The Cloud Revolution Will Not Be Televised - It'll Be Streamed

[00:00:00] The maximum that a CEO on the Gem Exchange can be paid is 30 times the lowest paid employee. I don't think that we argue enough on a male CEO's pay. I think the only reason that we're bringing this up here is because she's a female CEO with a very chunky salary. This is interesting to me because I feel that what's coming down the road of AI and automating a lot of clients, we're as accountants going to have to specialise a lot more and focus probably niching

[00:00:27] down to focus on specific sectors. With that mid-market I see it growing, they want that differentiator and I can see them not necessarily just being one sector but picking two or three that they're potentially really strong in. The fine which is the largest ever issued by Lithuania's central bank comes after an inspection revealed that Revolut had not consistently identified suspicious transactions. This is not the first time that Revolut had fallen foul of the rules.

[00:00:55] It raises questions about how mid-market accounting firms are navigating increased competition and regulatory pressures. John, hit us with some nuggets that we should look out for in this IPO. I think they buried some bad news in there because... Hello and welcome to another episode of the DigiTours in a Cruel World Podcast brought to you of course by the Digital Disruptors. I'm delighted to say that this week's episode is sponsored by AdvancedTrack and the good people over there. Of course we've spoken about them before but just in case

[00:01:24] you're not sure who AdvancedTrack are, they are one of the pinnacle outsourcers in the UK with the concept of this podsourcing idea where you can outsource a whole accounts function to a pod of people who can deliver bookkeeping, accounts, payroll and all sorts of other services along with that. And just a very quick reminder because it's not too far away but they do have their GBX conference the day before AccountEx happening at the British Museum I think if I'm right.

[00:01:49] And I'm going to be there and I think possibly India or Ryan are also going to be there as well. So it'd be great to see some familiar faces. And also just since we're on the reminder game, don't forget that we're running AccountEx after GBX conference the night before AccountEx. It'd be really great to see you there. You can pick up tickets on our Eventbrite page, you can find the links on all of our socials etc. I'm sure you'll see us promoting it so take a look out for that. And finally just a quick shout out to Exledger. We're running a quick mini series with them.

[00:02:19] So you'll be hearing from myself and Ryan over the next few episodes talking to the good team at Exledger about their products and what makes it really exciting to use. But anyway, let's get into it. Indy, how are you? No Ryan today. Unfortunately, he's feeling a little bit under the weather. So it's just me and you, dream team. How's things going? Yeah, very good. Another week, another dollar, another day. I am looking forward to AccountEx,

[00:02:48] as you said, and it was a lot of fun to meet and spend a bit of time with the people at DAS. And I think that it's quite good if we can reinvigorate some conversations and connections over the course of that couple of days that we've got at AccountEx. Thanks. I'm starting off with a quick reminder, just in case you've forgotten and you're not aware,

[00:03:15] but the MTD public beta has gone live. So very exciting times for anyone that's into their income tax and desperate to get going with MTD. But it's available and also connected to that, which I think Ryan and I briefly touched on is the fact that Excel bridging software is back with a bang for MTD for ITSA. So there's the ability to utilize that. So it's very exciting. But yeah, if you're

[00:03:42] wanting to jump onto the MTD or ITSA beta testing, you can now volunteer. You basically sign up through your software provider or direct through your agent accounts. And you can then sort of see what the impact is going to be for your clients. It gets you straight into their quarter return regime.

[00:04:05] And this enhanced testing phase was launched just a couple of weeks ago, or not even a couple of weeks ago on the 16th of April. So middle of April. And really basically what HMRC are trying to do here is like test their capacity and their capability to make things work. And the big thing that they launched as a consequence of that was the ability for clients to now authorize multiple agents to act on their behalf. This is one of the key things for MTD for ITSA, which is this concept of you may well

[00:04:34] have, say a bookkeeper, for example, helping you with the day to day recording of transactions who will submit those quarterly submissions for you on your behalf. But at the end of the year, doing the final submission and the tax return, it may well be your accountant, your pre-existing accountant or someone like that who would do that. So you've now got the ability to appoint multiple agents and that is working. I've seen it in real life. And I've also seen a few posts about it on LinkedIn. So exciting to see the next phase of this out there. I'm not sure how many people will be up

[00:05:02] for being involved in the beta testing, but it is there for anyone that wants to get on board early and get their clients involved. How long is the beta testing phase expected to last, John? Do you reckon? I think effectively, they're just going to continue keeping this open now all the way through until we go fully live in April next year. So yeah, so essentially, I'm not sure because I haven't released it. I'm not sure if there's any additional phases they expect to drop in, in terms of whether it'll expand

[00:05:31] out to different entity types, well not entity types, but I guess sort of like, you know, to landlords, more complex landlords and income tax arrangements and stuff. But I think essentially, it's just going to be a rolling feast over the next, I guess, 12 months really until we go fully live. Very nice. I've got something slightly different from Companies House, who have also introduced their

[00:05:56] voluntary identity verification system, IDV, for directors and individuals with significant control, so your PSCs. It's a big step in the UK's ongoing push to tackle corporate fraud. So starting from April 8th, which was a couple of weeks back, directors, PSCs and their third party representatives like accountants can begin verifying their identity identities, though it's still a voluntary stage

[00:06:26] until autumn 2025. Then there'll be a mandatory verification that kicks in. So for accountants, this might seem like a simple, much needed update, aiming at improving the quality and accuracy of company data. However, there is a bit of a catch. The voluntary nature of the system raises concerns about the potential misuse and lack of checks before the mandatory period begins. So that's quite

[00:06:55] interesting. And I think while the voluntary ID verification process has itself been described as fairly straightforward by some accountants who we know have tried it. David Winch, who is an expert in anti-money laundering, warns the system may still be vulnerable to abuse, especially for accountants who may not fully understand the exact verification standards required by Companies House.

[00:07:19] The concern seems to stem from the lack of verification feedback in the system itself. For example, once you've verified a client's identity, there's no clear indication that the verification has been successful on Companies House's records. And that could lead to inadvertent errors, fraudulent activity slipping through. And the bigger question I think is around this is will

[00:07:42] IDVE be enough to stamp out the growing fraud within the company's register? Or will bad actors exploit the voluntary window and the lack of comprehensive checks? So I think that most are sort of speculating that that could become a band-aid solution unless the process is tightened and audited. So I think for

[00:08:08] accountants, while this system introduces a necessary step forward, it's also a reminder that compliance checks and client due diligence are still top priorities that should not be overlooked. And especially as a deadline for full implementation is on the horizon now. So yeah, big, big step for them. And I guess it is a suck it in sea moment, I guess, for accountants on being able to make sure that they've got the right

[00:08:34] kind of records in place for their clients. Yeah, I mean, as you said, indeed, you know, this is just the start of a process. And I guess the key thing with the voluntary phase of this is, as you say, there are probably some risks. But I think we know that whenever the government roll out things like this, and there is a voluntary element of it, the uptake is always quite small. So I'm not expecting, you know, a huge amount of demand. And so really not too many changes from what we, you know,

[00:09:00] what we currently experience at the company's house in terms of the risks that we have with, with, you know, fake or false directors being appointed to companies and things like that. But, you know, once it does become mandatory, which I think is about six months away, then I'm sure there'll be a significant impact then because by default, people will start to have to do it. And I guess also the part of this with it being voluntary is that they're really testing out their systems and making sure it's robust. And I know from seeing some of the stuff that David,

[00:09:29] David in particular is reported, but also from other people is that there were one or two like challenges, particularly for accountants who wanted to do this ID verification on behalf of their clients for company's house. There was a few little glitches in the system in the early days, just as sort of, that had to be addressed. And you have to go back to company's house like the following day or a couple of days later once those problems have been ironed out. But we'll get there.

[00:09:53] Yeah. The, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the act, the economic crime and corporate transparency act has given companies have stronger powers to tackle fraud. I think that there's a, it shows that they play, they will play a key role

[00:10:21] in just how other companies will also use that data going forward and be able to trust the data that's within it because it is highly accessible. And I think that it's important for the register to be as accurate as it can, it possibly can. Moving on to something a bit more tech focused then. There has been a little bit of an outcry, I think it's fair to say, particularly on the Australian market in respect to Sukinda Singh-Kassidy's pay that was agreed fairly recently.

[00:10:51] Her pay has now increased. It's almost doubled to $25 million. That's Aussie dollars, not US, which will now make her the second highest paid CEO on the Australian Stock Exchange this year behind Makari's CEO. Makari, the big mining giant for anyone that's not familiar with them. And yeah, there's been a little bit of an outcry because this was agreed earlier in April and a huge, a huge challenge, I guess.

[00:11:18] The board's sort of explanation, I guess, for why they've arrived at this salary package is because it brings her up to speed and up to parity with other equivalent US challenges, although they didn't name any accounting firms in the challenger list, which is interesting. So they mentioned people like DocuSign, Twilio, Workday and Atlassian as US-based peers that they're benchmarked against.

[00:11:45] Clearly didn't mention Intuit, which is their major competition. And I guess the big challenge here, of course, is like, can Sukinda and the team really break the US market? Xero have been in that market for a long old time now. They've never really managed to have a significant impact. And I guess the pushback from other people, whether that's shareholders or anyone else that's interested in this has been the fact that really Xero is still a UK and Australian product, if you like, in terms of where its revenue generation comes from. And that isn't the kind

[00:12:15] of salary that maybe would be reflected typically in the marketplace. I guess the other thing that Xero's CEO will be assessed on is the performance of the share price, which when you look at it over the last six months or so is actually up. So that's good. There has been some fairly big sort of volatility in the price though, because it's bounced around between anywhere around about 140 Aussie dollars to almost

[00:12:43] 200 dollars. And of course, you know, not all of that is within her control. So you've got to give us some dues in terms of the macroeconomic climate. But I guess that will be the ultimate assessment of performance will be, can they break the US market and what impact will that have on the share price in the longer term? I mean, it is very interesting to see how it's that she's been picked on for that.

[00:13:10] I hate hearing that. How much is 25 million in Aussie dollars? It's around, what, 12 million pounds? Yeah, I think so. I will check. Give me one second, Indy. I think there's some gender considerations, okay? 12 million pounds, yeah. And of course, that won't all be salary, will it? There'll be share incentives, and there'll be other parts of that package. I'm sure that'll be wrapped up in that. So it won't be

[00:13:35] cold, hard cash that she's getting for sure. I think that we just need to, like you say, compare apples with apples here. And is there any gender considerations that should be taken into account there? It's interesting. What her salary does is in line with a global sort of tech sector, Atlassian, DocuSign, Twilio, Workday. Yes, okay, it's very competitive.

[00:14:06] But yeah, I think that that's something that we should dig into, John. I'm not sure that that's entirely fair. I'm sure there's an element of sort of sexism or misogynism into this. And I mean, I guess that's always one of those problems, particularly when you do have female CEOs and people want to call out and question these things. I think if you could, you know, if the board have justified this and

[00:14:33] the shareholders have signed off on it, then unfortunately there's very little you can do, isn't there? And you can moan about it a little bit, but you just got to see where the performance is. I mean, ultimately, as I say, she'll be assessed on the performance of Xero as a product and as a, you know, and their ability to expand into the US market or increase the share price. And she'll be incentivized to do that as well. So if she doesn't do that, she'll get sacked. It's as simple as that. Well, we're going to wash this space. Like I said, I don't think that we argue enough on

[00:15:02] a male CEO's paying. It doesn't even make the news most of the time because it's fairly standard and it's behind closed doors for major tech companies. Whereas I think the only reason that we're bringing this up here is because, you know, she's a female CEO with a very chunky salary. Yeah. And, and, you know, look, that's, that's just part and parcel of being in the place she is. I mean, I think if we're going to complain more broadly about CEO salaries, you know, listed organizations, I do think we should take a, you know, a feather out of the cap of what they do in

[00:15:32] Germany, for example, where, and I might get this wrong, but I think the maximum that a CEO on a, on, on the German stock exchange can be paid is 30 times the lowest paid employee in the organization. I think that's a, that's a great way of managing and limiting pay and, and making it a little bit more, you know, acceptable, I guess, socially acceptable.

[00:15:59] Hmm. Interesting. It's very interesting. And a good reason to pay everyone in your team a little bit more. So, um, I've got something different, which is a more around valuation now in terms of, um, uh, another accounting firm that you probably know a lot about MHA, the 13th largest accounting firm in the UK, taking a bold step by listing on the London stock exchange with a

[00:16:24] 269 million pound valuation, despite the current market volatility. They're pushing ahead with an IPO aimed, aimed at raising up to 101.8 million. If you look at the ratio of IPA, IPOs that are taking place and how many companies are actually IPO in these days, it's becoming, you know, it's dropping, it's in decline. So, um, it's interesting that this is part of MHA's strategy to fuel further

[00:16:51] expansion, particularly through a number of acquisitions, which John, you will come on to, um, and they're going to invest in technology and talent. So over, um, those recent years, uh, John and I, you would, you and I were discussing beforehand, you were sharing that MHA has experienced significant growth, largely driven by their strategic acquisitions, including the recent app

[00:17:16] purchase of more and smally, which boosted its revenue by 30.4 million. Um, MHA's IPI, which offers shares to the public for the first time is a significant milestone in their, um, ambition to become one of the top 10 UK accounting firms with the goal of reaching over 500 million in annual revenue. Uh, while the firm's valuation is, uh, signals strong growth, uh, the, some of the,

[00:17:44] the underlying data seems to suggest as John will go into, um, that the move is probably, um, something that will provide an exit opportunity for the partners, um, with 80 million pounds roughly touted for allocated for partner distributions. Um, but however, that in terms of it in its ambitions,

[00:18:10] the firm is under investigation by the financial reporting council, whatever it's called it, uh, of the collapsed construction firm ISG and adds a layer of scrutiny to the listing. So it raises questions about how mid-market accounting, mid-market accounting firms are navigating increased competition and regulatory pressures. So, um, John hit us with some other news and some nuggets that we should look out for in this IPO and whether we should be chucking a few

[00:18:40] quid that way. Well, I'm not sure I can provide investment advice, but let's see, let's see where we go. Um, yeah, absolutely. I mean, I think, I mean, look, first of all, I mean, we should say huge congratulations to MHA because you know, it's, it's been a long time since an accounting practice, um, like this has floated on, uh, the AIM market, uh, which is where they've, where they've landed. Um, uh, I guess probably the most, you know, most recent that people remember is, is 10 and all

[00:19:10] other have been some other multidisciplinary practices on the AIM market historically. Um, I think it's interesting to see, I mean, there's a few things that stood out for me. Number one was originally they were targeting a valuation of 350 million and they ended up getting 269, I think. I mean, I think that's just an inevitability down to market conditions and, um, probably the Tangerine tyrant had a bit of an impact on that in terms of, um, you know, the, the global sort of, uh, uh, you know, destruction of the economy that he's been trying to achieve.

[00:19:37] Um, but nevertheless, as you say, they've, they've got a fairly big war pot or war chest now in terms of being able to make more, more acquisitions. The one thing that I thought was, was quite interesting when I did read through the, the, the documentation, like the pre-float documentation was that, um, I think, and I mean, you know, maybe I'll be a bit unjustified here, but I think they buried some bad news in there because they, they took the option not to disclose the turnover and profitability impact of many of the acquisitions that it made over the last couple of

[00:20:05] years, um, on the virtue, on the basis that they couldn't this, you know, find it, um, produce the information readily and easily from their systems as a consequence of the subsequent mergers and how that got wrapped up in their systems. I, I am not entirely sure that is totally legit because I think, you know, when you look to a lot of those acquisitions, they have deferred revenue payments and, um, um, and payouts that were tied into the deal. And, and quite often in acquisitions of other

[00:20:30] accounting firms, those deferred revenue, um, um, uh, payments or deferred consideration payments, rather are tied into performance criteria linked to things like retention of clients, turnover or profitability targets and other things, and other things in terms of longevity. So the existing partners staying and not leaving. And, and in order to be able to manage and monitor those, you've got to be able to see the data and understand what it's like. Um, so my, my, I, so I have a question mark over that information and that data. And I, my question mark really is

[00:20:59] around does, does MHA have, you know, good organic growth as an underlying, you know, data point in the, in the numbers. I mean, clearly, if you look at their accounts over the last few years, you can see a lot of growth, but that has been acquisition driven, I would suggest in the main, and it's really difficult to unpick how much organic growth has contributed to that overall. And their, their strategy, um, you know, as documented in the, in the floats documentation

[00:21:25] was around, they want to continue the acquisitions with this war chest that they've got, but they are also targeting organic growth and increasingly want to target things like the pie audit markets or public interest entity audits. Um, and, and there is huge opportunity there. And we know that the audit market probably is growing from a fee level at around about 20 to 25% generally. So there's lots of great opportunity there, but I think as a retail investor, I think it's quite challenging to look at that documentation and understand whether or not there's a real opportunity there because

[00:21:56] inevitably if, uh, if MHA want to continue their growth and they don't meet their organic growth targets, they're going to have to deliver those growth targets through acquisitive growth. And that means they're gonna have to come back to the market at some point for more money. And when they do that, they're going to, um, you know, effectively, um, you, um, you know, reduce, uh, any retail investors opportunity because they're, they're, you know, the, the, the way that you raise money on

[00:22:23] a market is you go to institutional investors, not to the retail market typically, because there's not a lot of liquidity. So the last piece, total speculation, but off the back of the fact that if we can't see the data that then says they are actually organically growing, that if your only strategy is to continue acquiring more companies and you're going to need to have deep pockets to do so. Okay. Well, thanks John for that. So I think that was a good little, um, summary on MHA.

[00:22:51] Um, did you see the Sage, uh, take down Netflix blockbuster? I did. I thought this was quite ballsy from, um, from the team at iPlicit. I mean, this, this is, um, this is some fun stuff from them. I mean, they basically said, haven't they, that they want to do to Sage what net or what Netflix did to blockbuster. I mean, um, it's good to talk a big

[00:23:16] game, you know, and, and for iPlicit to sort of say, look, we're here to, um, you push forward and really, uh, push out into that, into that challenger market. I think that the irony in this is that, you know, if you look at where iPlicit's main competition comes from, when it comes to Sage, it comes from intact and that's already a cloud product has been on the cloud for a long time. Uh, pretty decent products got a huge market share in the U S and increasingly, uh, we're seeing it present in the UK market as well as other geographic markets. Um, and iPlicit have

[00:23:46] really got to push back against that or find a sub sector of the ERP market to push themselves into. So, uh, big news, uh, bold statement from those guys. Um, I, you know, iPlicit is a great product and it's got a great opportunity and a good team there. Um, but whether they'll be able to fully disrupt Sage, I'm not entirely sure. I think, um, you know, unlike blockbuster Sage have finally seen the light and they know that they need to, um, uh, they need to change and have been

[00:24:12] increasingly either making acquisitions on moving their products to the cloud. Um, how successful that strategy is, is still be to be determined, but, um, um, yeah, they're, they're definitely not in the blockbuster set at the moment. I think it's fair to say. Yeah. It's so interesting. I mean, we're used to hearing Dwayne Jackson really do the, the hot shots fired at Sage, but I guess he hasn't started a new business yet because

[00:24:40] it will be when he starts his next thing that we hear more about, um, the Sage bashing. Um, speaking of that, have we heard much more about the new Irish structure and, and their plans? Because Alona has obviously stepped aside now, um, from being CEO of, uh, Iris and come on, John, give us some goss on the, on the grapevine. I don't know if there is any goss to be honest. I mean,

[00:25:06] um, you obviously Alona stepped down and that was just after the DEX acquisition and, and, and their announcement of a focus on the U S market. Um, you know, subsequently Iris have done what Iris normally do, which is they've, they've removed some of their historic acquisitions off the market, like, um, uh, tax filer and things like that. So that's been deprecated. Um, there's a few others that we know are in the pipeline that will be removed as well in the future. So practice engine is one that we, that is going to come to end of life fairly soon star, which another practice

[00:25:35] management system that larger firms using is facing the same fate. Um, and, um, you know, and, and the ongoing malaise that we see with, um, you know, with their cloud strategy, it just continues, you know, it's not particularly clear, um, you know, elements as a platform doesn't seem to be, you know, garnering too many, uh, supporters or people that really like it. Um, so, so, you know, it's up to Iris to figure out what they want to do on the, on the UK market, you know, and, and, and I

[00:26:04] guess the only thing that they have done was from a positive point of view is they appointed, um, that person to come in and be like their chief customer officer or whatever his role was to, to kind of help to engage with that. And I mean, you know, when you start from a low base, the only way is up. Nice. Um, okay. Let's end this week's app news from, uh, a penalty, a fine. We like having a

[00:26:29] little bit of a news on, um, a, a wrist slap, shall we say? Revolut. Europe's most valuable darling startup has been slapped with a 3.5 million euro fine by Lithuania's central bank for failing to properly monitor anti-money laundering processes. So, two hour earlier conversation around ID verification. Um, the fine, which is the largest ever issued by Lithuania's central bank, comes

[00:26:58] after an inspection revealed that Revolut had not consistently identified suspicious transactions or effectively monitored business relationships. Uh, while the, the findings pointed out procedural shortcomings, sources close to Revolut clarified that no actual instances of money laundering were identified during the probe. Revolut has since acknowledged the deficiencies and has already

[00:27:22] taken steps to improve its controls and prevent future violations. Um, it, it currently operates under a Lithuanian banking license, uh, and Revolut is committed to enhancing the compliance measures and continues to invest in strengthening its fight against financial crime. Um, this fine comes hot off the heels of other notable regulatory actions in the fintech space, including a 35 million, uh, pound

[00:27:51] fine issued to Klarna by Sweden's financial regulator for similar AML violations. Um, the case highlights the increasing scrutiny overall that we spoke a lot about towards the end of last year. We cover a lot on this podcast in terms of fintechs facing, um, issues as they scale, uh, they will face more issues in the realm of regulatory compliance in terms of the AML piece. And, um, as a, as a result by extensions,

[00:28:19] the accountants being having the right insurances in place to make sure that they can service their clients if they are recommending any particular route to take with any of the fintechs or, um, banking partners. So it serves as a lot, a good reminder that even the largest fintechs and largest startups must stay vigilant in maintaining their robust financial crime controls to avoid

[00:28:44] hefty fines and reputational damage. Um, and it was good to see that Revolut had taken that quite seriously, I'd say given the, you know, it's a, a decent chunky fine. Um, I don't think we're going to see the end of this. We did say that, um, towards the end of last year, uh, I think we started to see that the FCA in particular has started to go back through the records of fintechs,

[00:29:09] of banks to then go and issue fines where it deems the procedures are just not strong enough, even without an actual breach in money laundering. Yeah. And as you say, Andy, you know, as these organizations become bigger, um, the impact of something going wrong, um, you know, either affecting consumers or affecting, you know, the regulatory environment just gets bigger. So they're going to be subject to more scrutiny. Um, I mean, I would say, you know, this is not the first time

[00:29:38] that Revolut had fallen foul of the rules. I mean, you know, you could say that you could say the same for some of the traditional banks as well, but it does, um, it does make you wonder about whether or not, um, you know, Revolut as an organization take regulatory requirements, you know, quite as seriously maybe as others, uh, prefer to do who have managed to so far to avoid, uh, any investigations that have resulted in fines. And that's our bucket load this week.

[00:30:06] We're joined again by Laura Joy from Xledger. And today we're going to be diving into sector specialisms. I mean, this is interesting to me because I feel that what's coming down the road of AI and automating a lot of compliance, the mundane parts of accountancy where as accountants are going to have to specialize a lot more and focus, probably niching down to, uh, focus on specific sectors. But what do you see or what do you think is going to happen to the accountancy sector,

[00:30:34] um, from a, from a, you know, sector based approach? Yeah, we, we've already started seeing it. Um, accountants specializing in certain sectors. Um, you know, we speak to them very often and a lot of them have got a wide range of expertise, but we're seeing a lot more that they want to have that focus on something specific, be it hospitality, be it charity. So they're kind of known as a leader in that space. They're the one,

[00:31:01] you know, the trusted advisor, not just the person that kind of does your accounts, does the bookkeeping someone actually, you can kind of lean on to give you that advice as well. So it's kind of a, a partnership between the accountants and the clients rather than just a traditional accountancy relationship. Definitely. I feel that obviously a lot of specialism niching down becomes your knowledge of that sector and the advice you can provide,

[00:31:30] but tech provides a vital role in this as well. So how do you see tech complimenting niching? Yeah. Tech, I think is going to be key. I'm having the right tech in place, you know, each sector does have its own, you know, quirks, um, you know, charities needing to do sort reporting, you know, having that fund accounting, um, something like Exledger does that really well, but then something like hospitality where it's high transaction volumes, you know, more, you know,

[00:31:59] different varieties of reporting, like 445 reporting, for example, um, and just kind of a wide range and having people that can help you, especially with scaling businesses, maybe newer businesses that they have, you know, some expertise, but not necessarily that full breadth. Whereas if they can lean on a partner, an accountant that knows that sector really, really well, that can really benefit those

[00:32:24] businesses and having the right tech also as well from an accountant point of view, they can help advise those clients rather than the client just thinking this will fit. They can go, actually, we've used this software with these kinds of clients and it's worked really well because of X, Y, and Z, not just because it, you know, does AP well or does this, which you still need, but more of that, it fits your industry because of these specific reasons.

[00:32:51] Yeah. And you flagged something there that, um, can be quite niche in itself. 445 reporting is not everywhere now. So you have to focus on finding the right solution to enable you to provide that service. And we've talked previously about, you know, the rise of outsourcing in those larger businesses. Do you think this is going to come hand in hand as county firms do more outsourcing, they're going to niche. And so those two are going to come together. Yeah, definitely. I think that

[00:33:16] having that niche, having that specialism, especially as there are a lot of people outsourcing, especially if you look at that, the smaller end, there's hundreds of thousands, you know, you can't look through LinkedIn on any one day and there's a new business there. But with that mid market, I see it growing and can see that, you know, they're not just going to want someone who can do the same old, you know, processing, they want that differentiator. And I can see them not

[00:33:44] necessarily just being one sector, but picking two or three that they're potentially really strong in. And that is then their focus. And that's their offering, um, that setting them apart from the rest of the market, because it's, we can do all of these, you know, accounting things we can do you, you're reporting your AR, your AP, but we can also offer you advice and guidance on, you know, the new, for example, in the charity world, there's like potential new sort reporting

[00:34:11] coming out. They've got that expertise without kind of having to spend a lot of time going and reading regulation. They're almost ticking those boxes for you. Yeah. And, um, it's a huge opportunity because those mid size businesses are looking for support. They're struggling to find the right skill set to, to help them grow. And, you know, a lot of them are on old, outdated technology.

[00:34:35] So how do you see, I guess, Xledger fitting in this? How does, how does Xledger's operational model enable and support accountants with this kind of niching focus? Yeah. With the niching focus, what Xledger does really well, um, and we mentioned it in a previous episode is our, our kind of entity structure that it is hierarchical. Um, and you can have kind of groups within groups and we've got, you know, lots of multi entity. We've got, um,

[00:35:01] some across our global network of over 300 entities in one kind of group of companies. Um, but how this can really benefit accountants is if they are going sector specific, you know, be it even, you know, very wide ranging sectors, they could do charity and then hospitality and then something completely different to both of those. What you can do with an Xledger is kind of create an out of the box offering. Um, so this means you can do a lot of setup in the background,

[00:35:28] um, and that setup then benefits those end customers. And what it also means is that those accountants can kind of go, we've got this kind of best of breed or, you know, this best approach. You can still make amendments still, you know, make small tweaks and things like reports can still be completely renamed. You know, if they don't like that it says sales, they want to say income or revenue, that's a very easy change, but it saves a lot of the setup. Um, and it means that

[00:35:56] from a time and a cost perspective, it can be, you know, much more efficient, but it also allows these accountants to have kind of two offerings as such. You have Xledger as a, as a, this is what we've kind of predefined or you can go full bespoke. So they still can offer that kind of full, you know, consultancy, um, system where they go through all the kind of chart accounts and how they want to do

[00:36:22] that. Or they can go, we've got this out of the box, kind of a, this is best practice. What we tend to find is the ones that even though they say they want bespoke, it's not a million miles away from that kind of standard offering. And that's usually their starting point anyway. And can really speed up that implementation process, which obviously, you know, time is critical for accountants. Um, and you know, you want to get client on board as quickly as possible.

[00:36:47] And this all plays into where the profession is going as, you know, as we see and will experience AI uproading compliance. We transition from compliance to advising the platforms and enable us to do that. Um, and the, the biggest change I think for accountants is just getting the pricing right, getting that model right and enabling that transition and the teams to have the skillset to deliver that. But thank you all for coming on and talking us through how Exledger helps power that, that change. Thank you again.

[00:37:16] There you go. That wraps up another episode of the DigiTools are Cool podcast. I hope you enjoyed the episode. I hope you enjoyed listening to, um, uh, the team at Exledger talking about their products and what makes it so special. Uh, and just a reminder that we were sponsored by Advanced Track this time. And, uh, if you do want to go to GBX or to our events account text, uh, the night before account text, we would love to see you there. You'll be able to find details in the show notes and more, uh, uh, more information and links so that you can get yourself booked onto those things. Um, and,

[00:37:45] and as always, we welcome your thoughts, your comments, your ideas. If we've missed anything, or you think there's something topical that we should be talking about, uh, make sure you pick it up with us and don't forget that you'll be able to catch us always, uh, every week on your, uh, on your podcast, uh, player of choice, along with our new newsletter and the live streams that go out every week. So, uh, if you need more information, grab the website, find more details, and you can, uh, you can get everything that you need, uh, from us, whatever you want.

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