Xero's Time to Shine in The US? || Accounting Tech News

[00:00:00] We've got the band back together. So excited. It's a one-off. Damn. This announcement did not go down well. The share price dropped by about 7%. Pretty much no impact on the UK. This is zero trying to buy a footprint in the US. There's some things in here that I just would have expected to see a lot sooner. If they're just giving it a facelift and they're going to park it, it's probably a bit disappointing. I do think we're going to start to see more and more accounts building these kind of point solutions to fix a particular issue that they're facing. When you've got products like Lovable, ChatGPT or

[00:00:27] Cloud or whatever, to help you to build and code these things, you could turn that around and do what Lucra have done and create a chargeable service opportunity. That I thought was pretty cool. That's using AI in a really smart way. Right. So how much of that responsibility should fall to the accounting software versus the accountant? The one thing I would pick you up on though, and you mentioned this, was around perfection. I think this is a challenge, is that we're criticizing these vendors. Wind the clock back to when Receipt Bank was founded and their accuracy was like

[00:00:56] in the low 90%. Now we're saying, oh, everything that we get from these vendors when it comes to AI has to be absolutely immaculate. So I think we do have this kind of like perfection fallacy that we've got to overcome. Oh, I don't know, John, I'm going to challenge that one. We don't want to be guinea pigs. If you're not tracking how the business is doing, if you're not tracking how projects are performing, that is a big red flag that you need to seriously grow up. Hello and welcome back to the DigiTools in a Cruel World podcast.

[00:01:25] I'm going to be back to the past. This episode is brought to you by iPlicit, the mid-tier finance solution that is helping any business that's trying to either escape legacy systems or has outgrown the small business finance systems that we, I guess, talk about pretty much every week on this show. This week, we'll also be talking to Harv Nagra from Skoro, as we dive into the partner program they run with lots of accountants around the UK as they help, I guess, those accountants try and become more digitally focused.

[00:01:54] So helping their businesses, their clients work with digital systems. Once again, something that I talk about pretty much every week. And who else joins me to talk about these topics every week? Well, either John or Indy, but today we've got them both together. Welcome back, guys. Hey! We've got the band back together. So excited. It's a one-off.

[00:02:19] So, yeah, just one-off, a reunion tour. So, Indy, how are you? Yeah, it's been an eventful year so far. I think that's probably the most muted word for it. But, yeah, I think I've definitely got some soul-searching to do for the next couple of months, which is a good thing, I guess, and much needed at this time.

[00:02:43] So, yeah, I've had some very interesting conversations with a lot more of my network of late, and I've just been reconnecting with a lot of people either in fintech, payments, banking and lending. And I think that, yeah, this is, let's hope for a more exciting end to the year. Well, it's actually, you know, I've had a lot of excitement, probably a little bit too much. Yeah, maybe not exciting.

[00:03:09] Not excitement, just some sage, and I don't mean the big green machine, just some sage times would be good. Like the stuff you get with your pork and apple sausages? Exactly. Exactly. I made really good apple sauce the other day, actually. So, you know, you've just reminded me of that. It went really well on my burger. I do like a little bit of fried sage. It's very nice. Ooh. John, are you starting the new Cooking Network channel, are you?

[00:03:37] You know, is that what we're expecting? We're a modern man, very modern man. Yeah. Well, I was going to say I've never made sauce, but then I was going to hand over to John. I didn't know where that conversation was going to go. So, John, how have you been? I know we caught up at the AI summit as we were talking all things sage and automation. But how's life in general for you? Warm, I think it's fair to say, right? Yeah. It's a little bit hot, isn't it? Yeah. Yeah. I mean, we're recording in the middle of...

[00:04:07] Is this the second heat wave we've had this year? I think I can't remember. But I mean, by the time this goes out, I'll be pissing it down at about minus 12, probably. But it's all good. But yeah, I really enjoyed the AI summit, actually. I thought it was one of the highlights of the first half of the year in terms of events I've been to. So that's very high praise, isn't it? It was. And I think we've been to lots of shows where there's been AI hype, but nothing tangible.

[00:04:32] And this one felt that it was highly tangible. There's lots of key takeaways you could use, I guess, straight away to kind of bring AI into your practice. And if not, at least prepare your business for utilizing AI. Did you get taught how to create your own GPTs? I'm curious. Sort of. I mean, it was very, very briefly touched on, but we didn't get into that level of detail. But I mean, there was lots of talk about use cases.

[00:04:59] I think that's one of the things that's been massively lacking over the last two years in talking about ChatGPT or LLMs more broadly. Billy Mac produced a really good presentation on kind of like the different models and different opportunities there. And some comparison with things like Claude and other things. So, yeah, I think for the level of audience, which was pretty mixed from the conversations I had, I thought it was really well pitched.

[00:05:25] Yeah. We even had someone who created a custom GPT and then demonstrated it live during the summit. And it worked, which I mean, it was a little bit slow at times, but it worked, which was pretty amazing. Very nice. I have got something this week and it was announced by Sukinda from Xero, the acquisition of Melio, the US B2B payments platform,

[00:05:53] which brings under one seamless solution the combination of accounting and payments. Again, I guess it fitting with the strategy that they have been employing for the last few years. The payments market in the US alone is worth 29 billion. And Xero's acquisition is helping to tackle a crucial need in integrating accounts payable, which if you didn't see Sukinda's video,

[00:06:23] she did go into how they are bringing them closer together. And it fits with their three by three strategy in helping businesses and accountants manage cash flow and simplify workflows. So a huge advantage in terms of reducing friction, having multiple systems and now using it as a more intuitive and efficient way to stay on top of the invoicing,

[00:06:47] reconciliation and payments piece available primarily in the US and concentrating on expanding its customer base out there. And by integrating everything from the accounts receivable accounts payable. For the UK accountants, I guess it's one to keep an eye on. And again, just being able to see that Xero is taking it more seriously in terms of we've always seen the number of apps in its ecosystem

[00:07:16] and challenged over the many years, how much of that should be owned by the accounting software. And I guess that they're now taking more of a stance on acquisition again, which is great to see, because it kind of went all a bit quiet there on the Western front. What do you guys think of this acquisition? Well, I think, I mean, we talked, didn't we, in a podcast a while ago, indeed, we talked about whether or not, you know,

[00:07:46] there was a huge amount of buy-in into Sikinda as a CEO. And we talked about the fact that she would be judged, you know, ultimately on performance. And part of that performance would be share price and how she can grow and expand Xero's footprint. And on that front, you know, this announcement did not go down well. You know, there's a share price, you know, dropped by about 7%. So it didn't completely tank, but it took a bit of a battering from where it was at and hasn't really recovered since. So I had a little bit of a dip and then sort of recovered ever so slightly, but, you know, marginal gains.

[00:08:15] And I think that represents, you know, the general trend and sort of, you know, feelings that I've heard from accountants in North America as well. You know, no one's really sure why this acquisition's been made, particularly at the valuation, you know, paying out two and a half billion of cash and equity plus a further half billion, you know, contingent consideration. I think there was a lot of people that felt this is a massively overvalued acquisition. Yeah.

[00:08:44] I think there was lots of people I've seen on kind of social media saying or trying to predict the impact on the UK. There's pretty much no impact on the UK. This is the Xero trying to buy a footprint in the US. It's because Milio has a good track record and a good loyal fan base. It's basically doing the sage play that was done in the UK not that long ago by buying our products that then try and give them some clout in the UK.

[00:09:12] And that has worked because, you know, you've had people like Stuart Hurst still staying on those systems and still giving them a lot of kudos. So what we've got to see is does that work in the US with Xero? And as I guess John alluded to, the market thinks probably not for the price that's been paid. Well, maybe it's an expansion plan for them. I mean, I guess that there's a customer base behind it.

[00:09:35] And like you say, it's one way to grow in a region and a region as broad as the US requires you to either be fairly localised, I guess. They see this as a good, tangible, meaningful enough synergy to the product and perhaps something that they couldn't have replicated themselves soon enough or quick enough. So time will tell.

[00:10:03] I'm hopeful for the fact that it's difficult to break the US soon. And I think that they're doing the strategy for them either which way would be very challenging, no matter which route they were to take. They've now at least got their deep strategic alliances in place with Stripe and they seem to be making a difference on the payment side.

[00:10:28] Add to that something like a major acquisition of a US-based company that is doing a good job in payments. I think that might just deepen their approach to the market. I think one of the really positives from this, if we're going to look at the positives as well, I think the announcement when it was made said that this is going to increase the US revenue by 10 times, I think it was.

[00:10:54] Now, I don't know how mature Melio is as a product, but if you're talking about a significant increase in revenue like that, that makes running that business unit in the US much more manageable. I think Melio is good. Everything I've heard, I obviously not used it myself being it's a US product, but it's got a very good reputation. So please don't kill it, Zero. Please don't.

[00:11:16] But on some other news from Zero, a very Zero focused episode, I believe today, we've got a focus on healthcare. I think globally, but definitely over in Australia. They're pushing the combination of products and integrations to say or center themselves, Zero is, as basically the tool for healthcare providers. Now, they partnered with Deputy a while ago over, it's global, but focused mostly on Australia.

[00:11:44] And that is the first app they reference as kind of that key app stack that will help healthcare providers. And they talk about one called ShiftCare, which is not one that you can actually get over in the UK. But there's one called, and you know how bad I'm pronouncing things. I'm going to go with Splose. I'm not entirely, entirely certain that it is called that. S-P-L-O-S-E. There's probably an actual term it's trying to reference here. I'm going with Splose.

[00:12:12] It is a system designed to help those health professionals and therapists. And it has, as you'd expect, AI as a key functionality inside that. So what does it do? It automates appointment bookings and reminders. Obviously, you create and send your invoices direct from the system. And syncs those invoices directly into Xero.

[00:12:31] So it's, as we've seen it with dentists, as you've seen with solicitors, Xero are focusing now on the healthcare side and integrating into key apps that are known in that space to help build out, I guess, trust for the businesses that fit that niche. I mean, the way you say that, Ryan, the only thing that came to mind, given it as a healthcare thing, is it's the noise that something makes when you squeeze a spot really hard. What's Splose? Gross.

[00:13:00] I was going to say, I splose it's a good idea. Quote of the year, I think, Indy. Brilliant. Well, if we're keeping on the theme of Xero updates, here's another one from me, which is, I think, a really exciting one because this is fun. Although I don't think we get to see this in the UK at the moment. But anyway, let's get into it.

[00:13:24] So most people will know that Xero acquired SIFT Analytics a little while ago, and they've been busy integrating that out into the various products. And so they announced their initial integration was to add SIFT's small business features into Xero, which was happening with a small group of plans. So not a group of testers, but a group of plans in the US. So some of their subscription plans. And that apparently has gone down a storm.

[00:13:54] And so they've extended that out to effectively everything in the US. So all US customers now have access to this. And at the same time, they've started to roll this out to Australia on all of the plans. And so you now have this, effectively, this analytics platform powered by SIFT into which you can get a whole bunch of dashboards and see how the business is performing with various different types of visualizations.

[00:14:20] So we do kind of have this in the UK already because there are some mini aspects of performance. And we do have a performance dashboard in the Xero UK product. But this is kind of melding that with the SIFT elements, which is all of the graphical stuff and the really nice, neat visuals that they can produce. And looking at the screenshots and stuff, it's really, really cool. It looks really neat and very valuable.

[00:14:44] And this is the way to integrate products, I think, if we're being perfectly honest about how to make the most of these things. So it's really nice to see this. It looks quite seamless. I just hope we're going to see it in the UK next. They have promised. Xero promised to roll this out to other markets. Just don't quite know when. Ah, no timeline. And we knew that SIFT would be more, I guess, integrated with Xero. And this sounds like the perfect first step. Indeed. Yeah.

[00:15:12] I guess the question is, if you're already a SIFT user, which we are, for example, and how does that then work as you kind of blend these two products together? Because we'll have SIFT in Xero and we'll have SIFT as a standalone product. And at what point would we potentially take a client out of SIFT? And I guess the SIFT model, the way that you pay for it, subscribe for it, doesn't really matter how many clients you have on the platform. But, yeah, just an interesting question, really.

[00:15:40] Well, it's about removing as much friction as possible. So I guess it's when it's easier to stay within the system that you are doing the work within. Interesting that you put on the look of the presenting the data more clearly. Xero also announced a reimagined Xero dashboard.

[00:16:04] So you can see more at a glance of a business's performance in the simpler navigation and a new dynamic homepage, which puts data and insights at the forefront in terms of the types of widgets that you can start seeing on that dashboard.

[00:16:25] So in terms of focus on the top priorities, things in the task list, recently paid invoices and net profit and loss, and giving you more critical financial information at a glance so that you can quickly grasp the financial health without having to run separate reports.

[00:16:48] So they've done some supercharging on some of the existing widgets and they have notified their beta participants. So I don't know if you guys have beta access, but you'll be able to see the interactive prototype of the new navigation and homepage, web page, and then be able to feed back on that.

[00:17:11] So it's off the back of a lot of research that's done across Australia, New Zealand, United Kingdom, and the US on the pain point of what you want to see on that dashboard. And to me, there's, I mean, like, actually, it is a facelift, hey? It is a facelift. There's some things in here that I just would have expected to see a lot sooner. So I guess it's just, for me, like, a look back at what was and what is and the fact that you should drill down.

[00:17:39] This is like, I went to something at the end of last year, towards the end, and they said, the visualization, the movement for open data is going to make it more critical than ever that people re-evaluate how they present that data to simplify it. And I think that that's good that Xero has kind of cottoned on to that and been able to hopefully launch something that allows them to also, yeah, benefit from the presentation of it.

[00:18:09] Not sure how it works with what you've just said, John, but that was, you know, five days ago they announced that, so. The dashboards haven't been worked on for a long time, and it's, yeah, it feels like they became a bit dated. There was a few little widgets in there, probably four that were brilliant, that people would interact with straight away, but nothing had been built out. And if this is just the first step and they're going to continue to iterate and bring new little widgets in, then that's a massive plus.

[00:18:37] If they're just giving it facelift and they're going to park it and not do anything for ages, then realistically, I think that's probably a bit disappointing. Excited to see it. Excited to see it rolled out. Please don't just leave it at that. Keep evolving it. They need to evolve over time. Just to add to that, I would say, you know, the Xero dashboard at one point was a thing that they sold everything on, wasn't it? It was a great opportunity to get a bunch of data about your clients. And then it sort of tailed off and became less and less interesting and less and less practical.

[00:19:05] They've got to react now to things like Sage for Accountants. You know, that is a platform where it is multi-system. You can add Xero and QuickBooks to that. I think Free Agent as well, possibly. And you can start to garner insights from those connected clients as well. So this is going to be the route of travel, which essentially is no different from what we see with TaxCal or with Carbon or with FYI and all the kind of functionality that they're building in there.

[00:19:30] So it's, yeah, it's an interesting challenge, but a great opportunity for Xero to enhance what we've got, I guess. Definitely. I feel like we weren't as excited as we should be about it. I am excited to kind of get my hands on this. I'm not in the beta. I do think that if anyone from Xero is listening, they should have me. But I do want to have a little play of it and just see how the data can be sliced, moved around. Hopefully a big, big jump up on the existing dashboard that I've got.

[00:20:01] But I'm going to wrap up Xero app news this week by, as I love to do, talk about the most recent released apps in the Xero app store. I do still think we need a jingle for this. And as I guess you probably expect to build up to summer, it's gone a little bit crazy.

[00:20:30] There have been 16 new apps thrown into the app store over the last month. And admittedly, the majority of these are not UK focused. There are some, though, and some of these look a bit interesting. So Pluto is one. I think I've at least got the pronunciation of this one correct. And that's corporate cards and expense management. So another one of these similar to, I guess, we've seen with Plio and Soldo.

[00:20:55] We've got a system called DriveTrain, which is connecting into Xero and works with CRM and HRIS tools to bring those, I guess, different systems and the data in those systems. Into Xero. We've got one called Luca, which is an AI tool. Well, I guess it's accurately extracting, as it says, and classifying your invoice data in Xero for syncing it.

[00:21:23] So I don't really, it doesn't really make it very clear what this is doing. So if anyone has used Luca or is exploring Luca, I'd be interested to see what Xero is doing because they don't describe it very well. But then you've got some other platforms that have already, I think, in the past been integrated, been on the app store, dropped off and come back in. Scora has been relisted on there and ClockIt, if you ever use ClockIt.

[00:21:47] So a couple of tools to, I guess, refresh how they're integrating because whenever they've been relisted, the integration is going to have changed, can be tweaked. It's probably going to be better than it was before. Isn't that cheating, getting relisted? Yeah, I don't know if it's just so, I don't think they do it just so I bring it up on this podcast though, John.

[00:22:09] I think that's more, they have to go for a process that may have been delisted at some point because you have to maintain with Xero your certification, I guess, to be certified at. And maybe there was a reason that that didn't happen and they just relisted. Don't know in these instances, but I have seen them on there before. Yeah, fair enough. Well, moving on from that, I've got something completely outside of the Xero ecosystem. Well, almost.

[00:22:37] iPlicit have announced an integration and partnership with SYN7, which I think is a really exciting and really great opportunity for both products. For those not familiar with iPlicit or SYN7, iPlicit is a mid-size, mid-tier kind of ERP, which you probably step in and out of from Xero or QuickBooks, for example, as you're growing your business out.

[00:22:56] And SYN7 is probably the second most well-known stock management system in the Xero ecosystem after Unleashed, although they do massively overlap in terms of product capability and functionality. SYN7 in particular probably has more capability around warehouse management and some of the sort of 3PL stuff that you potentially deal with with some distributors, for example.

[00:23:24] And I think this comes off the back of, you know, we know that iPlicit have done a huge amount of work on their stock management system internally, but clearly that has still got some limitations. And so this integration with SYN7 allows them to enhance that functionality and do a bit more, which is great. Yeah, yeah. And the other thing that I find really fun about these things is quite often when we're dealing with clients who are growing and outgrowing something like Xero or QuickBooks, you know, they do quite often want to take their third-party integrations with them when they move up and out of that system into something else,

[00:23:53] particularly around operational practices, because they're familiar. It lightens the load in terms of that move. And it also means that really all you've got to look at is a finance side of things and not have to look at the whole suite of other products and do much more broad training and have a higher sort of hurdle to get over. So, yeah, great opportunity.

[00:24:12] And one stat that really stood out for me, which I wasn't aware of as well, was that they said that 34% of SME turnover in 2024 came from the wholesale distribution and retail sectors, which is a staggering number. I mean, I was not even aware that I was close. Yeah. Oh, that is staggering. And I've got a little bit more insights, I guess, on how this integration will work or is working.

[00:24:42] And because I guess it's syncing product information, it's syncing purchases, it's syncing sales between the systems. And what you can do, because iPlisit has infinite ways to analyze data, is you can automate the mapping of those products to different analysis codes.

[00:25:03] So you can slice your data in far greater levels than you can do in SYN7 and therefore do much deeper reporting in the iPlisit tool, which enhances the SYN7 product even further. That's cool. Yeah. Yeah. But I think the beauty with that integration is SYN7, you know, two tools there. You've got Core, you've got Omni, and iPlisit, massively grown mid-tier finance solution.

[00:25:29] It's only going to improve or enhance the experience for any clients on the system. Talking about something else a bit man-loved. I think we actually gave too much love to Xero earlier. I don't think that actually you can with too much love to Xero usually, but, you know, we did our best there. So let's hit it back to Sage for a moment and their latest spate of accounting enhancements.

[00:25:56] So they've listed quite a few here. Some seem more in keeping and standard with what you would expect and some, you know, there's quite a few. There's a range. I'm not sure that there's any one that I would say is super standout. Automated payments for GoCardless. So you can automate payments to recurring invoices. Excellent. Quick approvals for quotes and estimates.

[00:26:23] New budget capabilities to keep finances on track, including being able to edit and manage budgets and run reports to track the business performance. Sales invoice improvements. So you can easily view the history of all sales invoices and helps when you need to chase late pairs.

[00:26:48] It would have been nice to see that go a step further to say that it actually automates the chasing as well. Customer statement improvements. Adjustments to stock balances with import. Mobile purchase capture. So something about making the expenses simpler. They've added, they've updated on their mobile app. So you can now capture receipts and purchase invoices while on the go. And that automatically pulls out the details and saves them in the platform.

[00:27:17] So another little oldie but goldie. And then there's some other things like the sort, the search, the filter of recurring invoices, creating refunds from bank feeds, blah, blah, blah, blah, blah. And updating contact and product records with imports. Trial balance report. I mean, it's nothing to avoid at home. I really love you, Sage. But I wasn't sure about some of these.

[00:27:42] But maybe the fact is that they're announcing this on the website publicly. It's a good little resource. I am going to say that I prefer seeing Chris Downing's videos and having like a little screen grab of how it works. And it's not difficult even to create a working prototype these days. So maybe, Sage, just make it a little bit more interactive.

[00:28:11] Because I love this giant list. But realistically, how many of us are going to go through and go, damn it, that's what I needed. Edit contact applied to payments and receipts. It just doesn't happen. It's just not going to happen, is it? But that's what you can do if you're looking at the list of the latest, say, updates. Don't provide Indy with a list. That's a big lesson I've learned today.

[00:28:37] As you said earlier, right, with the zero dashboards, we need those really well-presented bits of data we can ingest. Yeah, like on the zero dashboard, I can see the before and then the after. Before and the after. It was so nice. You know, you appreciate the transition. Maybe you can't do that in all cases. I mean, do I really want to see a video on export unmatched transactions in the bank feed?

[00:29:07] Actually, maybe I might, to be honest. But that is. Yeah, just pick and choose, please. We would like some prioritization. Because that was slowly moving into satire as a show. And well, you said it. We've given possibly too much love to zero. We've covered Sage. We've talked about Iplicit. Let's finish with QuickBooks. And in the last show, we talked a lot about the, maybe the last one or one before. I lose track now.

[00:29:36] About the AI agents that were coming to QuickBooks, but they are doing other bits in the background. They've released now a bit of functionality regarding balance sheet budgets. And the ability to report against those inside the system. So just by playing with a little cog in the settings inside QuickBooks Online or QuickBooks 9 Accountant, you can bring in budgets and then report against how you're doing against those budgets inside the balance sheet report. So very specific, I guess, tying in with what India was saying.

[00:30:04] But I did also jump onto their quarterly update. And there's lots of things that we've kind of touched on as we've gone through the last three months, like the fact that bringing in CIS and enhancing that. Books to tax. We talked about this in the Live Digital Digest. And it was frustrating the fact that they had released a lot of functionality and then pulled it back. So they kind of made it bare. They're releasing a lot of that again. So you've got enhanced error detection directly inside the system.

[00:30:34] You've got the company house integration fully launched. And they're bringing back task lists to work papers, which I know was a big frustration for Aaron Patrick when they announced that pulling that he loved playing with a little tool. But the reason I'm mentioning this product update I went on is because they talked about the agents. Now, if you missed the previous episode, these were the four agents that Intra bring into their products. And one of them was the accounting agent. I think you had a finance, a cash flow agent.

[00:31:05] And essentially, they were going to, as my voice goes, my apologies. What they were going to do is take away a lot of the mundane tasks that accountants do pretty much on a monthly, quarterly or annual basis with their clients. And I got a little bit excited. I was like, oh, this is going to be revolutionary. This is going to change the way we work. And then I came to this quarterly product update. And what it essentially said is that the accounting agent, what they're releasing at the moment is just to do bank account categorization.

[00:31:35] They're going to give you transparency of why it's doing it. But that's essentially what they're doing. But they are bringing out a migration agent as well. So it's going to... Sorry. Give me a second. You obviously heard, Daddy. I'll come back to the migration agent. You shut the window. Sorry. I'm just going to throw the swelter and lock the door. Timing of that couldn't have been any worse, could it? I'll try to get back to what I was talking about. Yeah.

[00:32:04] So the migration agent, which is still in development, is essentially going to enable businesses to move across more easily into Quibbles Online. Now, you can use tools such as Move My Books to do this. But you can just throw in data now. So you can do an export of like your sales invoices or your debtors, your creditors. You can do an export. You can import in your debtors, your creditors, your trial bands. And you don't even need to categorize these. You don't need to allocate it. It's going to pick up what is already...

[00:32:34] What is the data that's already in those Excel files? And then tell you what's in there. Tell you if the things that don't match, for example, in your debtors, it's trying to put it to a code that doesn't exist in your child accounts. And it's going to align it all and then flag to you things that you'd be aware of. That, I thought, was pretty cool. That's using AI in a really smart way. We've got from migration at the moment quite limited options. You can only use things like Move My Books or Open Abbalances

[00:33:00] or use the brilliant service of Migrate My Accounts. But essentially, it becomes a bit of a challenge. So this migration agent, although wasn't announced in the prior weeks, I thought was pretty cool. The accounting agent, for me, is a bit of a letdown. Come on, Jody Boy. Tell us what you think. Come on. Will you be using it? Are you migrating your books? I don't know.

[00:33:30] I mean, as Ryan says, that side of it sounds very interesting because it's probably one of the more challenging areas. But yeah, the other bits do sound a bit underwhelming, don't they? And when we're in this kind of arms race, if you like, of agents coming into products, which are going to be doing all sorts of different things, I mean, we haven't seen much really from Xero, a little bit from Sage on this, but we know that other products are building this. And we haven't even gotten to talking of the likes of like Briefcase

[00:34:00] and Genesis and others who are no doubt building this kind of functionality as well. These things really need to be on point and saving time where it really matters, not just sort of doing gimmicky things that are of little value. It's a tricky one, though. Don't you think that if they go gung-ho into this space, given the size that they are, accountants being little critical, just a little critical, I think when you have to get it right,

[00:34:29] the balance of what is replacing some of the work that would be otherwise done by an accountant, and also to the degree in accuracy that it needs to be, I just don't think that anyone can claim they are there yet anyway and get it completely right when they implement a new agent. So I think it's more test, trial, learn, redeploy and build on that.

[00:34:58] The most logical use case that you could give is migration, given that it's so difficult and it becomes a business in its own right. So I think it's a great way to acquire more customers. What a great use case for AI and what a great starting point for them. Yeah. Yeah. Go on, Ryan. And I think on the banking side, let's be honest, the bank reconciliation in QuickBooks has not been that great for a while.

[00:35:27] It's always been behind Xero and Xero brought AI into their banking process a little bit more quietly last year. And I think if they're going to enhance an area, the bank record is a great place to enhance. I just think given what they announced not that long ago with everything they're planning, I would have liked to see a bit more of a pipeline of we're going to be doing this rather than we haven't actually really got anything yet. The banking bit's coming and as well as migration.

[00:35:55] And maybe that's just because I've been to an AI summit that was pretty amazing with everything that can be done. I mean, it's still positive. It's still a big win for those that are QuickBooks users, QuickBooks like donated or focused accountants. So it's not a negative. I just kind of want a little bit more. And it's just because of what they tease me with. Here is a question for you then. Okay. All right. So how much of that responsibility

[00:36:23] should fall to the accounting software versus the accountant? And I'm about to give you a little wild card off the cuff, you know, something you said earlier on this podcast and I didn't come back and challenge you on. Say, what do you mean? You don't know why Luca's little feature that they've got is going to be interesting because Luca is an accounting practice, if I'm not mistaken. It's an accountant and they do CFO advisory services. So for them, they're a back office

[00:36:53] and they are implementing AI into their technology and into their customer base in a way that makes it easier for them to process their client's invoice data. So they're not waiting for the wave of change that comes in Xero. They're going and doing it as part of, you know, a little agent, agentic approach within their practice and going into the Xero app store as a result. How clever is that?

[00:37:22] I just sort of wonder how much of that do you think will then go to the accountant to do versus the accounting software? Disgust. Well, the bit I actually find fascinating on this is that it's costly to become a certified app on the Xero app store. So my understanding with this then is that maybe Luca are using this as an advertising ploy to drive businesses to their accounting, you know, offering,

[00:37:51] which we have not seen before really. So I think that's, if that is what is going on here, maybe that's the start of another trend. We build a tech product, but actually we're just funneling this into a service to provide. So that I find intriguing and brilliantly dug up, Indy. I did not know that. A little bit of information there. So yeah, so I've learned something today. I mean, my thoughts on this are, in some respects, I agree with you, Indy. You know, I think accounting firms

[00:38:21] should be exploring this more often, shouldn't be relying on the vendors to provide this. I do think we have a little bit of a challenge in our space in that we've been spoon-fed solutions by vendors for so long. Whether they've had a solution that fixes a problem or not, it's a question we've always asked in the past and we've spent a lot of time thinking about that. But I do think we're going to start to see more and more accountants building these kind of point solutions to fix a particular issue that they're facing or a particular missing level of functionality that they want in a particular product.

[00:38:50] And when you've got products like Lovable and a whole bunch of other things, plus ChatGPT or Claude or whatever, to help you to build and code these things, it's really easy. And then you could turn that around and do what Lucra have done and create a chargeable service opportunity. And if that generates them 20 grand a year, does it really matter? Because that's a bit of income has probably got a fairly low cost of support and everything else. I think the one thing I would pick you up on though, and you mentioned this, was around perfection. I think this is a challenge,

[00:39:20] is that we're waiting for, we're criticizing these vendors for producing these products and saying, oh, they're not good enough. And yet, winding the clock back to, you know, when Receipt Bank was founded and their accuracy was like in the, what, low 90%? You know, in terms of like what they published. And before that, it was actually even lower. It was around about 70%. And yet now we're kind of saying, oh, everything that we get from these vendors when it comes to AI has to be absolutely immaculate and just has to do everything from the very start.

[00:39:48] And yet we've never had that with technology. You know, you could talk about zero payroll when it first launched and it was abysmal. It didn't work. You know, lots of other things that have gone through over the previous history. So I think we do have this kind of like perfection fallacy that we've got to overcome as well. Well, I don't know, John. I'm going to challenge that one back. So maybe not, maybe we won't go back and forth too much today, but I will say that words like

[00:40:16] we don't want to be guinea pigs comes to mind. You know, the accountants don't want to road test on some of those things. And I don't think that everyone's the same. So maybe that's why we've seen more controlled and private beaters coming out because people are aware that they want to be able to have the ability to say it's not quite ready yet and be forgiven for it.

[00:40:43] But yeah, I echo some of your sentiment that it's a lot easier now to build, to prototype, to get the back end done and do that all from, you know, a small accounting team actually, having a much bigger global footprint so long as, you know, they own how they build that into their practice. I think it's a very clever approach like you said, Ryan, by Luca.

[00:41:12] Maybe it's a marketing tool, but great. Why not? I mean, that's clearly there's an agenda behind that. So we should probably talk to the guys at Luca and see what their agenda is. We are back with Harv Negra from Scoro and we've talked a lot about what a PSA is, but you touched on something in the previous episode that just stuck with me half,

[00:41:41] which is that at some point a business needs to graduate into a PSA. You know, they've grown, they've matured to the point where actually a PSA is a strong requirement to properly manage the business. And I'd like to understand from your side is that what are the trigger points or what are some of the red flags that you should be as a business owner thinking, okay, I now need to, I need to grow into a proper system. Yeah. I think what I hear most often, Ryan,

[00:42:09] is the lack of kind of understanding of how a business is performing. You know, you set out the year with an idea of the budget, what you're expecting to, like kind of revenue you're expecting to make and maybe even profit. But at the end of the day, month to month, if your clients are sitting there, you know, from your audience's point of view with no idea really of how they're performing or how things are going to land and then it's kind of a hope and a prayer that things are going to be profitable at the end of the year

[00:42:39] and I'm sure that resonates with somebody listening, that is a big red sign or red flag that you need to seriously grow up in terms of the way you're running your business. So if you're kind of operating in the dark without that kind of visibility, that is a major reason. I think, you know, oftentimes as a business grows, the founder needs to step back a bit. Well, one of the issues I think in the early years is if you didn't come from a kind of a business

[00:43:08] or finance background, there never may have been the maturity to really be running the business in a really smart, profitable way. And now, you know, so you're kind of guiding the business based on gut feel. Maybe that was okay in the first couple of years. After that, not so much. And certainly when you're stepping back further and kind of have a bigger team, more complex projects, that is even worse. If you're not tracking how the business is doing, if you're not tracking how projects are performing,

[00:43:37] you're kind of just really hoping at the end of the year that things work out. And that is in this economy, that is a horrible, horrible thing to count on. Definitely. And as accountants, we've been kind of constantly banging on about having real-time financial information. You know, moving businesses into a real-time cloud integrated finance system where you've got bank fees that drag the information in. But we sometimes don't go deeper.

[00:44:05] And that kind of revenue to gross profit level, understanding actually what projects, what jobs are we making money on, is something as accountants, we are all over. You know, we track time. In fact, we've struggled to get away from kind of billing based on time for so long. But we can, inside that, we can see what jobs are making money, how well we're utilising our staff. But sometimes when we talk to our clients, we're not having those conversations.

[00:44:34] We're not challenging them. We're not asking them, do you have the visibility? And maybe that's something we need to focus more on, really, to be giving the value back to the client. And we don't necessarily need to be the person that recommends the system, but we should be challenging them to at least know when they should be looking at changing how they operate. I'd say so. I think it's almost kind of a disservice, if you will, if you're not taking the opportunity to kind of nudge someone on the expertise that you're kind of holding close to your chest

[00:45:04] for yourselves, right? If you know that that's how a smart business runs, you know, as accountants, you're not there just to kind of, you know, balance the books or whatever, support in that way, when you could be actually saying, hey, look, you're getting to the point in terms of headcount and kind of your lack of kind of visibility and it's a bit chaotic, you know, you need to kind of tighten the ship a little bit and kind of guide people on what they should be looking at

[00:45:33] and how they could get there. And a PSA system is definitely one of those key milestones in a growth journey, you know, centralized best practice, things like that are important as well for certainly a PSA system is something that becomes essential. Definitely. And, you know, once again, I'm very biased, but I always focus on finance first and then, you know, getting the real-time operational data. I probably, you know, realistically,

[00:46:01] it may be the other way around that you need to focus on to deliver the most value. But still, both go hand in hand and a fully integrated suite in this space is a requirement. Yes, you could probably play around with tracking categories or projects in Xero, but they're going to outgrow that. They're going to need greater functionality, not just the financial aspects, but the operational aspects. And that's where SCORO comes into its own. So, yeah, I think that the critical steps is identifying where those requirements to grow up, to graduate,

[00:46:31] to mature are, and you touch on headcount. But I do find that headcount is intangible. It could be, well, I say intangible, it could be variable. So, it could be that in a certain business, you know, five individuals, they need a PSA. It could be at 20 individuals they need a PSA or whatever the figure is. But I think you mentioned it earlier that when, as a business owner, you're kind of, either by choice or being forced to step back and let people run it and you've not got the same visibility. If you can't look at a system and see where you are

[00:47:00] at any given time, then realistically, you're probably not on a mature system and you need to consider a PSA. Is that a good summary from your aspects and the conversations you have with clients? Yeah, definitely. I think if you see that people aren't tracking how things are going, you know, with regards to their projects, they're not tracking their time, their expenses, their purchases, stuff like that, that's usually a red flag. You know, if they've got one too many tools they're using and you can see that from, you know, without even getting deep into it,

[00:47:30] you can observe that they're using a lot of different systems and there's a lot of information that's falling through the cracks. That's another sign. If they're taking weeks to do any reporting, that's another big sign. You know, that shouldn't be the case and those are all kind of indicators to me that they need to kind of level up their maturity and kind of centralize some of this functionality. And, you know, another red flag, maybe this is more easier for somebody in-house to notice is if people are grumbling

[00:47:59] and a bit miserable about how inefficient ways of working are, that is a major sign. So whoever's behind the scenes, the ops director, the finance director, the MD, should be listening out for those clues because that is very indicative of it being a bit chaotic and not a great experience for your employees. Definitely. And look, everyone moans about IT. It's like a hobby for people. They moan about IT. But it's knowing whether you've got across that trigger point of, okay, this has now become a critical point

[00:48:28] that we need to address. But... Ryan, actually, if you don't mind me saying, one other thing I think is a really good indicator is if their invoicing is chaotic. They don't have good practices around invoicing. And I've seen businesses as well. You know, they forget to invoice something that was like 30K or something like that. Horrific. So if that is all over the place and they don't have good control over the cash flow and overdues and all that kind of stuff, that is another major sign

[00:48:58] that they've got to the point where they're operating like a startup still, a very chaotic startup and they need to get level up rather. Definitely. Yeah. So prompt invoicing, but also then visibility on is this something that's out of scope, like initial scope? Is this something which we're invoicing over like a retainer basis or a project basis? All of that kind of your fingertips. But something I want to touch on is that accountants for a long time have been going,

[00:49:28] oh, we need to move away from timesheets. Just the opposite mentality. I'm advising so many businesses to go towards timesheets because it gives you that visibility of performance, not only for yourself as a business owner and how the business is doing, but for your individual staff members. And I think what we do with timesheets and the way we consider this as accounting firms is that we've always focused on it's a chore. You have to write your timing. We've made it so it doesn't feel like there's any benefit. Actually, if you're empowering your team with visibility

[00:49:58] that enables them to make sure to eat decisions and you're not just wrapping their knuckles with how they're performing, then actually that's a huge positive for them. And that's how I see the likes of a PSA system that actually delivers that value because they can see how they're performing and tweak their day-to-day operations to deliver on their ultimate objectives. And is that the kind of conversations that you have with clients and prospects when you're talking about Skara? Totally. I think, yeah, you're right.

[00:50:26] People don't love tracking time, but I think that also comes down to ourselves in kind of the leadership positions, maybe not explaining what that is used for, right? So if people don't understand the purpose of that tracking, then they're not going to be motivated to do it, right? So that's the first hurdle. But, you know, Ryan, also timesheeting has moved on. It's not all about like a manual grid system. I track my time and I do it through my calendar. So in Skara, I literally just block out

[00:50:56] my meetings or whatever I've been working on and I can tag it to a project or a task, right? So there's ways of doing it like that. So you do have the timesheet grid that we all kind of have experienced at some point or other. You can do it through your calendar. There's timers. There are kind of, you know, in Skara, if you're actually planning someone's schedule, you know, there might be certain resources in your company that you plan their day or their tasks for them. Then effectively, they don't have to record their time at all. All they need to do is tick to say, I did that thing

[00:51:26] and yeah, it was four hours. So there's really modern ways of doing it and there's kind of third-party tools and integrations if anybody wants to do something else. You know, there's tools out there that kind of track everything you do on your screen and they can synchronize with Skara so that at the end of the day, it kind of tallies up all the time in an email for a particular client or something like that. So if you have somebody on your team that will absolutely not go with one of these other suggestions, then there's options for those kinds of people as well.

[00:51:55] It's super important though. Otherwise, you have no idea how you're doing against what you're putting in the code. I can't percent agree and I love the automatic drafting of timesheets and it's something that I think should become a must, mandatory in every single accountancy and professional services firm. But just to finish on, I know that we talked about, you know, what are the red flags? What are the triggers? And I just want to run for a few that I come across and maybe you can check in as well, in that if the business is starting to grow with lots of systems but they're not sharing data

[00:52:24] so they're trying to track maybe resourcing over one place, profitability in another, task management in another. That's when actually now you need to look at a full PSA and you've got duplication of work, duplication of data, disconnected operations and data flow. So now you've actually got unreliable data because it doesn't match in the various systems. That's another trigger. If you've got other things that maybe we've not touched on yet that you think is a big red flag, someone should be considering a PSA. I think you've kind of hit the big one there,

[00:52:54] you know, the automation element and I've worked with consulting for a business that had about 110 employees. They were multi-entity and they were still doing things in spreadsheets and then they had a separate resourcing platform, a separate time sheeting platform, a separate invoicing platform and I just went in being like, holy crap, like this is chaotic. So yeah, I think we've generally covered it. The disjointed systems, your teams are spending too much time copying, importing and exporting information.

[00:53:24] Things are not accurate and you have no idea how you're performing and your reporting takes a lifetime because people have to co-late spreadsheets for weeks before your finance team co-lates spreadsheets for weeks. That's a big red flag. Yeah, I think that's the perfect way to end, right? If you're putting everything into spreadsheets to actually get any useful information, then you probably need to graduate up to a full PSA. Once again, Harv, thanks for jumping on. I think we, as business, I guess,

[00:53:54] advisors and accountants should know a little bit or have more awareness about some of the red flags, some of the triggers to have those very advanced conversations with our clients about actually when should we not necessarily advise a system but advise for them to research and consider an upgrade to a full PSA. And that brings another Digitals in a Cruel World podcast to a close. Hopefully you've gathered some insights from the topics we've discussed. If you want to make sure you, I guess, get these news articles

[00:54:24] as soon as they come out, please do follow our newsletter, subscribe, and you'll get them straight into your mailbox. And if you want to have a say, join our weekly live chat at 9am every Thursday morning where we pick one of these topics and dive into it in detail. Every time someone makes a comment or question, we bring that to the guest and see what are their thoughts on this. So thank you for listening and hopefully tune in next week.