The Accounting Podcast

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[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.