Making connections

It is not often that professionals in the accounting sector get stopped in the street, but that is what happened to Kevin Fitzgerald, Regional Director of Asia at software platform Xero, on the day he opened the Hong Kong office earlier this year.

“I wear Xero T-shirts to work, and I got stopped on Lockhart Road in Wan Chai by a lady who asked if I worked for Xero, and if we had an office here,” he remembers. “I explained to her who I was, and she said, ‘I love Xero.’ I said, ‘Do you realize you just told me you love an accounting platform?’”

Fitzgerald got chatting to her to find out why she was so enthusiastic about the company. She told him the platform had helped her to become more efficient, enabling her business to be more successful but also giving her time back in her own life. “She did not really love Xero – she loved what Xero had allowed her to do,” he says.

The incident was not a one-off. “If you walk around Australia in a Xero T-shirt, you will have people beeping their horns on the roads and waving at you. It is really bizarre,” he says.

Kevin Fitzgerald started his career 20 years ago at accounting and advisory firm Moran and Partners as an audit manager and then worked at KPMG as audit senior in the Channel Islands

Xero is a New Zealand-based software platform that simplifies financial management for small- and medium-sized enterprises (SMEs) and accounting firms. It has 1.38 million subscribers around the world.

The platform has more than 700 different add-ons, ranging from online invoicing and bank reconciliation to real-time accounting dashboards, enabling companies to invoice faster, get paid more quickly, and gauge their financial health on a daily basis.

Fitzgerald says the online invoicing tool, which sends out automated reminders and tracks when a customer has seen an invoice as well as when they have paid it, is one of the platform’s most popular features.

When the system was first launched in Hong Kong, the average number of days it took for an invoice to be settled came down from 43 days to just 32 days.

“With online invoicing, you can send your customer an invoice with a hyperlink, so they can pay online straightaway. This is where we see cash flow become a lot less of a problem for businesses,” Fitzgerald says.

The platform also includes direct bank feeds, which enable business owners and their accountants to get real-time information on their financial position, with transactions from their bank account automatically flowing into Xero’s platform overnight. It is also currently in the process of launching an open-banking API to enable fintechs and other non-bank financial institutions to integrate with its platform with minimal development. “When you wake up the next day, all of your prior-day transactions are already in Xero. That is an incredible time-saver,” Fitzgerald says.

“Our customers are small businesses. We don’t want to charge them over-the-top prices for something they don’t need.”

He adds that this feature saves small businesses around 15 hours a month because no one has to physically enter information from bank statements into their accounting system.

As a result of this increased efficiency, Rush Hour Media, a creative web and branding agency in Hong Kong, which was introduced to Xero by accounting firm Fresh Accounting, has been able to focus more time on building its business.

“It really helped them with their invoicing and to keep track of their debts, receivables and cash flow. The business owner reckons it reduced his administration time by at least 70 percent, enabling him to focus on scaling his business,” Fitzgerald says.

“People get into small business because they are passionate about that business. They don’t go into it to do debt collection or bank reconciliations, so we try to take care of that for them.”

Unlike some of its competitors, Xero charges its customers on a per company basis, rather than a per user basis, with entry-level access to its platform costing US$20 per month, while top-level access costs US$40 per month. “Our customers are small businesses. We don’t want to charge them over-the-top prices for something they don’t need,” Fitzgerald says.

Even so, Xero still faces hurdles in getting firms on board. “The biggest challenge is getting businesses to understand the extent of the benefits that cloud technology can deliver. The term ‘cloud technology’ has been so overused that people don’t understand nor see what the real benefits are.” He adds that the platform has so many different functions, while it is also connected to an ecosystem of third-party apps, that businesses are often confused and do not know where to start. Xero tries to overcome this by offering firms a 30-day free trial to enable them to try out the different functions and pick the subscription level that is most suited to their needs. There are also no-lock in contracts, with businesses able to terminate their subscription at any time with a 30-day notice period.

Hong Kong expansion

Xero opened its Hong Kong office in March in response to demand from users of its platform. “Hong Kong is a really exciting place,” says Fitzgerald. We are seeing a huge amount of demand, and we are growing the number of accounting partners there into the hundreds. I see our office expanding quite quickly over the next six months.”

He thinks businesses in Hong Kong are well-placed to start using accounting platforms, such as Xero’s. A study carried out by the group before it opened its office in Hong Kong found that 53 percent of SMEs and accounting firms in the city were already using some kind of accounting software package, although this was typically desktop-based, and very few of them had taken the next step and moved to a cloud-based system.

“It is moving to the cloud that is generating the demand. It is something that businesses in Hong Kong find really exciting.”

“It is moving to the cloud that is generating the demand. It is something that businesses in Hong Kong find really exciting,” Fitzgerald says. “Opening the office in Hong Kong is just the start of our growth, we really want to tell everyone about our platform and get them excited about it.”

Fitzgerald is encouraged by the fact that many accounting firms are fully adopting Xero themselves.

“Our key strategy in Hong Kong is to form strong relationships with local accounting firms, both big and small, so that they will not only adopt us for their day-to-day accounting work but also recommend us to their clients. We believe in the power of positive word-of-mouth.”

With technological developments enabling many basic bookkeeping functions to be automated, Fitzgerald thinks it is important that accountants ensure they remain relevant.

“I actually feel really passionate about this and I spend a lot of time coaching junior accountants and accounting associations about the challenge the industry is facing.”

But he thinks that while the sector will be challenged by the uptake of new technology, this development gives accountants an opportunity to offer advisory services to their clients and help them to develop their businesses. “You can really only offer these advisory services if you have up-to-date rich information, and previously accountants have not had that because they were getting information from the clients three months after the fact or after the year-end,” he says.

“Now, if we are bringing  in information from the bank overnight, and the accountants are looking at it on a daily or weekly basis, they are right on top of the business, enabling them to have a rich and powerful conversation with the business owner, and that is flourishing into giving them really good advice. That is where the opportunity is.”

Fitzgerald believes technology will never completely replace accountants, as the relationship between a professional advisor and a business owner will always be important. “One of our values is ‘#human,’ and we are seeing accountants having a major influence on SMEs across the globe because they can help people understand their business better.”

But he warns that the world is changing very quickly, and accountants need to start educating themselves about how they can utilize this new technology straight away and start selling additional services to their clients. “A lot of SMEs just see the accountant as an extension of the tax man. Accountants have an opportunity, but they have to tell businesses what they are capable of doing.”

Fitzgerald said he had seen some accounting firms offer free advisory and business coaching services for six months to anyone who was interested, in order to sell these additional services.

“It was a big investment of time at the start, but once clients began to tell their friends about it, it started to grow really quickly, and then it became a chargeable service,” he says.

Accounting background

Fitzgerald believes his accounting experience has really helped him understand what small businesses need.

He started his career in Dublin in his native Ireland, nearly 20 years ago, where he worked for accounting and advisory firm Moran and Partners as an audit manager.

He adds that his first boss not only taught him accounting, but also about business. Fitzgerald likes to think he takes a similar approach to his former boss, being very consultative with clients and never assuming he knows everything about their company.

After five years, he took up a position as an audit senior at KPMG in the Channel Islands. During these early years of his career, he discovered a passion for helping people develop their businesses. “A lot of my time was spent working with SMEs and helping them understand tax requirements and compliance, but I also found I was teaching them about business – which I loved,” he says.

After a stint with Royal Bank of Canada in the Channel Islands and nearly four years as a hedge fund supervisor with International Fund Services back in Ireland, he moved into recruitment, taking a job with Robert Walters in Melbourne.

He explains that he had always enjoyed helping businesses grow and empowering his own team to achieve success, and this passion led him into recruitment. “As I had established a strong network within the accounting circle at that time, it was a natural transition for me where I could match accountant candidates with great job opportunities.” He was also keen to work in a new country. “It was a great fit for me at that point in my life,” he says.

But when, three-and-a-half years ago, he got the opportunity to join Xero starting as a territory sales manager at the group’s Australian head office in Melbourne, he jumped at it. “The role totally appealed to me because it combined my expertise as an accountant, SME advisor and recruitment – the best of all worlds.”

He became Regional Director of Asia, based in Singapore, six months ago, where he has a team of 30 people who oversee Xero’s presence in 46 different Asian countries through small businesses and accounting partners. With only 26 percent of businesses in Singapore and 17 percent in Hong Kong having so far adopted cloud-based accounting software, he thinks Asia has significant growth potential.

“I love Singapore. It is a fantastic place to live. I can really see the pathway of our business here. I could see myself staying in Asia for quite a long time to grow the business,” he says.

When he is not working, Fitzgerald is a keen footballer. “I am getting close to retiring from football, so at the moment I’m trying to play as much football as possible before my knees and hips give up. It has always been a big love of mine.

“I am also a big motorcycle fan, I used to race motorcycles and I have had heaps of them over the years. That is another big passion,” he says.

But his passion for his day job is also clear to see. “What I like most about my role is when I go to an accounting firm or an SME to tell them about Xero, and show them what the platform can do. There is literally shock and excitement as they realize on the spot how much time they could save. I love that.”

Xero Small Business Insights data showed that businesses that use connected apps had 5.5 percent more revenue growth, compared to 3.6 percent for those that do not