Accountants facing revenue plunge left stranded, says iFirm CEO
UPDATED: Chisholm throws down gauntlet to rivals; Xero responds.
Automated accounting software will rip away the security blanket of tax compliance revenue – and software makers are not doing enough to help accounting firms cope with the aftermath, said Mike Chisholm, CEO of CCH iFirm.
“What is your supplier doing about that? Xero says to accountants you just have to add extra value with extra services. But they don’t say what those services are,” Chisholm said.
The CEO of CCH iFirm, a cloud-based practice management suite which Chisholm sold to CCH earlier in the year, recently showed accountants a news article about a business that cut its yearly accounting bill from $5,000 to $1,500 by moving to cloud accounting software.
“I asked them, is client accounting dead? What if this happened to 100 of your clients? Often they go quiet,” he said.
Chisholm said better systems and new services would help accountants stay competitive. CCH hoped to create those systems by exploiting its range of information services for accountants such as the Australian Master Tax Guide and research platform Intelliconnect, and had started building and acquiring accounting programs that would integrate with its content services, CEO Russell Evans told BoxFreeIT.
Which other cloud accounting vendors can say, Here are the apps I’ve written especially for you to work as a financial controller to help you add value to your client?, Chisholm said. At CCH, “We are for you – we are for the accountant.
“All your content dealing with procedures and workpapers and checklists and research and tax advice should actually be built into the tax solutions, the practice management solutions and ledger solutions. That’s a unique offering that no-one else in the world has,” Chisholm said.
CCH intended to sell iBizz at a much lower price than competitors – $5 per month for the software plus $5-$15 a month for bank feeds provided by BankLink, Chisholm estimated. But lowering the price of the client accounting platform was not the only goal.
iBizz and iFirm were built from the ground up for benchmarking and cashflow forecasting and other vendors would struggle to add these features, he said. (Benchmarking and forecasting were due at the end of 2013 and business analysis and valuation at the end of 2014.)
“I’m going to leverage off my experience to create a better program. I think Xero has made some mistakes here. If you try and do benchmarking but have an unstructured chart of accounts where anyone can set up any code, you’re fundamentally shot.”
Chisholm also questioned the wisdom of cloud accounting vendors promoting their accountants in online directories. “I don’t think some accountants have worked it through,” he said.
Chisholm spoke to one accountant who had a client using a cloud accounting program who had looked up the accounting partner list on the software maker’s website, got a cheaper quote to prepare his accounts and then switched. “The accountant was shocked at how easy it was for them to lose their client,” Chisholm said.
Chisholm admitted that businesses using desktop accounting software could switch accountants by sending their data file elsewhere, but he insisted that cloud accounting software made it easier to shop around. “Desktop accounting is stickier than that. The difference is the promotion of a partner network where it’s actively promoted.
“Banklink don’t promote a partner network and I can understand that. They just say, we look after each accounting firm,” Chisholm said.
“We congratulate Mike on his sale of his business to CCH,” replied Rod Drury, Xero CEO, when contacted for comment. “I’m not sure what he’s smoking with the proceeds but Xero’s delivery of the single ledger vision, substantial investment in providing tools for accountants and bookkeepers, and significant education being provided to the channel in how to take advantage of the cloud to provide additional new services seems to be winning.
“Like MYOB’s flawed new AccountRight the mysterious iBizz is again delayed, meanwhile Xero has shipped over 60 updates to its software and in a short time we have amassed over 110,000 customers and developed an active and vibrant accountants channel. Xero accountants are growing business and fees and really helping their small business customers to grow,” Drury said.
“We’ve also seen a huge acceleration in the add-on ecosystem over the last year. Our gold partner accountants are building relationships with the over 100 solutions providers that integrate with Xero to further improve their clients businesses,” Drury added.
“We are seeing an increased pick up in conversions from Acclipse which would explain Mike’s increasingly erratic comments. He is just wrong and I think the market sees that.”