The importance of building app stacks

Building app stacks

Nathan Keeley discusses the benefits of building tailored app stacks for clients, and considers the changing role of accountants when assisting businesses in the cloud...

@carpenterbox

Nathan Keeley, Partner, MHA

Carpenter Box

Nathan is a partner at MHA Carpenter Box, and specialises in offering advice to the SME business sector by looking at both accounting and tax solutions, alongside cloud software options, to drive efficiency. Nathan heads the cloud team within the firm, and nationally through their association MHA, and advises clients on the benefits of add-ons and integration opportunities now available.

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hanging landscape

As an accountant, it used to be enough just to mention the cloud and Xero, and you were seen as progressive! Not long after that, these progressive accountants started talking about apps. Nowadays, the landscape has developed even further, and any savvy business owner knows about the cloud. And it’s not just start-up businesses moving to the cloud – everywhere you look, there are established, growing businesses looking to join the cloud revolution.

As cloud technology develops further in 2018, ‘app stacks’ are being created to help businesses automate not only their finance function but every aspect of their business processes. Clients want an industry solution, not just accounting software. Xero partners are finding small businesses eager to try more services: 92% want help with extra financial reporting and analysis, 50% desire advisory and support on apps and 30% would like assistance with HR advisory, people and planning.

Advisers not only need to capture clients’ accounting records in the most automated and presentable way, but they also need to be able to assist in advising on internal processes. We must therefore further develop the relationship between ourselves and our clients, which will require a more granular insight of the individual client’s business.

For readers who attended Xerocon UK at the ExCeL London last October, it’s clear to see that Xero’s strong presence in the market is here to stay, and they are investing heavily in their development. One of the more exciting takeaways from the event was to see the new offerings coming out soon that will help our clients in the day-to-day running of their businesses.

What benefits will app stacks bring to your clients?

It can be difficult for general accountants, who often work with clients in a wide range of industries, to deal with different processes and requirements. There’s a growing need for firms to offer bespoke solutions that help not only with operational issues, but to allow clients to focus on the business (and not in the business!). The remit for accountants is being stretched further and further, away from pure compliance and into an advisory role. Clients will need your support as they grow their businesses, and will trust your advice when choosing apps to ensure they retain the day-to-day control of their business. Building an app stack will help your clients to be more efficient and reduce time costs. This support will no doubt become increasingly more important to help add value and strengthen your relationship, thereby reducing the risk of them leaving for another accountant.

To work out what specific app stacks may be appropriate, an analysis will need to be conducted by the accounting firm to identify who could benefit from cloud systems. This is typically done via a segmentation session, which should provide an overview of what systems clients are currently using. You may find that cost associated with assisting certain clients outweighs the benefits, particularly in terms of time. However, you will need to identify the key signs that show a client needs to tweak the way they work, eg. they are still using a desktop based accounting system.

Once you have identified the appropriate clients, you can reach out and help clients to analyse their current processes. This should flag any snagging issues or problems. As mentioned above, if they manually key in purchase invoices and receipts, you could suggest an invoice scanning systems. Or if they’re using an out of date EPOS system to log their sales, software that integrates with

their accountancy system would be beneficial. Every industry will face difference issues.

How many apps and where to find them

The key is to identify a system that works not only for a client’s industry, but for the specific client. Every business has their own idiosyncrasies that require a tailored service from their advisers. Now more than ever, you need to identify apps that work with Xero that will help your clients.

To get started on building an app stack, the first place to look is Xero HQ to see which apps your current clients use. This will help you identify which sectors and which apps to focus on. There are so many apps out there, with some being extremely niche. Your time is finite, so allocate your time wisely.

Within Xero HQ there are apps that are focused on helping you run your general practice, such as Practice Ignition (client on-boarding and re-engagement process), Boma (focused marketing) and Suitefiles (file management).

Xero HQ also offers horizontal apps that should work with a significant number of your clients. These include management information tools (such as Futrli, Fathom and Spotlight Reporting) and expense/

invoice processing tools (Expensify, and Receiptbank). You may also find in some cases that you and your client are already using the same software solution (such as AutoEntry). I recommend having a preferred horizontal solution that you can include in your client’s app stack. On top of those already mentioned, you may also want to have a debt collection tool such as Chaser. It is particularly useful during these uncertain times for small businesses.

Next we move on to vertical apps, which tend to be industry specific. If you are thinking about building app stacks, it is worth first focusing on the industries that you already specialise in. To find relevant apps, the start with the Xero app marketplace: https://www.xero. com/uk/marketplace/s/appfunctions

Google can also be a great tool for sourcing apps, but may not always identify systems best suited for small to medium sized enterprises. However, it can be a good source of information in terms of reviews and issues other users have had. The advantage of the Xero marketplace is its ability to not only showcase apps targeted at certain operational needs but also at specific industries. Have a look, find one that may be useful and reach out to relevant contacts.

Charging for your services

There are different ways of addressing your pricing structure. You may be undertaking a specific piece of work advising clients on the apps they should use. In this case, you are able to charge as you would do normally for an advisory piece of work.

Where it is an ongoing assignment, you should value the advice you are providing and bill appropriately. What is more difficult is how to frame the ongoing cost of any additional software the client takes on. You could separate out the costs on the fee note. However, bundling fees is a more common billing method for the cloud sector and this may be the way you decide to go. You should make sure that you aware of what each app will cost and when these amounts change (e.g. by usage or tiered pricing) to ensure you are making the necessary return on an ongoing basis.

A lot of the apps will offer also offer commission. You will need to decide whether you take and declare this to you clients or whether you pass it on as a discount to your clients.

This should provide a useful outline on getting started on building your own app stack for clients. Good luck!