and more come over to the UK such as Deal, etc. You need to be looking at this, whether that's for your own firm, if you're an accounting firm, or for your clients.

[00:42:28] Please do make sure you have someone that you can direct them to to make sure this is covered. Can I touch on this just slightly in terms of just a call out to conference organisers? Can you please have harassment policies within your guidelines so that people have clear avenues to deal with things if situations become awkward at conferences? Agreed. Especially as we're going into more conferences soon and this has been

[00:42:57] flagged multiple times. Let's say off record at conferences and after. So, yeah, very good shout out, Heather. I think so. Ryan has had to escort me as well as John a fair few times in the past. Ryan, you probably recount some. I've often had to feel that a little bit because you never know when you're meeting people how uncomfortable it gets and people have a few drinks and they get over familiar on some things and so you never know how that goes and it's just difficult

[00:43:25] to be in that situation. Luckily for me, I have two strong burly accountants left and right of me so I'm always well protected but for those people that don't. I'm glad we bring those other two people along that's Dale. So, yeah, it's something that there needs to be more more to be done around it. I'm not sure what conference organizers can do but there needs to be something. So, clear guidelines and a safe reporting option

[00:43:57] before and during. So, sometimes you need to alert them before if you have a stalker in attendance that you're aware is going to happen so that when you go to a security guard they can deal with it and that is something that many of the big conferences have. They have a list of who are the stalkery type of people and if you've never known that, good for you. You've lived a charmed life but unfortunately some of us haven't. All right, I've got one last bit

[00:44:26] of news and this is huge in my opinion but was completely lost because it happened on the same day as Influencergate. So, it was kind of buried. I picked it up and Damon and also brought this up in his kind of analysis of influence again. Accrual have acquired puzzle. Now, depending on where, I guess, what you've been following, both of these names may mean nothing to you. They're both AI-powered systems, accrual being focused

[00:44:56] on tax and puzzle being focused on accounting and essentially it's the first merger or bringing together of two highly supported for investment systems to bring something that's going to be much more powerful together in theory. So, they're not, I guess, one just getting rid of a competitor. Two inside different spaces come together to bring something that should be a lot bigger and better. Now, why is this important? Well, the whole AI ledger area

[00:45:26] hasn't been around for very long so we're already starting to see, I guess, consolidation in that space. We don't know what's led to, I guess, puzzle being acquired but, yeah, the whole what they call is it client accounting? I'm trying to think what, it's called CAS over in America. Is it client accounting? Client advisory services. There you go. Thank you, Heather. That is like an area that we're puzzle focusing

[00:45:55] that accrual wants to get a part of and taxes we understand is more specific points of the year whereas accounting is more regular so I guess having both these systems you can, especially from a core perspective, smooth out that cash flow and pinch points depending on what you're doing. So I think it's big. I think hopefully this will actually benefit both parties as they become one but I think it's just it's already what we're going to start seeing. We're going to start seeing all these new AI ledgers just start to consolidate

[00:46:25] because there's too much, there's too little traction. It's all the things we can speculate about but yeah, big news, big news. I don't know how either of those businesses' names survive SEO searches, accrual and puzzles. There must like be a million searches for them. In a way though, puzzle and if you're probably going to logically say puzzle accounting or something and maybe that's where that specialism of finding

[00:46:54] something so random that you then think okay, well, I'll just have it kind of works as like what it's trying to do is find all the pieces, right, and put them together and it's a clear I like the brand name. I actually think on the story there was obviously in amongst all of the news that's come out this week there's been more of a pattern emerging hasn't there about private equity moving more into the fact that these technology

[00:47:24] companies are not just trying to get more investment for the sake of investment, they're using those investments to purchase more accounting firms in different countries so that they can actually come in whether it's IT services or accounting services that this is a logical entry point for where the data is messy where the systems and the processes is all within a workflow so in theory can go from A to B to Z to

[00:47:53] D and actually I think that's another story that we could probably cover but we will run out on today's podcast for it so we'll catch up on the next one but yeah there was an article by Bill Gates on that as well and saying that actually his thesis is exactly that around accountants being the first people the first market to be disrupted truly as a kind of white collar worker and we invite Bill Gates to join us on the podcast

[00:48:23] to discuss that well it should be easy for him because if he searches accrual accounting the top one's obviously going to be the podcast not this other you know tax related system so he should find us easily but I guess one last bit to reference is that they have stated on this that they're going to continue both products they're going to sit separately it's going to continue as it was accrual were kind of building their own caste system realistically puzzle is going to come in and kind of not replace it but

[00:48:52] enhance it and that kind of integration between accrual and puzzle should evolve over the back end of 2026 so yes together hopefully stronger and we'll see if any of us are even needed in the future once Bill Gates prophecy has come to the fore we can just go and get those bikinis you just want to see me in a bikini Heather you keep pushing it absolutely now can I ask you both something how

[00:49:22] should the community influence the vendors we have this great vehicle here with the loop podcast but for the people who don't have a podcast what do you suggest to them okay so this is a tricky one because what I find happens a lot is that accountancy firms will or anyone in this space will be asked for opinion and whatever is pertinent

[00:49:52] in their mind at that point is what they put forward whatever has frustrated them at that point is what they put forward because that's what's there right being asked your opinion this is my opinion but it's very just you what's affecting you at that point it's not standardized so what happens when they get loads of opinions very disparate across everywhere and none of them are really taking a preference and they'll just go and pick something we can solve that but that's maybe 0.001% of what everyone

[00:50:22] cares about so what I found and the reason we got so involved in the early adopters hub is taking all of those opinions and debating them and we tend to as generally mostly align on what takes priority and what doesn't even if I'm going this is what bothering me and I hear someone else actually what you said bothers me more now you said about it so we start to get an order so what we need to I think is try and band together in some way if you've got other accountants you know ask them get something

[00:50:52] get a list and send it across prioritization is key don't say this is get them a list and try and give some sort of percentage to it because that will show what they should focus on obviously if you have specific things you want to address please do reach out to us we're more than happy

[00:51:26] together there's several hills that we should all be willing forward to come on to the agenda and we should die on these hills which is we need to have some change and we need to have some disruption and community is a great way of making that happen so I like what you're saying that there's ways when you come back together with the early doctors hub you're able to debate out very quickly what should or shouldn't be a priority so that's one thing but I also think as you said that it comes down to us putting in place a system where we say okay

[00:51:56] it absolutely needs to have an accountant in the loop perfect way to wrap that up in the so yeah I mean what a bumper app news section I'm so glad I've come back it's so energetic so yeah we should probably bring this pod to a close yep so if you are listening to this podcast it is literally going out the day

[00:52:38] subjects one is can accountants be builders and two is is this the end of the ecosystem era so it would be really great to hear your perspectives on that and we will catch you on our next pod