Who Should Own your Accounting File? Xero’s Position Hard to Defend

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Oscar de Vries gave me a call over a week ago to put his side of the story about a wrangle with a well-known Xero accounting firm on Sydney’s north shore. Oscar claimed he had been billed for $16,000 (reported this week in the SMH as $20,000) for bookkeeping, file conversion and inventory set-up – a fee he felt was unexpectedly high and he didn’t want to pay all of it.

It was difficult to tell how much of this story was just about a pay dispute. Digital First is about the revolution in online accounting software and the impact this has on the accounting profession. Fights over bills? Not so much.

Oscar’s main beef was that Xero wasn’t giving him control of his accounting file so he could move to another accountant. The accountant didn’t want to let go of the file because he wanted to be paid for the work he had done, although Oscar could still access it.

This wasn’t the first time I had heard a complaint about ownership of the company file. Xero is obviously feeling the pain of negative publicity and is moving swiftly to stem the damage. It has contacted industry figures about the Herald article and Australian managing director Chris Ridd has just posted a 600-word defence on the Xero blog.

Xero’s position is that it is legally bound by its terms and conditions not to mess with the ownership of the company file. If an accountant has opened a subscription on behalf of a client, and the accountant doesn’t want to surrender control of the file, that’s the client’s problem, not Xero’s.

Quite a few comments are going the other way. “Xero should grant severance rights to their client in the event of a request directly from the company. Xero’s company data should not be used as leverage in a dispute. Period,” wrote Mike Porter.

“I dont think your response and current practice is acceptable,” wrote @CJ_NZ.

“As a small business owner, I find the prospect of my accounting firm holding my data file, or subscription login, hostage over a pay dispute, shocking and concerning,” wrote DM in our coverage earlier today.

Investigations by Digital First show that Xero is on a limb here. Reckon and Intuit both insist that the data in online accounting software is owned by the business itself. Even though an Intuit partner sometimes pays Intuit for that subscription (often when they are heavily discounted) the client can call Intuit and transfer the subscription to another Intuit partner.

Reckon simply doesn’t allow its partners to have a billing relationship or file ownership. The business is the owner and the biller. MYOB does allow partners to own the subscription. It’s not clear how it resolves disputes with the business owner – I’ll update later.

It is increasingly clear that Xero is far more aggressive at promoting the ownership of company files by its partners. Its whole partner program is based on the number of subscriptions held by the partner.

This is surely setting up Xero for many fights to come. Eventually it will change its terms and conditions so that business owners retain control of the company file.

It’s just a matter of good business.

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