Xero has unveiled its 2023 State of the Industry Report, shedding light on the transformative impact of cloud-based technology in the accounting and bookkeeping sector. The report offers a comprehensive overview of business performance, industry trends, and technological adoption within the field.
Key Findings: Revenue and Profit Increases
A striking 75% of the practices surveyed reported an increase in revenue, and nearly as many (73%) noted a rise in profits over the past year. Significant drivers for this growth include an increase in client numbers, the introduction of new services, and the adoption of cloud software.
The Impact of Cloud-Based Software
The report underscores the pivotal role of cloud-based software in reshaping the accounting and bookkeeping landscape. Practices utilizing cloud technology not only saw higher profit margins (75% for cloud users vs. 54% for non-cloud users) but also experienced benefits like improved client service and enhanced workforce morale. Cloud adoption correlates with higher staff retention and more effective talent recruitment.
The Surge in Client Advisory Services (CAS)
Xero’s report also highlights the growing emphasis on Client Advisory Services (CAS), encompassing forecasting, budgeting, and financial strategy. About 41% of surveyed practices now offer CAS, with many having introduced these services within the last year. Firms providing CAS witnessed a more substantial client increase compared to those not offering these services.
Value-Based Pricing: A New Trend
Emerging trends in value-based pricing models were another focus of the report. Over 60% of surveyed practices have adopted value-based pricing for at least a quarter of their clients. These models, preferred for their simplicity and transparency, have been instrumental in boosting revenue and profitability.
Industry Optimism and Future Growth
Gustavo Suarez, founder of JPG, an online accounting and payroll service, and a respondent in the survey, emphasized the significant growth potential offered by CAS. Ben Richmond, US Country Manager at Xero, expressed optimism that the report would guide firms in identifying growth opportunities and enhancing client services.
Xero’s State of the Industry Report for 2023 paints a promising picture of the accounting and bookkeeping sector, driven by technological advancements and innovative service offerings. This comprehensive analysis serves as a testament to the industry’s adaptability and growth potential in the digital age.
Source: Small Business Trends