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Our journey as a 100% Xero firm

This week marks a milestone for our business. We’re off to the Xero Awards as top 3 finalists in the “100% Xero” category.

It’s really great timing for us at Cloud 360 Accounting as 2020 marks our 10th year in business. What a way to add to the celebrations if we won this award!

It got me thinking and reminiscing about our journey as an accounting firm with Xero since we kicked off.

Moments of discovery

I was practice manager for a chartered accountancy firm based in Derry and had been for 5 years or so. Sage Line 50 was very much the done thing. If we saw a need for an integrated system within a client’s business, we re-sold Sage, installed and gave them the training they needed. I wrote a generic Sage procedures manual applicable to the vast majority of our small business client base, and tweaked it to suit each individual client needs.

In 2009, I visited a fairly new client with ambitions to build a great business. Off I went with my preconceived vision of installing Sage as one of our first objectives. To my horror, they were already using accounting software and it wasn’t Line 50!  They were using a product called Accounts 24/7. Fascinated by the fact that a client had chosen something else, I had a look.

They opened up a browser, entered a user name and password and…………..logged in online…………..

What is this witchcraft? Hold on a second, can I see customer balances and reports? Yes, ok. What about suppliers? Same. Right, so it’s for sales and purchase ledger, right? No, it has a bank rec. And……….a trial balance, P&L, balance sheet. So everything we’d need to extracted year end data. But……!

The penny dropped. The tedious need to move backup files around on USB pen drives was gone. In fact, we could login from our office and work on their data AT THE SAME TIME AS THE CLIENT.

Within a few weeks, someone told me about a new company called Xero who had kicked off in the UK a few years earlier. They’re one to watch I was told. That was an understatement. I checked out Xero’s platform, the beautiful dashboard, the ease of maneuvering around the ledgers and, last but not least, the bank feed technology. A world of possibilities flooded my tiny mind. This was a new way of working with clients. A new way to have up to date figures. A whole new world for accounting firms.

I pondered over how long it would take to introduce these concepts to our practice. It would take years. Another option was to do it myself. It gave me an immediate USP. Would the local small business community buy into it? Who knows, I had no idea but that’s the risk you take when starting a new business.

Within a few months, after saving and planning and watching too much Dragon’s Den, I handed in my notice in March 2010. In June that year, I became the first certified advisor in Northern Ireland and, on 1 July 2010, the first truly online accounting firm was launched – K Phelan & Company.

The early years

For the first few years in business, I struggled. I kept many of my old practices in how to deliver client services. I used Xero on a more ad-hoc basis and extracted data from Xero to prepare year-end accounts and tax returns. VAT returns were still on excel summaries with yearly journals to the final accounts. Year-end adjustments to Xero were being processed. The single ledger was still a fair bit away for me.

I was using VT Accounts for end of year compliance, TaxCalc for tax returns, Companies House and CRO for company secretarial, Moneysoft for payroll and excel to plug all the gaps.

I felt the need to keep doing what I knew rather than invest time in developing new and better ways. I took on my first staff member in 2011, the client base grew and grew as a vast assortment of businesses and individuals came to me for their accounting needs.

Lots came because we were a small firm in the expectation that the fees would be (and were) lower. This was during the years of the financial crisis and one of my central ideas was that it would be a good thing to provide services for cheaper fees during such times. I couldn’t lose, surely?

Then the pain kicked in

As client numbers grew, so did the demands on my time and our resources. I hired our second team member in 2013. Our first daughter was born in March that year. Things started getting pretty tough pretty fast. Not only did my time get squeezed enormously, so did our cash flow.

Thankfully, a few things happened during 2013 and 2014. Our Xero account manager, Darran Glanville, who supported me from day 1, was off to pastures new. Darren and I ran the first ever Xero event in Northern Ireland in 2011. We were blessed to have Diane Holden take over. Diane began push me forward and opened the door for us to the possibilities of how we could go all-in with Xero. Use the client data in real-time. Run proper year end accounts straight into tax returns from Xero.

Did we feel ready for it? Did we think our clients were ready? I wasn’t so sure. But back then I had a more ‘closed’ mindset, driven largely by the fear of failure. My only saving thought was that if a new approach didn’t work, we could just revert to what we knew.

It was time to go all-in with cloud and Xero.

How to make change a success

When I look back now with much more commercial experience, I can see how we made the move to 100% Xero a success. You see, everything starts in the mind. If you want something to work, you can make it happen. Maybe not how you initially visualized it, but having a desire and drive and passion will keep moving you forward.

During the years from 2015 onward, I had a strong belief that Xero was the only way. I certainly tinkered with the idea of expanding our offering as a firm to attract more clients. This was sparked by other cloud platforms offering much cheaper alternatives. Some clients wanted to use the lowest cost software. What should we do?

Thankfully, we opted to stick with 100% Xero. The clients who wanted cheaper software also wanted cheaper fees. Sorry, been there and done that. It doesn’t work out well for both parties. Even moreso, we decided to stay in our lane. We were living and breathing Xero, running Xero events, promoting our Xero focus. Why confuse the market by introducing more and more options? Why frustrate the team by expecting them to be proficient with several platforms? It didn’t make sense.

Going deeper with Xero

Some of my predictions on Xero were coming to bear fruit. My blind faith was paying off.

In the last number of years, Xero introduced a lot of the things I expected them to. We now use Xero Payroll across our entire client base. All contractors use Xero CIS features. We’ve been filing VAT through MTD since the new system kicked in last year.

We’re using Xero HQ to monitor and react to client alerts. We’re rolling out the use of Xero Ask by creating client on-boarding templates which we send to new clients to gather up their standard info – addresses, DOB, tax references, upload ID documents.

Xero Workpapers is part of our workflow for all year-end jobs. Once figures are drafted on Xero by the client manager, they create a workpaper pack, link to Xero, fill out the schedules and attach supporting docs. Client queries are issued in Xero Workpapers, we use Internal Queries to raise a question from client manager to me and I use Review Points to note areas for the client manager to check/adjust.

Xero Files is an area used to create a bespoke cloud storage area for each client. We save signed accounts and tax returns in Xero files to allow clients to access their documents easily. We create sub-folders when clients have outsourced their finance function to us, to store supplier statements, remittance advice notes etc.

Over the past 3 years, we’ve defined our App Stack with Xero at its heart.

We’ve gone deeper and deeper with Xero every year. As the platform continues to develop and improve, we will keep up the pace with Xero for the benefit of our business and our client’s businesses.

The future with Xero

I went to Xerocon in 2018 for the first time. What an experience!

The big news announced that year was the plans for Xero Tax and the acquisition of Instfile. The final piece in the jigsaw was coming……..

In 2019, the vision of payment services direct from Xero was introduced via Transferwise. A massive efficiency for small businesses and a big plus in using the single ledger approach.

I’ve no doubt that Xero will continue to innovate and lead the way in cloud accounting for many years to come. We’re blessed to be living in a time when we can be so well connected to our clients and make amazing connections across the Xero community. Competition between the major players in the cloud accounting space is a healthy thing and means we get the best results possible for the developments rolled out.

The thing about Xero is this………once you get it, you really get it. The biggest exponents of Xero are raving fans, us included. And we’re part of a community of forward thinking business owners who run cutting edge accounting businesses.

At a conference last year here in Northern Ireland, I was on a panel discussion. During Q&A, an accountant in the crowd commented that I was “Mr Xero” and they didn’t want to be known like that. They were a chartered accountant and that’s their brand. I was allowed to respond and said I’d never had a bigger compliment than to be called Mr Xero here in Northern Ireland!

Some of our clients say they hate bookkeeping but they love Xero. They wish they’d found us and Xero years ago. They see running the finances and books as the easiest part of their business by using Xero. We totally understand where they’re coming from.

We’re 100% Xero………..always have been…………..always will be.


Kieran Phelan FCA

Mr Xero NI      😉


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