Don’t be evil, Xero
Once upon a time, before Xero turned to what many consider the dark side of corporate management, it was a super-duper friendly Kiwi company. Customer-hungry they hosted fun little get togethers for early adopters who happily sat around in a circle of love as they wooed us. Some liken the wooing to fun Tupperware or Avon parties. Others jokingly say it was cult-like but either way celebrities were presented to affection-starved accountants, discounts were flung about like a Lolly-Scramble, Xero paid for accountants cars to be branded, shares in Xero were up for grabs, and professionals were rewarded with childlike badges ranking firms from Bronze to Platinum.
Not once during that fluffy dating stage, did those Bambi-eyed chartered accountants click that by moving to Xero they potentially risked losing their tools of trade. Many were so distracted grazing on Lollies, they missed the extra risk being injected into their faithful business model. To be fair, a few did predict the introductory software prices would later explode into ongoing price hikes, but did anyone anticipate that a playful startup might end up with the power to perhaps devalue and undermine an entire profession?
The intention here is not to undermine or criticise anyone, but to help prise open the eyes of those last few accountants who haven’t yet grasped the full impact on an industry now heavily reliant on cloud-based, multi-user, multi-period software. Even the most blindly devoted fans can’t deny the declining income levels, the rising legal cases against accountants, and the corresponding surge in professional indemnity premiums. Let’s hope the handful of nasties we share with you below are simply unintended consequences because the alternative is ever so slightly evil.
Tools of trade lost
Can you imagine if a mechanic’s supplier forced them to give their tools to the new mechanic every time a customer left. Commercially it’s unthinkable but it’s how Xero business-subscriptions can operate. Oddly, it goes against the global norm where the owner of software license is the master subscriber.
Scores of accountants (who we jokingly refer to as Mr Stupid) are blind to the risks associated with giving their Xero subscription to a new accountant. Typically, Mr Stupid has no idea that during his reign income was coded to funds introduced and a 25% depreciation rate was transposed to 52%. When auditors joyfully uncover the errors, the ex-client demands Mr Stupid pay the horrendous IRD bill. Little does Mr Stupid know it was a sloppy bookkeeper who made the errors, not him. But the new accountant has locked him out of Xero and the only way to regain access is by court order.
Profession undermined
In Mr Stupid’s situation you’d hope Xero would step up and fight for their business partner and customer, the loyal accountant. But this hasn’t been our experience. Instead, we’ve found:
Xero sides with the accountant’s customer. Even worse, we’ve seen Xero cast the poor accountant as the villain for retaining their own master subscription.
It’s almost as if they’ve forgotten Xero was originally pitched as a standard accountants-only ledger with an option to voluntarily give clients access.
Xero’s marketing can feel like a direct betrayal undermining the profession. Campaigns pitching accounting as "easy" or suggesting accountants aren’t needed implies accountants are expendable. Worse still, giving bookkeepers access to CA templates actively devalues professional qualifications and erodes industry standards.
The impact of Xero’s unsolicited push for accountants to move from trusty hourly rates to fixed tiered fees, could ultimately threaten industry viability.
Risk explosion
Other factors compound the largely unseen explosion in risk by creating a fundamental shift undermining how accountants create, deliver and capture value:
We regularly see Xero files with swarms of users, many based offshore in bookkeeping sweatshops. What sane business person would hand over their bank account numbers, client list and customer email addresses to unqualified strangers in India or China?
They say too many cooks spoil the broth and we’ve found multiple Xero users sends the quality into a death spin. It’s why many NZ senior accountants now spend time on your job not doing accounting, but instead training and fixing errors made by non-qualified users.
Who’s negligent? Contractually, it’s likely customers will sue their accountant before Xero. Only last week, we uncovered a disastrous error made by Xero’s artificial intelligence. Without the clients knowledge, the automated bank reconciliation coded a six figure sum for Wages to Telephone-expenses and claimed GST.
Where to from here? Smart accountants have already seen this uprising brewing and updated their contracts to make clients liable for court order costs. Some are moving back to accountant-only ledgers, separate from the client’s Xero. Others have started transitioning to Xero’s more affordable competitors. We even have a client so fed up with Xero’s price hikes, they’re actively developing software similar to how Xero used to be (simple without all the overcomplicated bells and whistles).
But does it have to be this way? There are simple fixes Xero could introduce to head-off the mutiny including better audit trails, the ability to duplicate ledgers, giving accountants back their GST ledgers and making multi-user actually mean multi-user (so accountants can’t be locked out of periods they’re legally liable for). Perhaps Xero could adopt Googles old motto of “don’t be evil” particularly with their original family; the accountants who were once Xero’s primary unpaid sales force and biggest fans.
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