The Accounting Podcast

Ben Richmond, Xero's Country Manager for the United States, joins us to discuss new Xero product features like improved inventory management and AI integration, plans for the upcoming XeroCon 2024 conference, the future of the accounting profession, and Xero's sponsorship of the FIFA Women's World Cup. Ben provides an insider's look into Xero's roadmap and vision for transforming accounting with technology.

  • (00:00) - Intro and XeroCon Conference Plans
  • (02:15) - New Xero Product Features
  • (07:15) - AI in Accounting Software
  • (14:30) - Rebranding the Accounting Profession
  • (21:45) - Advice for Accounting Firms
  • (25:30) - Activating Brand Sponsorships
  • (30:15) - Xero's Small Business Fund
  • (37:00) - Diversity and Inclusion in Accounting

Meet Our Guest, Ben Richmond

LinkedIn: https://www.linkedin.com/in/ben-richmond-ca-b8794220/
Twitter: https://twitter.com/BenRichmond1

Learn more about Xero
https://www.xero.com/us/

Show Notes:

Xero Beautiful Business Fund (applications close Oct. 6)
AI guide
Xero's 2023 Money Matters Report
Future Focus: Xero’s AI Guide for Accountants and Bookkeepers 

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Creators & Guests

Host
Blake Oliver
Founder and CEO of Earmark CPE
Host
David Leary
President and Founder, Sombrero Apps Company
Guest
Ben Richmond
Country Manager, United States @Xero

What is The Accounting Podcast?

The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

[00:00:00] Blake: Ben Richmond, welcome back to the show.

[00:00:03] Ben: Hey team, great to be [00:00:05] here.

[00:00:05] Blake: Yeah. So what's new at Xero?

[00:00:07] Ben: Oh, lots on, it's been a pretty [00:00:10] crazy 6 to 12 months since I think we last saw each other in St. Louis. So we just got back [00:00:15] off a big roadshow, so we visited partners across the east, west, coast and central parts of the [00:00:20] country, so we launched lots of product as part of that which I'd love to get into.

We had our big [00:00:25] XeroCon down in Sydney, but the big news as part of that was we are bringing XeroCon back [00:00:30] to the USA next year. In Nashville of all places. So we're gonna go to the home of [00:00:35] country music. Uh, lots of Australian New Zealand and partners from around the world also looking to come [00:00:40] across.

We're sort of switching zero con up a little bit. So instead of doing every country every year, [00:00:45] we're gonna start to sort of move it around. Um, and what was really exciting was just to see how many partners actually wanna start [00:00:50] jumping around the world. So it was the first time we sort of testing, uh, this new format.

So, uh, yeah, I'm [00:00:55] sort of. Being pumped. Our teams are out in the street, busy catching back with, you know, the [00:01:00] pandemic seems to be predominantly behind us now. So we're, we're back out in front of our partners. [00:01:05] Um, seeing all our good accounting bookkeeping partners in the flesh, which has been awesome in their [00:01:10] offices.

Uh, and lots of, I think the big thing for me is lots of great product coming out for the U. S. So lots of [00:01:15] U. S. specific product, um, that we've been building for a long time. I mean, your sales taxes has been [00:01:20] a. Almost like doing open heart surgery, uh, on the product. So lots to go through.

[00:01:24] David: [00:01:25] so regarding the conference in Nashville, if I'm hearing you correctly, it sounds like you're gonna have [00:01:30] a rotating flagship show. And because of this, you're expecting, um, [00:01:35] accountants, bookkeepers, vendor partners from UK, from Australia, [00:01:40] New Zealand, all to come to the States. This is kind of the,

[00:01:43] Ben: Yeah. So some will, some [00:01:45] won't. So we, we will have, next year we'll have, uh, both London, um, and, and the [00:01:50] us. So instead of doing every country and every spot, we'll, we'll sort of move it around. And so [00:01:55] what I know I spoke to lots of Australian New Zealand partners that are going up to the London event. [00:02:00] Um, Nashville's obviously a massive draw card, uh, as well, but we are already starting to see that.

And obviously, and you guys. [00:02:05] See this sort of the globalization of, um, politics in the world might have gone the other [00:02:10] way, but there's sort of been this globalization, um, in the technology space. So we already saw lots of [00:02:15] partners starting to actually travel to different zero cons. And so by sort of moving them into a roading, [00:02:20] rotating schedule like that, um, we can start to bring sort of more of the global community together.

And there's, so, I mean, [00:02:25] Having spent so much time in New Zealand and Australia myself, um, and then I've spent seven years up here in the [00:02:30] USA, um, there's a lot that's different about all the different countries, um, there's, you know, each [00:02:35] country's got its different strengths and weaknesses, particularly when you think about, you know, you know, moving to the cloud, which I can't believe we're still talking [00:02:40] about, but that's still happening in lots of places, um, and, you know, building on these new services, the explosion [00:02:45] of AI and that, and so I think bringing, um, but there's a lot of stuff that's the [00:02:50] same, right?

We might have different vernacular or semantics, so I'm kind of excited to start bringing Seeing partners [00:02:55] come together and share like that, and I think there's already networks that exist, um, um, but this is really [00:03:00] doing it on a really big scale.

[00:03:01] Blake: So XeroCon Nashville is going to be in [00:03:05] 2024 in August. The dates are August 14th and [00:03:10] 15th, 2024 in Nashville, which is right after my birthday, Ben. So this is like a little [00:03:15] birthday present. Thank you very much.

[00:03:17] Ben: No problem. We'll have to mark that down on the calendar so [00:03:20] we celebrate XeroCon together.

[00:03:22] Blake: Yeah. The year, the day before I'm the 13th. [00:03:25] So, uh, fantastic. Well, let's talk about new product. Uh, [00:03:30] what has come out recently? What should accountants and bookkeepers be aware [00:03:35] of that's new in the product? And can you give us any sneak peek [00:03:40] at, uh, what is coming?

[00:03:41] Ben: Yeah, absolutely. I'll talk about what's out and what people can get in and have a play with [00:03:45] now. Um, because as accountants, bookkeepers, we actually love to be able to play with things, not see slide decks. Um, [00:03:50] and, and what's, what we've got planned. So, we've talked a lot in the U. S. about making sure that the, you know, [00:03:55] Xero's platform has a lot of innovation in it globally.

Um, but, you know, for the U. S. market, there were specific, [00:04:00] you know, complexities in the market that we just had to get right. Um, so sales tax was a massive piece of that. [00:04:05] Um, and, and so we were, at the roadshow, we've... We're calling it a limited [00:04:10] preview release, but under the advanced settings you can now get in there and turn it on.

And what that's allowing [00:04:15] you to do is to basically within our current business edition SKUs, you [00:04:20] can both calculate sales tax, do your reporting on sales tax, that is [00:04:25] all powered by our partnership by Avalara, but we've been building that all into the core parts of what [00:04:30] customers call BlueZero. Um, so that you can calculate report on sales tax.

And then if you want to use the e filing [00:04:35] capability, um, it then takes you across, uh, into Avalara. But from a customer's perspective, it's just [00:04:40] as though it's in blue zero, um, and it all sits in the current SKU. So that's out there now, you can go turn that on. [00:04:45] We've had that in beta with customers for quite a while, um, so there's been plenty of our partners that have been in there, [00:04:50] um, testing and playing with it.

As you can imagine, putting 14, 000 lines of sales tax code into [00:04:55] zero, um, was a bit like open heart surgery. So it's been really, really exciting to see the product teams. [00:05:00] Sales tax was the big one. If you think about what that means for an AB or an [00:05:05] accountant or bookkeeper, you know, if I want to use Xero in my practice, whether I'm using it for my CAS practice, [00:05:10] um, and I've got goods based clients and I've got service based clients as well, um, you know, being able to [00:05:15] run one platform across both is an efficiency play.

Um, and so we've always been really [00:05:20] strong in the service based sector, but this really opens up Goods based businesses for us, you know, [00:05:25] which are the predominant ones that have to, you know, obviously calculate solve sales tax. What excites me [00:05:30] also about, you hear me stay excited a lot, um, is, is, you know, sales [00:05:35] tax in the US is really complex.

Um, and I've been involved with the product teams and a lot of the customer focus group [00:05:40] testing, um, and sort of what I can sort of gather is about 90% of us small businesses probably do their sales tax [00:05:45] wrong. Um, and so I think what we are really passionate about is how do we make it easier and [00:05:50] how do we bring that accountant, bookkeeper, front and center so that.

And one of my favorite [00:05:55] quotes from one of the customer testing with our partner was a, I've generally steered away from helping small [00:06:00] business clients with sales tax. With the way you guys are building the functionality, this, you know, [00:06:05] maybe look at actually helping small businesses do this and help them with their filing, um, which is another service.

[00:06:10] Um, so that, that excites us as well and we've already thought about how to bring the ABs front and center. So that's out now. If you're a [00:06:15] Xero customer or partner, you can jump into the advanced settings and turn that on. And [00:06:20] again, the teams that are building that, there's more and more launches coming as we keep, you know, building out that functionality.[00:06:25]

Then moving on to 1099, right? So [00:06:30] 1099 is still critical. So, you know, every year we put new updates. There's obviously regulatory changes that go through in that [00:06:35] space as well. But we did a lot of, um, just... Updates we launched at the Roadshow, particularly [00:06:40] around how you can get information from contractors that you're often left chasing, [00:06:45] um, uh, at the, at the end of the year, so we've made a really nice space where someone can send out a link, it [00:06:50] doesn't matter whether or not they're a Xero user, they can upload those documents and the software's going to track who you've got [00:06:55] the important documents for or not, just to make that whole 1099 process easier at the end [00:07:00] of the year, so, um, um, Updates in the 1099 space there, um, big one as well, [00:07:05] you would probably,

[00:07:05] David: Ben, is that both sides? Because I know that the big problem I have is I send invoices to people, then I always [00:07:10] forget to send them our W 9. Like, are you, are you handling stuff on both sides?

[00:07:14] Ben: [00:07:15] we are on the, it'll chase them for the W9, so actually it runs a whole register for you of who you got a W9 [00:07:20] from and who you haven't, um, and then, and then it makes it easier for them, for you to, for you to go [00:07:25] after them, but I'm not sure on the other side, uh, basically what they get is a link, Um, via an email, they'll [00:07:30] click on that link, it'll take them into, uh, into what looks like a Xero environment where they can upload their [00:07:35] information and then it's going to trigger you as the Xero user on the other side to say, hey, that W9's been [00:07:40] uploaded, here's the ones you're still chasing.

[00:07:41] David: Got

[00:07:43] Ben: Uh, and then on the other [00:07:45] side, um, you probably would have recalled a few years ago we acquired a business out of California [00:07:50] called Locate. Um, the team at Locate had built awesome, uh, inventory, [00:07:55] um, for the US market and so they've been busy. Um. [00:08:00] Busy Beavering away. Basically what we've done is completely recoded in the [00:08:05] zero environment, what we're calling x i p zero inventory plus.

Um, and this is the first [00:08:10] iteration of us really getting, you know, into the game for inventory, particularly businesses that are in the [00:08:15] retail or retail hybrid and e-commerce space with all the connections to the sales channels [00:08:20] that they're using. Um, We unveiled this, we've got a beta available at the [00:08:25] moment, people are jumping into it, it's pretty close to release, I'm hoping to get the first big release out, [00:08:30] um, coming in the next couple of months, uh, so we unveiled that at XeroCon, uh, sorry, our Xero [00:08:35] Roadshows, we had partner working sessions with partners where they could get in and play with it, um, and partners are able to sign [00:08:40] up now and get in, get in and have a play with it as well, so we're getting constant feedback, uh, as we bring that to launch.[00:08:45]

Another exciting moment for me on this space, one is we, you know, one of the reasons we really like the [00:08:50] Locate team was they took a really accounting first mindset to how they developed inventory [00:08:55] and its connection with accounting. So, obviously, you see great inventory players out there that just haven't thought about how to, how that all turns [00:09:00] into accounting data.

Um, and so, as we thought about how we build that clean into [00:09:05] Xero, Um, XIP has that accounting first mentality in it, so everything's going to be working [00:09:10] well. We've been working really hard to make sure all the key channel partners are signed up. You know, the [00:09:15] different online places that people sell goods and services in the e commerce space.

So, really excited to have [00:09:20] that. That plus sales tax is really us coming in and saying, Hey, we're here. Um, [00:09:25] and we're serious in the goods based space in the U. S. A.

[00:09:28] Blake: So when is [00:09:30] that going to be? Sorry, David. So, so Ben, when is that going to be out of beta available [00:09:35] for anyone to use

[00:09:36] Ben: Yeah, so the current plan is always the caveat in software if [00:09:40] things change. So it's in beta now, um, we sort of had sort of rolling betas where it's gone deeper and deeper and more partners have come [00:09:45] in. We opened it up wider at the roadshows recently. Um, the plan right now is to [00:09:50] hopefully go to a launch in November.

With then rolling launches, rolling right throughout, um, [00:09:55] the remainder of the calendar into early next calendar year as well. So all going well, we'll be opening up, um, [00:10:00] much more aggressively in the November timeframe.

[00:10:02] Blake: and what sort of businesses will be able to [00:10:05] use this new inventory system? Like what is it best for? And you know, [00:10:10] who would it not be appropriate for? If I'm looking at my client base, you know, who would I want to put on [00:10:15] it right away?

[00:10:16] Ben: Yeah, great question. So, um, look, we, so we have a great range of [00:10:20] ecosystem partners in the inventory space, right? They deal with very complex inventory scenarios. So if you've got [00:10:25] warehousing raw materials and all that sort of stuff, this is not where it's aimed for, uh, at the moment, [00:10:30] right? This is what I'd say it is been really aimed for is the sort of simple retail businesses [00:10:35] that have a hybrid.

Between selling online through e-commerce or in bricks and mortar. [00:10:40] Um, there's, it's amazing from our research how many of those small businesses are still using Excel, um, for a lot of that as well. [00:10:45] So if you're at that sort of, I would encourage, uh, ab uh, our partners that are out there, [00:10:50] those clients that are, um, simple to medium complexity that are selling through e-commerce or a mixture of [00:10:55] both in the retail space, they're gonna be the best first clients to test for it, um, to, to, to throw on and [00:11:00] have a play with it.

Um, as we roll it out, and again, we'll be bringing more and more features to the market. So [00:11:05] what we launch isn't. You know, we're done and we're moving on, we'll be continually iterating it [00:11:10] from customer feedback and looking at different parts of the market, um, to go after as well. And [00:11:15] as you probably know, Blake, it'll have the right valuation method too for U.

S. inventory which is something we've [00:11:20] been working very hard on.

[00:11:21] Blake: Oh, yes. The accountants will be very excited.

[00:11:23] David: and Ben, is this, uh, [00:11:25] inventory, is it, is it, is it a separate app still? Like, the code's going to still be separate, or are you [00:11:30] fully integrating this into, it's zero inventory and it's just zero code?

[00:11:34] Ben: Yeah, [00:11:35] so it's Xero code, so it's still the way we're going to sell XIP, and there's future [00:11:40] horizons coming of it, right. So XIP. It's still going to be an additional thing you turn on, so if you're [00:11:45] using one of our business edition SKUs, you can turn on the XIP [00:11:50] inventory add on. But it's not the thing we acquired.

The team have fully [00:11:55] recoded it in a clean Xero code environment, so it looks like Xero. So, you know, it's not something we [00:12:00] bought and then gone, hey, it's all integrated over here and looks completely different to Xero. It's [00:12:05] been, you know, coded and the design is all Xero feel, um, and if you need that [00:12:10] added inventory functionality, you can, you can turn that on from within the buy flow once we go live.

[00:12:14] Blake: [00:12:15] So David, Ben, let's pivot to AI because that's the hot [00:12:20] topic right now. And every time I go into Xero and I code [00:12:25] transactions, uh, I think, oh man, when is Xero going to have [00:12:30] generative AI telling me which account I should be using and automatically filling in the vendor [00:12:35] name. I mean, it feels like it could do this because I can copy paste that [00:12:40] stuff into GPT or into Cloud and it can tell me if I give it the chart of [00:12:45] accounts where I should put it.

And it's pretty darn accurate. Like when are we going to start seeing that kind of automation in Xero? [00:12:50] And like, what are you doing with AI right now?

[00:12:52] Ben: Yeah, absolutely, it's great, great, great [00:12:55] question, and you probably remember standing on, uh, Rod, standing on stage, I think, what was he, five, [00:13:00] five, six years ago, talking about the vision for, I mean, he, he was, [00:13:05] We're proud of how we built the platform, and hey, I want to get to a point where you wake up in the morning and basically Xero [00:13:10] says, hey, here's all the transactions I've coded overnight, here's the ones I couldn't code, um, that [00:13:15] we need some help with, and it's done that through looking at, um, we've coded things down in the past, we [00:13:20] also can see where the advisor, so if you've got your advisor in there and you're a You're a messy small business where your client, [00:13:25] your accountants, often having to tidy up that coding.

We can also see where the accountants tidying things up. And also at an [00:13:30] aggregate level, we can start to see where businesses code those like for like expenses too. [00:13:35] Um, so the structure's all there. We're already starting to do it in Xero's space for, um, it's been there for a while for [00:13:40] suggestions. So when you get, you see Xero suggesting, that's actually using, um, that those suggestions, [00:13:45] that's where they're coming from.

Um, the next vision is how do you move that so it's just doing it right. So you [00:13:50] basically... You know, our vision is still the same. How do you move to a world where it's almost code free accounting or coding by [00:13:55] exception? Um, so we're using the technology for suggestions and as we think about the next phase, that's [00:14:00] how we want to go better.

I'm really impatient. I'm like, why can't we have that? Um, now we're using it across [00:14:05] our, uh, so we have a lot of AI.

[00:14:06] Blake: Well, so the issue is right now is like, I don't know. I don't [00:14:10] know how it's happening behind the scenes, but I know that if I code a [00:14:15] transaction, a particular statement line to a particular vendor and a chart of [00:14:20] account, then in the future. Most often, you know, as long as that statement [00:14:25] line looks pretty similar from the bank, I will get the suggestion for that vendor for that account, [00:14:30] but it doesn't do it proactively.

It does it based on the history. Whereas we know that [00:14:35] generative AI could look at that vendor name, uh, the statement line and, [00:14:40] and estimate, figure out what is the best account without me having to do anything. Right? [00:14:45] So like that, I mean, why not? Why not integrate [00:14:50] right now with OpenAI or with any of these tools that have these [00:14:55] APIs?

I mean, it seems like it could be done. I mean, I know people are building these tools that like [00:15:00] can, can do that for us. Um, like pull from the Xero, GL, [00:15:05] and then code the transactions automatically. Like this is doable now with Zapier, with Make. [00:15:10] Why, why can't Xero do it like today?

[00:15:12] Ben: Yeah. That's a great question and a great challenge. [00:15:15] That's important for us. The teams are working on it. Um, there's some things for us to work through, so I know our, our, actually [00:15:20] it was XeroCon that our, one of our EVPs of engineering, James Bergen, [00:15:25] um, worked through, which is. We really focus in two areas around AI.

How do we save [00:15:30] our clients time, which is really what this example falls into, right? How can we take away the need for our [00:15:35] small businesses to actually code? So the software's actually doing that work for them so they can get quicker to the [00:15:40] insight. So that's the first bucket of how we're thinking about where we put, um, you know, leverage AI into the [00:15:45] system.

The second bucket is how do we then use it to get more smart around looking at the data and starting to do [00:15:50] predictive insights. We've already built some of that into our, you know, our cash flow. We have the 30, 60, 90 day [00:15:55] cash flow analytics. Insights tool that starts showing you where we think your business is going to be and [00:16:00] some of the levers we think you should pull.

So, so those are two big buckets we're really focused on. One, save [00:16:05] meaningful time for the customer through using AI, and secondly, start to give them insights and analytics that they can [00:16:10] make proper business decisions around. We're being measured with it as well. Like obviously, [00:16:15] for us, it's kind of scary.

The data that's in Xero goes into the IRS. It gets used for tax [00:16:20] calculations and all those things, and we need to be very careful how we, how we, you know, as we look at things like [00:16:25] generative AI and using, say, the The Cloud Accounting Podcast GPT platform, um, you know, there's, there's, there's [00:16:30] implications to connecting those things, and so we, we, we, the teams are busy working through.

The good news for [00:16:35] us though is we're born in the cloud, so we, you know, while we're being measured, I don't use the [00:16:40] word we're excited and we're being measured, um, You know, the good news for us is we're [00:16:45] born in the cloud, so our platform, we've got one global code base that's been only in the [00:16:50] cloud. Yes, we're doing a lot of work around how we re architect and modernize our platforms.

There's a lot of, what people [00:16:55] probably haven't seen for the last few years is just the enormous amount of work going on [00:17:00] underneath the hood in Xero. Like, Xero is, you know, it's not the new kid on the block anymore. You know, [00:17:05] Xero was, um, is coming up 17, like 17 years old now. Um, you know, the [00:17:10] original code base built out of an apartment in Wellington, and now, you know, well over [00:17:15] 3.

5 million, 3. 8 million customers globally operating the system. So over the last few years, we've had a lot of [00:17:20] work going through various parts of the platform, modernizing and fully re architecting it so that, you [00:17:25] know, we think about what does the next 10 million customers look like in our next phase of scale.

So a lot of work's gone in [00:17:30] there, which helps us unlock going faster with AI. So we're using it in parts of the platform now. [00:17:35] Um, faster and there's some very obvious use cases as you point out, where we can go faster and [00:17:40] actually take, you know, save our clients more time. 'cause no one, I don't even think accountants, I mean, I, I did [00:17:45] my accounting degree and, and reconciling a bank account was the least exciting thing.

Um, I [00:17:50] think we, none of us went to do accounting degrees based to do bank recs, right? So how quickly we

[00:17:54] Blake: Well, [00:17:55] and my concern is that the AI is flashy and sexy and that's why it's [00:18:00] getting applied to doing short term cashflow projections and dashboards and, you know, fun stuff like [00:18:05] that, that moves product. But. Honestly, it could be [00:18:10] used to do some really boring work, like you said, like simply coding transactions [00:18:15] and reconciling bank accounts automatically.

And my fear is that, you know, [00:18:20] the main GLs aren't doing that, even though it's a real easy low hanging fruit [00:18:25] opportunity, because yeah, it's not going to sell you more Xero. Okay. Subscriptions. Right.[00:18:30]

[00:18:30] Ben: Yeah, I think, I

[00:18:30] Blake: but it would be hugely beneficial to accountants to have, you know, 90 percent of [00:18:35] a bank rec done automatically for us.

[00:18:37] Ben: we've heard loud and clear, actually, [00:18:40] because it's similar, we've recently published this AI guide after a big survey across [00:18:45] 3, 000 accounting and bookkeeping professionals across the world, including here in the U. S. It's [00:18:50] pretty loud and clear from like, you know, and this is the feedback I give to our product teams as well, core accounting [00:18:55] is the basics where all the magic, you know, starts or doesn't happen.

So, let's really [00:19:00] get back to making sure that we're innovating at the core. And, you know, [00:19:05] We're still, I mean, even in our recent product release, there's a lot of work going into how we get bank data into Xero, [00:19:10] because we still know it's the ultimate unlocker, and then how do we process that data much faster, so I [00:19:15] think you're spot on, it's the number one thing we hear from our customers, is, you know, particularly as we've [00:19:20] asked them around where would you like us to see us go in the AI space, there is that sentiment of like, [00:19:25] we're sort of getting a bit tired of all the glitzy, glammy, um, quick AI features that get sort of put out [00:19:30] there, there's really core fundamental workflows That impact every client we work [00:19:35] with, that if you, you know, you could take five, ten minutes out of the workflow times, say I've got a [00:19:40] thousand clients, that's a really meaningful, um, you know, in a world where we have a huge labor shortage in the [00:19:45] profession, and then being able to get to the more important stuff we can do with those clients.

So we've heard that loud and [00:19:50] clear, and it's absolutely where, you know, I think our AI guide and what we're talking about how we want to [00:19:55] use AI is use it on stuff that isn't glitzy and glammy, use it on stuff that's going to have meaningful impact on [00:20:00] saving customers time.

[00:20:00] Blake: And you mentioned the AI guide, but I don't think we actually mentioned the title of it or [00:20:05] where to get it. What is that guide?

[00:20:07] Ben: Yes, we, um... Uh, we [00:20:10] launched that, uh, uh, recently, so I'm just gonna, I can give you the link, or we can, we'll make sure we can [00:20:15] send you a copy, so it's called Future Focus, Xero's AI guide for accountants and [00:20:20] bookkeepers, um, we've pulled that together based on data and insights [00:20:25] from surveying over 3, 000 ABs around the world, Plus our own internal experts in this space and [00:20:30] Xero and other people externally in the profession that are working around it.

So we just wanted it to be, [00:20:35] um, a resource and what I'll make sure we do is we flick you the link, [00:20:40] um, to where you can get a copy

[00:20:42] Blake: And we'll put it in the show notes for anyone who's [00:20:45] listening to the podcast or watching on YouTube. Go down to the description, go down to the show notes and check it [00:20:50] out. You'll be able to download this report. Some interesting stats in here. A third of small [00:20:55] businesses are intrigued by AI while others are feeling anxious. [00:21:00] Half of small businesses believe AI will be more helpful and have a positive impact on their people, [00:21:05] processes, and workflows compared to 20%. Who said they believe it will be more harmful. So it's nice [00:21:10] to see some positive coverage of AI. It's not all doom and gloom.

[00:21:14] Ben: [00:21:15] Yeah, I think as people get in play, my advice to partners has been like, we've all watched The Terminator, so [00:21:20] we've all, you know, we all go through that scary scenario in our head, and we have old Elon Musk running around reminding [00:21:25] us what AI could do, um, but the best thing, and I say this, it's almost like when Cloud came around, like, [00:21:30] get in, have a play, embrace it.

Learn about it. Learn how to harness it. Um, [00:21:35] don't, you know, if you keep it at arm's length, then you're going to miss the boat. Um, and I, cause I do think that [00:21:40] there is, there is meaningful ways to use it in your practice. Um, so I'll give you an example from my own, from my own, my [00:21:45] own mother, right? And so I, I was explaining to her, chat GPT.

Um, I said, look, you don't want to go... Private [00:21:50] data into it yet, because we're still sort of figuring those things out, but my mother is still working, um, [00:21:55] she is a very passionate person who often writes very lengthy, wordy [00:22:00] emails, and I happen to be friends with one of her customers who's like, your mother's so cool, but she sends these ridiculously long [00:22:05] emails, so I showed mum chat GPT and said, hey, Write your beautiful email, copy it into chat GPT [00:22:10] and say, can you make this a bit more succinct and direct, please?

Um, and, and so, you know, mum went from being [00:22:15] like terrified of it to just having a simple use case there, um, which is now saving her lots of time, [00:22:20] but also helping with her customer interactions. And she's, you know, all about it. Yes, she's also watched The Terminator and [00:22:25] is... You know, worried it might come and kill her one day.

But, uh, I think as she starts to play with it, people see the use [00:22:30] case where it's relevant. And so it's like any, any new technology, get in, learn it and, and be a [00:22:35] part of, um, how you drive it. And it's the same thing we take with our partners here, you know, you [00:22:40] mean Blake, you've been on X pack. Um, you know, a lot of our great ideas for how we could be thinking about the [00:22:45] stuff is actually coming from our partners.

And there are partners out there that are jumping in, playing with it. There's partners in [00:22:50] there that love getting all the latest and greatest tools that any ecosystem, ecosystem partners are using. [00:22:55] Um, and so hearing from them is actually super powerful as well.

[00:22:58] David: [00:23:00] Yeah, it feels like the table is set for you, in a way, from applying AI in that boring way, [00:23:05] right? It's not the sexiest feature, but you have, you have Bank Feeds, obviously, giving [00:23:10] you half a transaction. You have HubDoc, which gives you... It scans and gives you 60, 70, [00:23:15] 80 percent of a transaction. You have the zero expenses.

So employees are, you know, possibly adding parts of [00:23:20] transactions and where the AI comes in, it's like, cause that's what a lot of accountants and everybody has to do, bookkeepers have to do. You have to be like, [00:23:25] all right, they scan this. It's missing this data. Oh, but that's in the bank feed. Okay. That's, that's a match or that makes [00:23:30] sense.

And that's where AI could really pull these tools together. These, these tools you [00:23:35] guys already have in house that are really separated.

[00:23:37] Ben: Yeah, the other one, so we're thinking we're actually just launching [00:23:40] some tests with it now, so firstly, um, Bank statement extraction. So we still are [00:23:45] seeing big growth of people that either the bank they're with doesn't give you any accounting software [00:23:50] vendor, a good feed of data, or they might need to go back [00:23:55] multiple months, might be a conversion client or something like that and they can't get that from the bank feed, or [00:24:00] it might be a client that's not tech savvy, but it's still a very profitable client, and so they bring in [00:24:05] the paper bank statement.

So one of the Last product we went through is bank statement [00:24:10] extraction, which is leveraging some of the, uh, from the acquisition of HubDoc, um, where, you know, you [00:24:15] can put a paper bank statement through a feeder, um, still happens, um, and then the system [00:24:20] can go to work using, um, the extraction to actually pull that data out.

Now, we're using [00:24:25] AI in this part of the system, right, because right now we're, we're being very careful to say, hey, these are the banks that we're happy with the [00:24:30] quality, that you can use it for bank statement extraction. In reality, you can actually upload any bank. [00:24:35] Um, the system will tell you if things like.

Uh, the opening and balance is matching obviously things to make sure that [00:24:40] the data feed you're going to push in is, is correct. Um, but we're using AI there a lot to actually [00:24:45] rapidly expand, um, the amount of banks we can cover with that technology. [00:24:50] Um, and there's no human interaction. So as you know, a lot of the, a lot of the softwares out there that do do that, um, [00:24:55] workflow have big chunks of people sitting in random places around the world, um, that are actually making that [00:25:00] seamless automated experience come to life.

So we're actually using AI there, um, to help with as well. [00:25:05] The second piece is, um. Thanks for watching. I'm How our customers interact with us, right? So we haven't, I mean, [00:25:10] the platform at Xero now is quite expansive across how a small business uses it, [00:25:15] how an accountant and bookkeeper uses it, and so there's just so much [00:25:20] information across all our help centers, Xero Central, and again, sort of [00:25:25] like Finding the right answer is often hard.

So we're starting to look at how we use generative [00:25:30] AI to have a conversation with Xero. We'll go through things, think about how we make it easy to set up and [00:25:35] onboard Xero, but particularly how you access data on how to use Xero. So you're not having to worry about, [00:25:40] um, you know, talking to someone here.

You know, the system's actually having a human conversation with the system [00:25:45] and it's surfacing up the relevant things to help you get, get going again. [00:25:50] Get

[00:25:50] Blake: for your product people. If they're listening, find and recode. Why can't we [00:25:55] chat with an AI? Chat assistant to find and recode transactions instead of [00:26:00] having to go through those dropdowns to, you know, filter and find the transactions. [00:26:05] Just, I want to be able to say in plain English, you know, find all the payments that I made to [00:26:10] David Leary and reclassify those as consultant fees or, you know, [00:26:15] whatever, like for this particular time period.

I mean, it feels like an [00:26:20] AI, a Gen AI with access to the right levers and [00:26:25] buttons could easily create that search for me.

[00:26:28] Ben: Totally. Well, I'll take this as my first [00:26:30] action. So you probably saw our new Chief Product Officer, Dia Jolly. She's ex Octa [00:26:35] and based in the Valley. So a lot of leadership in Xero now is landing here in the U. S., [00:26:40] which is super exciting for us globally. So I'll take the action to [00:26:45] pass it on. Because I do think, like I look at, I always use the example.

I actually use this [00:26:50] recode, which is, yeah, like I don't want to have to go through and click the filters. I want to just say, hey, I know. [00:26:55] There's a husband and wife combo that run the coding, I'm the partner, I know the wife's super [00:27:00] diligent, but I know the husband just codes everything to suspense, or just [00:27:05] throws everything in general, so can I just go, hey, hey Xero, go, go find me all the transactions [00:27:10] Ben's entered.

Um, and go, and, and he dumps them all in general suspense, can you go bring them up and suggest [00:27:15] to me where we could put them, um, which is a much nicer and easier experience than having to go through and create all the filters, so I'll make [00:27:20] sure I pass that on, but, yeah, I mean, I think you've hit the nail on the head, there are so many [00:27:25] opportunities around just the core workflows of accounting bookkeeping in Core Zero, [00:27:30] um, that, that, the functionalities like Finery Code changed the game when we launched that, I remember, actually it [00:27:35] was, Rod was launching a little bit of AI on stage in Melbourne, This was probably seven, eight years ago, [00:27:40] where you could start to type the description of an invoice and the system would code [00:27:45] the item on the invoice somewhere and start to suggest that based on some AI.

It was very, very early, [00:27:50] and I remember the accountants in the crowd were all sort of like, you know, starry eyed, there was a bit of woos. Um, [00:27:55] and then he got up and launched Find and Recode, the ability to, you know, quickly find someone who's [00:28:00] done a mess with coding and recode it, and there was a standing ovation, um, so it's kind of, um, it's come full [00:28:05] circle now, where it's like, well, how do you take Find and Recode and apply that AI that we were showing years ago, because those are [00:28:10] the workflows that can really drive a meaningful impact.

[00:28:12] Blake: I mean, you know, I'd love for [00:28:15] that to happen, but in the meantime, um, consider, consider... [00:28:20] I've got you captive here, Ben, so I'm just going to give you all my

[00:28:22] Ben: I'll tell you, I've got, I've got notes, um.

[00:28:24] Blake: well, [00:28:25] you know, uh, ChatGPT now has plugins, and Avalara made a plugin so you can query [00:28:30] tax rates for any address in the United States now.

I mean, uh, give... [00:28:35] Make a Xero plugin for ChatGPT so that I can authorize my ChatGPT [00:28:40] plus instance to access my Xero GL data, and then I can go and query it. I mean, that could [00:28:45] be incredibly powerful without you even having to build anything. So just, just wanted to throw that idea out [00:28:50] there.

[00:28:50] David: And another reason to do that is now you can have all the accountants and bookkeepers [00:28:55] basically tell you what they're actually going to use it for before you go and build something. That's [00:29:00] actually

[00:29:00] Blake: Well, some, because a lot of times we say we'll use it for this thing and then you build it and then we don't, right? [00:29:05] So it's like, if you actually give them the tool. Then see what they're using it for. [00:29:10] Um, maybe that's one way to decide what to do. 'cause there's so many things. Anyway, that's, that's the end of [00:29:15] my unsolicited zero product advice.

[00:29:17] Ben: Super appreciate it. See if you can give me some of the [00:29:20] data. You can't chase, chase those up. Um, but I mean, it's exciting, right? I mean, I think [00:29:25] I'm in my travels around the U S I still meet so many firms that are still so [00:29:30] early on their journey to get into the cloud and this whole AI revolution is hitting us so [00:29:35] fast.

And. So, you know, that first step of getting your practice [00:29:40] online so that you can get connected to your client better and you can start to unlock these massive AI [00:29:45] opportunities that's here today and coming even faster down the pipe at us, so [00:29:50] it still baffles me how many people are still, you know, like Excel is still out there [00:29:55] going strong for accounting.

[00:29:56] Blake: I mean, I, I just saw an article about a [00:30:00] webinar about how to move to cloud, like that is still a topic for webinars these days. [00:30:05] And, uh, yeah, let's hope that, I think the AI stuff is going to finally pull all the laggards because [00:30:10] can't do the AI without the cloud and AI is going to do [00:30:15] another 10X efficiency gain.

Like,

[00:30:17] Ben: Yeah. I think, I think [00:30:20] it's more than this is like, if you look at what's that status or recently that for every, [00:30:25] um, two accounting jobs open for every, um, two accountants, there's only [00:30:30] one candidate. So we've got a massive labor shortage going on. So we need, um, [00:30:35] and then the amount of firms that I meet in my travels and my teams that are looking to go [00:30:40] beyond tax, looking to have more of a regular interaction with the client, looking to even just build on basic advisory.[00:30:45] [00:30:50] [00:30:55]

Welcome to The Cloud Accounting Podcast. You know, I had a great laugh and chuckle and excited [00:31:00] moment when I saw you guys rebrand this The Accounting Podcast, because I am still baffled that we are still [00:31:05] talking about cloud, but, but cloud practices are becoming more of the norm now, [00:31:10] um, the services that they can provide on top of just end of year transactional tax are becoming more [00:31:15] More and more expected, um, so I think there's more pressure on the mass market now to start [00:31:20] moving.

Um, and it's up to us as vendors, and we've had this chat in previous catch ups, which [00:31:25] is let's not scare people, let's keep, and I think you guys do a really good job of this, and the vendors also need [00:31:30] to play their role in this, which is, it's all, we want to sound as innovative as possible, but let's make [00:31:35] sure we're taking the people on the journey, showing them the opportunities, hearing them, meeting them [00:31:40] where they're at.

And getting them started right. So if they are at desktop, um, well let's get [00:31:45] you to the cloud first before we get too excited about, um, um, and we'll use chat GPT to help you write a [00:31:50] better email. Um, and just sort of find out where's the partner at and how do we get them on the journey and, you know, [00:31:55] you've got to show them the possibilities.

Um, but I think everyone's doing a better job of that now because that is, you know, how do we make [00:32:00] them, how do we, because I, you know, the profession is actually needed now. More than ever, [00:32:05] um, and I, and I think it has a really powerful role to play, um, but we're stuck. I mean, one of the [00:32:10] funniest things I heard recently was, could you imagine, you know, if you're thinking about your GP, your [00:32:15] doctor that you go to for, for, for health, imagine if they were unavailable for three [00:32:20] months of the year because they were just too busy to see you.

[00:32:22] Blake: well, Ben, that's the typical

[00:32:24] David: yeah,

[00:32:24] Blake: [00:32:25] most Americans with our

[00:32:26] David: been living in the States, right, Ben? I want to make sure you're experiencing

[00:32:29] Ben: So [00:32:30] yeah, I did actually have to wait. Probably too much information for a doctor's appointment recently. But like, accountants and bookkeepers [00:32:35] do disappear for a long time. And so how do we get this regular interaction going? So, I think it's exciting. [00:32:40] I think there's enough people doing it now. There's enough people that are right at [00:32:45] the edge of the curve and changing the game, which is exciting.

I [00:32:50] always say this, I'm from the profession, I still consider myself an accountant, I do my CPD [00:32:55] and keep it up. It's fun being on this side of the fence. [00:33:00] You know, I think we've got a real, we have to rebrand the profession, I'm a bit worried and Deandra and I [00:33:05] were talking about this recently, we've got all these, you know, councils and, um, committees [00:33:10] being set up everywhere to talk about how do we rebrand the profession, how do we get more people coming into it, um, well I [00:33:15] think we need to put those people on those councils and ask them.

Um, because, you know, like we're [00:33:20] still, I think when you look at some of the firms now, the type of services they're [00:33:25] doing, the type of businesses they are, the opportunity, excitement, you know, even if you're an entry level [00:33:30] employee in them. It's totally different to what you expect, but I don't think the graduate [00:33:35] community understand that.

Um, so it is a massive rebranding challenge and we've got to meet them where [00:33:40] they are as well. And so I think, you know, we need to start including them more in, in, in our [00:33:45] conversations. So for me, it's super exciting sitting on this side of the fence because I'm, you know, Helping change the [00:33:50] profession as a passion of mine.

Um, but I'm super proud of what it is. You know, there's a, there's a massive chunk of [00:33:55] firms that are changing the game for their business clients. Um, and that's, [00:34:00] that's who I'm proud of. And we just need to make that chunk bigger.

[00:34:02] Blake: And I think Xero deserves credit [00:34:05] for helping to create a new image of accounting. Um, you know, when I started out [00:34:10] in accounting as a career changer, Xero came to the U. S. and [00:34:15] had this I mean, the idea of beautiful accounting software was like mind blowing, [00:34:20] revolutionary, and that you could have a beautiful accounting practice and a beautiful job.

[00:34:25] And a lot of that messaging really resonated with me and inspired me to create my own [00:34:30] business, my own accounting practice. And We've got to figure out, I think, [00:34:35] how do we spread that message to the accounting students and graduates [00:34:40] that it doesn't have to be this corporate grind, that you can go somewhere else [00:34:45] other than the big four, you can go somewhere else other than a giant Fortune 500 [00:34:50] company.

If you want, you can go work with small businesses right out of school, you can make a difference, [00:34:55] and those are the people who are having the most fun in accounting. All the firm owners that I know [00:35:00] that are really excited to go to work every day are the ones who are serving small [00:35:05] businesses. And that's who Xero is building software for.

And [00:35:10] these kids just don't know about it because their professors don't tell them. It's not an option, you know?

[00:35:14] Ben: [00:35:15] Yeah. And I think right up, right up to the I C P, like who we promote. As the [00:35:20] poster child of the profession, it's often like, you don't need a suit and [00:35:25] tie anymore. I think we've finally realized that like, I just researched years ago [00:35:30] when I was back in New Zealand and most small businesses were scared of going to their accountant [00:35:35] because the accountant would talk jargon, the accountant wore a fancy suit, the accountant was in this [00:35:40] fancy office and it made them feel, you know, the husband and wife couple, let's say they're running a [00:35:45] plumbing business.

They felt scared to go there. They felt, mate, one of, one of the, like, I felt dumb, [00:35:50] you know, I didn't wanna ask a silly question. There was jargon being used and, and, and, and, [00:35:55] you know, you both know the same probably people across the profession now that have changed the, like, they meet [00:36:00] the clients where they are.

Um, yeah, they're dressed, they're dressed well, but, you know, realize that the client goes, Hey, [00:36:05] My experience and my power as your advisor is not this tie that I've got [00:36:10] tied around my neck in a 110 degree Phoenix day. Um, it's actually, [00:36:15] I'm wearing a nice clean cut t shirt, um, I have a passion for the industry that you serve, um, and I [00:36:20] know your business and I also know your personal goals and I'm getting involved more in that.

So I think we are seeing people do that and [00:36:25] small businesses don't, don't see the big fancy building or the clean cut suit or the [00:36:30] amazing jargon we talk as the, the things that make us a professional. Um, it's the [00:36:35] empathy, it's the advice, it's the knowing the numbers, yes, we're still going to know the numbers, still going to know the tax code, like, [00:36:40] yeah, the foundation stuff, but there is so much more, it's like I [00:36:45] just, it's always why I've been stuck in my role here and excited about it is, is [00:36:50] we've always been the trusted advisor, but I think at a mass market level, We have [00:36:55] failed to capitalize on that trust, um, and, and it doesn't take much and there's enough [00:37:00] partners out there doing it now that are showing you what, and, and, and they're having fun.

I mean, you probably, you know the same [00:37:05] people, Blake. They're out, you know, I look at their, I've got a lot of them on Facebook as well and they look like they're having a great time out there. So [00:37:10] how do we promote them, um, to the college grads because, yeah, what they [00:37:15] think it is. I think the other thing too, diversity and inclusion is a, is a big piece, um, as well when you [00:37:20] look at firm ownership.

It is still predominantly, um, male and [00:37:25] it's still predominantly white, um, and when you look at the people coming out of college, it's starting to [00:37:30] flip completely on its head around ethnicity and gender, so you've got a real disconnect, um, happening [00:37:35] there, um, so we need to, we need to work, you know, there's a lot more work to do.

I think the professions, [00:37:40] you know, I wouldn't say is one of the leaders when it comes to this space, but again, you've got to, [00:37:45] you've got to look and feel like and connect to your customers that you're serving and the community [00:37:50] that they're in. And so that is super, super important. So yeah, it's kind of weird because I think it [00:37:55] is, there's so much going well, there's so much to be excited about in the profession and the opportunity that sits in front of it.[00:38:00]

But then there's also quite frustrating moments where there is so much to do and there's so many things still, you know, still holding it [00:38:05] back.

[00:38:05] Blake: Well, it's creating a lot of opportunity. And if you want to go out and create that [00:38:10] small firm now, and you're willing to embrace cloud and AI, I mean, sky's the limit. I'd say [00:38:15] it's even, I was an early mover when it came to doing the whole remote virtual cloud [00:38:20] firm. And some people would say, Oh, you know, that opportunity doesn't exist anymore.

But I think with AI [00:38:25] now it's even greater.

[00:38:26] Ben: Yeah.

[00:38:26] Blake: you know, you can, you can go off on your own and you can make good money and you [00:38:30] can have a great lifestyle and, and you can do it with these awesome tools, including Xero. So [00:38:35] Ben, thank you so much for joining us. David, did you have anything you wanted to add before we

[00:38:38] David: No, I just, uh, I, [00:38:40] I must say it was smart to sponsor the women's, uh, FIFA World Cup. We were [00:38:45] sitting in the living room watching the USA women's team play. And just the Xero logos were all over the field. My kids were [00:38:50] like, it's Xero. It's Xero. They recognized the logo everywhere. I don't know anybody else who recognized it [00:38:55] outside of people in our space, but it was a lot of exposure.

I'll tell you that.

[00:38:59] Blake: Oh, that's [00:39:00] awesome.

[00:39:00] Ben: Yeah, no, it was fantastic. It was awesome for us globally, obviously, in all the markets that we operate. It was really [00:39:05] gutted to see Team USA, you know, I was down at the final and gutted that the powerhouse team of Team USA [00:39:10] didn't make it through. But I was super excited to see the, um, the New York Times coverage and the [00:39:15] New York Times headlines of the Xero billboards in the back.

But for us, I mean, it's just, I mean, women's soccer is [00:39:20] just amazing. There's so much alignment to what we're doing. So we're doing a lot of stuff with, um, You know, most of [00:39:25] those sports sponsorships, and it's sad it's still this way, but you'll sponsor the men's league, and [00:39:30] sort of like the women's league as an add on, and so with Xero, it was very passionate, like, no, we want to actually be one of the principal [00:39:35] sponsors of women's soccer, um, and do that in a really genuine way, so we're doing work across all our [00:39:40] countries on how we help with, like, literacy in our soccer clubs, because soccer clubs need women's soccer.[00:39:45]

[00:39:50] Sponsorships are great, but it's how you activate them, and we're really, really passionate about how we activate it properly. And one last thing I'd [00:39:55] love to share is, um, for any business owners out there, we launched the Xero Beautiful Business Fund, [00:40:00] um, so if you just Google X E R O, Beautiful Business Fund.

For our Xero [00:40:05] partners out there that have clients on Xero, they can go in the drawer. There's over 770, [00:40:10] 000 New Zealand dollars, um, there's a big chunk split up for each country, so there's a big chunk for [00:40:15] US small businesses as well. Um, and they can enter in sort of four key categories [00:40:20] around innovating for sustainability, trailblazing with technology, strengthening the community connection, [00:40:25] Or upskilling their business for the future.

Um, they can go online, pitch their [00:40:30] business into that, and there's a whole lot of small business grants that they can win, um, to help them out in those spaces. [00:40:35] So there's a whole big chunk ring fence for our US customers. So if you're a zero partner out there and you've got us small [00:40:40] businesses go along or, uh, and check out the zero beautiful business

[00:40:43] David: So I can help my [00:40:45] clients apply for this. That'd be a good value add service.

[00:40:48] Ben: Correct, yeah. Absolutely, yeah. So if [00:40:50] you've got clients on Xero, um, or not even clients that are on Xero, if they want to have a look at it, they can go [00:40:55] on, put their submission in, uh, and enter, uh, into the draw. So, uh, this is an exciting new [00:41:00] initiative that we launched globally, uh, just a couple of months ago.

[00:41:03] Blake: Ben Richmond [00:41:05] of Xero, country manager, United States, chartered accountant. Great to chat [00:41:10] with you. Hope to see you again soon.

[00:41:11] Ben: Likewise, thanks for having me, and we'll, uh, probably see you at the next conference.[00:41:15]

[00:41:15] Blake: See you in Nashville.

[00:41:16] Ben: See you in Nashville.