A
United Kingdom 2018
Accounting & Bookkeeping
Industry Performance Report
See how your practice compares and where you want to get to
B
Inside cover: Max Henderson, Hotpod Yoga, London | Xero customer
Cover: Sian Kelly, Inform Accounting, Birmingham | Xero partner
1
Foreword
We’re very pleased to share with you this accounting and bookkeeping industry
performance report, the 2018 edition of Xero’s partner benchmarking study for the UK
market. This year’s report sharpens the focus on forward planning, as partners have
told us that the most valuable use of previous reports was to inform their strategic and
annual planning. We’ve also added significantly more detail on marketing and advisory
services, in line with the feedback.
We produced our first detailed benchmarking reports – for the United Kingdom, Australia,
New Zealand, and the United States – in 2016 and 2017. Over 2000 practices took part
in those studies, and now over 5000 accounting and bookkeeping firms globally have
participated in providing the rich data that lets Xero partners compare their firm with
other similar practices.
This report includes findings in two new areas.
•
It shows results for practices who’ve taken different approaches to positioning their firm
in the market (see tables 3 to 5). It’s evident that raising these questions helps practices
agree and articulate their firm’s strategy for 2018 and the following three to five years.
•
It reveals the composition of advisory services revenue and what partners are prioritising
in 2018. In the ‘what if’ scenario in table 6, we show what the 2017 results would have
been for a firm with 250 small business clients. This demonstrates the potential revenue
to be gained from advisory services.
As you read through this report, you’ll see illuminating patterns emerge – in client
management, marketing, pricing, billing, employee compensation and advisory services.
The data shows that, across the industry, practices aren’t investing much into marketing
online accounting and advisory services. This provides a real opportunity for practices to
improve their marketing and to be seen by – and win over – the high proportion of businesses
actively looking to switch advisors.
The findings in this report point to opportunities and ways for firms to achieve their 2018
goals. We’re here to help you move your practice forward and enjoy the benefits of your
efforts, so get in touch with your Xero account manager for assistance to make it happen.
Your account manager can also point you to more resources to assist your practice as we
couldn’t fit everything in here.
Please continue to share your questions and feedback with us as we plan for 2019 and
beyond. You can reach me directly by email.
Doug LaBahn, Ph.D.
doug.labahn@xero.com
Xero Practice Leadership Team
2
We love putting reports like this
together to help you plan for the
future. Thanks for reading.
Hotpod Yoga, London | Xero customer
3
List of figures
Figure 1. Sources of new clients
Figure 2. Investment in marketing
Figure 3. Growth in client numbers by age of firm
Figure 4. New clients in the last 12 months
Figure 5. Annual revenue per small business client
Figure 6. Revenue contribution per employee
Figure 7. Number of clients per employee
Figure 8. Increases in employee compensation
Figure 9. Advisory service revenue
Figure 10. Regretted client departures
Figure 11. Revenue per employee as percent of
clients on Xero grows
Figure 12. Comparison of practices with and without
advisory services
List of tables
Table 1. Role and seniority of participants
Table 2. Growth in size and revenue over time
Table 3. Practice approaches
Table 4. Billing options
Table 5. Results for practices taking different approaches
Table 6. Contribution of advisory services to revenue
Table 7. Most attractive areas for firm revenue growth
Table 8. Comparison of different size firms
Table 9. Profile of sole practitioners
Table 10. Profile of small firms
Table 11. Profile of midsize firms
Table 12. Profile of large firms
Table 13. Profile of very large firms
Contents
Highlights ........................................................................................................................... 4
Participant profiles ............................................................................................................ 6
Insights to help your 2018 planning .................................................................................. 7
Marketing, performance and growth .................................................................................. 8
Client metrics for online practices ..................................................................................... 14
Advisory services opportunities ........................................................................................ 21
Ingredients for success ...................................................................................................... 24
Different size firms: a close-up look .................................................................................. 27
How we can help ................................................................................................................ 38
These stats are based on an online survey we did of 939 UK accounting and bookkeeping partners. We aim
to be as clear and concise as possible with this info, but we can’t promise that it’s free of rounding or other
errors. The info and commentary in this report is just a guide and should not be taken as taxation, financial
or legal advice – you should always check with an independent expert that what you’re doing is right for you
and your practice.
4
Results across all practices
Highlights
Average revenue growth rate for Xero accounting and bookkeeping practices
in Singapore in the 12 months to December 2017*
Average annual billing per small business client**
Average revenue per employee including contractors
* 139 Singapore accounting and bookkeeping practices in December 2017.
** Small businesses are defined as businesses with up to 100 employees.
£124,600
12.3%
£91,200
Results across all practices*
Highlights
Averag r venue growth for practices in the UK i the 12 months to De mber 2017*
Average revenue per mployee including contractors
advisory s rvice rev nue
* 939 UK accounting and bookkeeping firms in December 2017
5
£382,700
14%
£113,200
Results for pacesetting practices*
Average revenue growth for practices in UK in the 12 months to December 2017*
Average revenue per employee including contractors
Average advisory service revenue
* Pacesetting firms are the practices with the largest number of clients (300+) using online
accounting software. These firms grew rapidly with 14% revenue growth and more than
triple the advisory revenue.
6
Participant profiles
Definitions
TYPES OF FIRMS
For the purposes of this study, we defined:
•
sole practitioners as having no employees other than the owner
•
small firms as having 2 to 9 employees including the owner
• midsize firms as having 10 to 19 employees including partners
•
large firms as having 20 to 49 employees including partners
•
very large firms as having 50 or more employees including partners
Where there were instances of only a few responses, we’ve omitted the results
from this report.
SMALL BUSINESSES/SMBS
When we talk about small businesses or SMBs, we mean those with up to 20 employees.
Participants’ role in their firm
This table shows the role and seniority of the 939 survey participants in their accounting firm.
By and large, they hold senior positions in their firm.
Number of
participants
Owner/
Managing
partner/
Partner/CEO
Practice manager
/team leader
Accountant or
bookkeeper
Not
disclosed
Total
Not disclosed
396
0%
0%
0%
100%
100%
Sole
practitioners
101
100%
0%
0%
0%
100%
Small firms
241
93%
5%
3%
0%
100%
Midsize firms
78
78%
19%
3%
0%
100%
Large firms
65
55%
40%
3%
2%
100%
Very large firms
58
45%
43%
9%
3%
100%
Average

47%
8%
2%
42%
100%
Table 1. Role and seniority of participants
7
Insights to
help your
2018 planning
“ Last year we turned over seven
million. That was about three-
and-a-half million four years
ago. So it's 25% growth year on
year, for four years running.”
• Malcolm Pope, Shorts Chartered Accountants
“ We're doing a lot of our work more cost-effectively.
We're making better recovery on our jobs, we're not
carrying so much work in progress, we're doing the
jobs faster. All those good things are happening.
We’re in double figures for growth, percentage-wise.”
• Olly Evans, Evans & Partners
8
Other
3%
49%
18%
30%
Switched from
another firm
Were doing it
on their own
New business
startups
Marketing,
performance
and growth
This page shows the sources of new clients for firms in 2017. The high percentage of clients
switching accountants reflects the migration we’re seeing as SMBs move to firms with larger
cloud practices – which are also the ones that have much higher client retention rates.
We were surprised by the sheer number of businesses (estimated to be around 224,000)
switching accountants in 2017. This is a large market for Xero partners, who can show small
businesses that moving to cloud services provides them with far better value by boosting
collaboration and increasing ease of use, while removing the cost, hassle and complexity of
older methods for doing accounting.
Sources of new clients
Small businesses seeking to hire new advisors were the largest source of new clients.
This was followed by new business startups – who are often confused by the compliance
terms and regulations they face during their first year as a business.
Figure 1. Sources of new clients
“ Xero helps so much with taking
away those worries. As a startup,
we found Xero was really good
for not having to think about
expensive hardware and all that
kind of stuff. It’s in the cloud, it’s
all maintained and looked after for
us. It’s an easy decision to make.”
• Jonathan Bareham, Raedan
9
Investment in marketing
Most firms – except for the larger ones, which generally have staff dedicated to marketing
and client development activities – are reluctant to invest in marketing.
Figure 2. Average investment in marketing in the past 12 months
“ A lot of accountants have got their
head in the sand - we think we’re
marketing the right way but really
we’re not, and there’s loads
of different things that we could
be doing.”
• Sian Lloyd, Lewis Ballard
“ In terms of marketing, it’s all about
education. Educating clients about
the unique selling points of Xero
to say ‘Look, this is what Xero can
do for you. This is how we can add
value to your business if you use
Xero.’”
• Daniel Lowndes, Mitten Clarke
Average marketing investment in last 12 months0
£20,000
£40,000
£60,000
£80,000
Large
firms
Very large
firms
Midsize
firms
Small
firms
Sole
practitioner
10
201720162015201420132010-122005-092000-041990-991970-891950-691930-49Before 19301500
1200
900
600
300
0
Number of small business clients Year the firm was formed
All firms
Best group: top 15% in each age cohort
Growth in client numbers by age of firm
This graph compares the average number of small business clients of all respondents with
that of the best group – the top 15% of each cohort. So, in effect, it shows the growth curve
for average and for top practices in the UK over time.
Figure 3. Growth in small business client numbers by age of firm
11
Growth in size and revenue over time
These figures can help you set revenue, staff and client goals for 2018 by knowing what the
top and average firms have achieved.
All respondents
Best group*
Year the
firm was
formed
No. of
firms
No. of
business
clients
New
clients
in last 12
months
Firm
revenue
in last 12
months
Average
no. of
employees
% of
regretted
staff
departures
No. of
business
clients
Firm
revenue
in last 12
months
No. of
employees
2017
32
26
11
£113,273
2.1
1.3%
114
£252,850
3.0
2016
22
46
20
£739,193
5.6
3.0%
143
£1,147,000
19.5
2015
33
79
20
£577,091
7.6
4.6%
270
£2,514,050
35.4
2014
32
55
16
£176,828
3.8
7.7%
200
£414,750
7.8
2013
43
96
27
£321,663
5.3
6.2%
383
£916,542
13.7
2010-2012
67
127
25
£321,129
6.2
3.7%
350
£749,400
17.0
2005-2009
72
223
28
£724,011
8.8
3.5%
740
£1,130,250
15.4
2000-2004
50
252
25
£764,578
12.5
3.7%
887 £2,648,438
46.3
1990-1999
56
318
39
£1,139,924
20.0
2.1%
844
£3,218,750
51.3
1970-1989
58
505
40
£1,707,649
31.4
1.6%
1,393
£4,703,125
69.4
1950-1969
12
737
48
£3,595,667
42.5
1.8%
1,500
£2,333,333
48.3
1930-1949
19
705
57 £3,268,289
59.0
2.4%
1,500 £8,250,000
108.3
Before
1930
45
832
69
£6,591,706
78.4
1.9%
1,500 £16,321,429
125.0
Average
285
32
£1,359,210
19.5
3.4%
745 £3,385,485
41.7
* Top 15% in each age cohort
Table 2. Growth in size and revenue over time
12
Practice performance based on approach
PRACTICE APPROACHES
We asked participants to select the best fit for their practice from the options below,
then looked at the performance of practices with each approach.
Approach
Description
Specialised surgeon
Our firm provides the highest level of expertise in a select number
of important areas. We deliver exceptional service in a few areas.
Urgent care centre
Our firm provides high quality service when businesses get stuck,
or are in too deep and need fast, smart resolution of their issues.
WeWork shared community, talent, team
Our firm provides services as if we are employees or members of
their team with all the experience and benefits (and without the
high costs and effort) of hiring full-time employees.
Business mentor/counsellor
Our firm provides the wise, experienced advice and counselling
that helps businesses navigate the best path forward for their
business – both now and far into the future.
All-inclusive ‘Amazon’ shopping centre
Our firm provides a full set of services that cover virtually every
business need.
Fast and effective service centre
Our firm provides great value and service to businesses that want
to get the job done quickly and economically.
Personal fitness trainer/coach
Our firm provides regimentation that helps businesses and
business owners excel at work and in life.
Tech-loving accountants
Our firm is filled with qualified accountants who are also tech
geeks or front-runners.
Holistic health centre
Our firm provides great accounting (fitness) and holistic business
coaching services (nutrition and lifestyle).
Table 3. Practice approaches
BILLING OPTIONS
We also asked participants about the different ways they billed clients and what proportion
of clients they billed by each method. The options were:
Billing option
Description
Service plan
Clients are on a fixed-fee monthly or quarterly service plan and the agreed rate
is automatically collected.
Service plan
plus projects
Clients are on both a monthly service plan and they expect to pay for additional project work.
Bill by project
Clients are quoted a fixed amount for the service (eg, tax return, general ledger setup) and
billed when the work is complete.
Bill for time
Clients are billed for the number of hours (and partial hours) of service provided.
Table 4. Billing options

13
RESULTS FOR PRACTICES TAKING DIFFERENT APPROACHES
See how practices taking different approaches performed on average and the billing options
used to support each strategy.
% of clients on each billing option*
Best fit for the
practice
Annual
revenue
per
client
Revenue
growth
in last 12
months
Popularity
of the
approach
No. of
small
business
clients
Service
plan
Service
plan plus
projects
Bill by
project
Bill
for
time
% of
employees
required to
complete
timesheets
Specialised surgeon
£4,980
13.7%
10%
292
25%
20%
27%
28%
57%
Urgent care centre
£4,190
11.6%
2%
75
16%
5%
26%
53%
46%
WeWork shared
community, talent,
team
£3,320
14.5%
14%
99
26%
23%
20%
31%
47%
Business mentor/
counsellor
£2,880
13.5%
21%
308
27%
17%
29%
26%
62%
All-inclusive ‘Amazon’
shopping centre
£2,570
10.1%
31%
398
27%
17%
34%
20%
65%
Fast and effective
service centre
£2,420
13.3%
8%
227
25%
18%
24%
33%
47%
Personal fitness
trainer/coach
£2,280
16.7%
3%
249
23%
26%
24%
27%
55%
Tech-loving
accountants
£2,120
17.3%
5%
237
33%
9%
32%
26%
43%
Holistic health
centre
£2,060
15.8%
6%
191
43%
24%
21%
13%
52%
Average
£2,930
13.0%
283
28%
18%
28%
25%
57%
Table 5. How practices performed by approach
Partners often ask us what small businesses are seeking in an advisor when they search for
an accountant or bookkeeper. These results show that practices that provide specialised
services and urgent care are realising the highest annual revenue per client (£4,980 and
£4,190), by offering expertise in solving challenging business problems.
However, these firms are in the middle of the pack in terms of growth. The approaches with
the highest growth rates are personal trainer/coach, tech-loving and holistic coaching.
These approaches match mentoring, coaching, and technological savviness with competitive
billing rates. They also have the most clients on a service plan or a service plan augmented
by charges for specific projects. Partners taking a ‘WeWork’ approach show a positive
combination of good growth and average annual revenue per client.
It’s clear that firms can achieve success pursuing different approaches. We encourage
practices to align their pricing and employee time-keeping strategies to support the
approach they determine is best for them.
* Some respondents use billing methods other than the four shown in table 5, which is why the percentages don’t
add up to the full 100%.
14
Client metrics for
online practices
New clients in the last 12 months
Firms with larger numbers of online accounting clients are onboarding more new clients
The factors that contribute to their success are the lower rates at which they’re able to offer
their services, and being tech savvy.
0
20
40
60
80
100
Average new clients in the last 12 months
Number of online clients100–299
300+
36–99
6–35
0–5
Figure 4. Average number of new clients in the last 12 months
“For me, the most gratifying thing
is the new work that’s coming in
purely as a result of offering Xero
to clients.”
• Paul Lodder, Sagars
“ Going from desktop stuff and
paperwork, and time sheets and all
that nonsense, and moving over to
Xero has just completely changed
how accountants work. Xero has
modernised how we do things,
and it’s moved with the times.”
• Alex Falcon-Huerta, Soaring Falcon Accountancy
Several findings, including regretted client
departures (figure 10) and practice approaches
(table 5), suggest businesses are placing a
priority on technological know-how when
choosing a new accountant or bookkeeper.
15
£0
£1,000
£2,000
£3,000
£4,000
Number of online clientsAverage annual revenue per small business client
300+
100–299
36–99
6–35
0-5
Annual revenue per small business client
With the exception of practices with only a few online clients, the prices firms charged were
consistent across practices. And, while those firms with fewer online clients charged higher
rates – in part to offset higher labour costs – they also experienced dramatically higher rates
of client departures (see figure 10). Evidently, price-based market forces are making it more
difficult for them.
Figure 5. Average annual revenue per small business client
Revenue contribution per employee
A substantial increase in revenue per employee is achieved as the number of online clients
increases, which can be attributed to greater employee efficiency (figure 7) and higher
advisory service revenue (figure 9).
£0
£30,000
£60,000
£90,000
£120,000
Average revenue contribution per employee
Number of online clients300+
100–299
36–99
6–35
0-5
Figure 6. Average revenue contribution per employee
16
0
10
20
30
Average number of clients per employee
Number of online clients300+
100–299
36–99
6–35
0-5
Number of clients per employee
There is a substantial increase in the ability of accountants to serve clients efficiently as the
number of online clients increases.
Figure 7. Average number of clients per employee
Increases in employee compensation
Employee compensation increases as the number of online clients grows, illustrating how the
benefits of greater revenue per employee flow on to staff. It also shows the risks to employee
compensation in firms that are slow to move their clients online.
0%
2%
4%
6%
Number of online clients
Average employee compensation increase100–299
300+
36–99
6–35
0–5
Figure 8. Average employee compensation increase in the latest review cycle in 2017 (excludes partners)
17
Advisory service revenue
As advisors get closer to their clients due to the use of online accounting, numerous
opportunities for advisory services become apparent, and they’re easier to sell and simpler
to deliver. The jump shown for partners with 300 or more clients is noticeable and suggests
that the scale of the online practice facilitates the uptake and delivery of advisory services.
£0
£400,000
£300,000
£200,000
£100,000
Number of online clients
Average advisory service revenue100–299
300+
36–99
6–35
0–5
Figure 9. Average advisory service revenue in the last 12 months
“ Xero moves you more to a trusted
advisor role, where clients use their
accountant for accountancy, but also
for business software, for business
software support, for talking about
KPIs.”
• Nathan Keeley, MHA Carpenter Box
“ This year we’re hoping to hit about
75% growth. But we're getting that
out of what’s still a really small team.
Xero has allowed us, in a way, to
punch above our weight from day
one because we've been able to
streamline so much. We can focus
on doing more interesting things
that make us look like a bigger
firm than we are.”
• Jonathan Bareham, Raedan
18
Regretted client departures
Practices with fewer numbers of online accounting clients have high rates of regretted client
departures. Their ability to retain desirable clients is much weaker than for practices with
larger numbers of online clients. This is one of several indicators that we see of clients
moving to firms adept at using technology and away from firms who are less tech savvy.
One of these indicators is the number of new clients who switched to a Xero partner from
another firm (see figure 1).
Figure 9. Average number of regretted client departures in the last 12 months
0%
2%
4%
6%
8%
10%
Regretted client departures
Number of online clients300+
100–299
36–99
6–35
0-5
Figure 10. Regretted client departures in the last 12 months as a percentage of total clients
“ I think that there will be firms out there
who are scared of the change. But my
view is, it's happening, and it’s going to
keep happening. And the danger is,
if you don’t move to the cloud, you will
ultimately lose clients. You may have
great relationships with them, but they'll
become more and more aware of Xero
and the apps. And if you can't deliver,
you risk losing them to someone who
can.”
• Paul Lodder, Sagars
19
Figure 9. Average number of regretted client departures in the last 12 months
£0
£30,000
£60,000
£90,000
£120,000
Average revenue per employee
% of clients on Xero98-100
60–79
80–97
10–39
40–59
1–9
None
Revenue per employee as percent of clients on Xero grows
Practices that reported that 80% or more of their clients are on Xero are also reporting
higher revenue per employee.
Figure 11. Average revenue per employee as the percent of clients on Xero increases
“ Last year we grew our client base
significantly. That surely has to be
attributable, at least in good part, to
what we’re doing with Xero and how
we’re working.”
• Neil Stevens, Bromhead Chartered Accountants
20
Will Farnell, Farnell Clarke, Norwich | Xero partner
21
£0
£2,000
£4,000
£6,000
£8,000
Average revenue per clientCompliance-only
practices
Compliance +
advisory practices
£4,200
£3,440
£3,550
Advisor services revenue
Compliance revenue
Advisory services
opportunities
This section explores the 2017 revenue of Xero partners. Here we aim to provide clarity
on the often debated notion of what advisory services encompass and to assist your
2018 planning.
Comparison of practices with and without advisory revenue
Practices that offer advisory services reported higher overall revenue per client, but lower
compliance revenue. When we asked partners for details, they explained that there’s a shift
to charging clients separately for advisory services, instead of simply giving these services
away to justify higher compliance billing.
Figure 12. Comparison of average revenue per client for practices with and without advisory services
22
Contribution of advisory services to revenue
We’ve extrapolated the revenue reported by participants to show the contribution of nine
different advisory services to 2017 revenue and how this would look for a firm with 250
clients.
Service
Share of
advisory
revenue
What revenue would
look like for a firm
with 250 clients
Advisory services, eg, budgeting, cash flow forecasting,
business planning
29%
£259,000
Virtual or outsourced CFO services
16%
£143,000
Startup mentoring, advice, and networking or assistance with business
development
12%
£110,000
Capital-raising/assistance moving to better interest, terms or
financing options
11%
£95,000
Succession planning services
10%
£92,000
App/software (other than accounting) setup, configuration
and support services
7%
£65,000
Business performance benchmarking
6%
£53,000
For-fee implementations of accounting software for businesses that are
unlikely to become long-term clients
5%
£40,000
HR advisory services, eg, assistance setting employee compensation,
planning to add/reduce employees
3%
£30,000
Total
£887,000
Table 6. Contribution of advisory services to revenue
23
Most attractive areas for firm revenue growth
This table shows the areas rated most attractive for advisory services revenue growth
in 2018.
The top opportunity is commonly known as ‘compliance plus services’. The second service
– app/software setup, configuration and support – is showing great promise for firms as an
important differentiator, something that small businesses are looking for, and a potentially
large advisory revenue opportunity. It’s also the one we’ll be watching in 2018
to see how quickly it becomes a large service line for Xero partners.
The third area – startup mentoring – reflects the importance of this large source of new
clients (see figure 1).
Service
Rated as
the top
service
Rated as one
of the top
three
Rated as
one of the
top five
Advisory services, eg, budgeting, cash flow forecasting, business planning
57%
92%
98%
App/software (other than accounting) setup, configuration and support services
12%
51%
69%
Startup mentoring, advice, and networking or assistance with
business development
11%
60%
84%
Virtual or outsourced CFO services
9%
51%
72%
For-fee implementations of accounting software for businesses that are
unlikely to become long-term clients
5%
30%
48%
Business performance benchmarking
3%
38%
68%
Succession planning services
2%
29%
47%
Capital-raising/assistance moving to better interest, terms or financing options
1%
30%
57%
HR advisory services, eg, assistance setting employee compensation,
planning to add/reduce employees
1%
22%
32%
Table 7. Most attractive areas for firm revenue growth
“When we started working with Xero
clients, we realised that they didn’t
expect us to just engage with them
once a year. They would come to us
with a lot of questions. So we’re doing a
lot more day-to-day support, and we’re
turning that into a service as well.”
• Olly Evans, Evans & Partners
24
Ingredients
for success
The survey results suggest four factors that lead to positive
outcomes and higher growth for accounting firms.
Firms that have larger
numbers of online
accounting clients grow
faster and have an
easier time signing on
new clients.
“We’re winning clients.
They’re coming to us,
because we proactively
tell them about Xero.
Pretty much all of our
sales staff would say that
their conversion rates have
gone up because they can
speak about Xero and it’s
an easy win.”
• Andrew Perrett, Taylorcocks
Firms that provide
advisory services earn
considerably more
revenue per client than
firms that offer only
compliance.
“Xero is an opportunity to
bring in new work, bring
in new opportunities,
and develop the advisory
side more.”
• Paul Lodder, Sagars
25
Firms that serve a
larger number of online
accounting clients
generate significantly
more revenue per
employee.
“A job that might have taken
us three days to do, we can
now do in a day. That means
we can leverage our staff and
get more clients in, without
bringing in more staff.”
• Neil Stevens, Bromhead Chartered Accountants
Firms with the largest
numbers of online
accounting clients
have the lowest rates
of regretted client
departures.
“Clients haven’t looked
back. They’ve loved online
accounting. I think selling it
to clients has been one of the
easiest parts, really. Xero sells
itself. And it’s really adaptable,
versatile. We’ve got lots of
different kinds of businesses
on it, using all the features.”
• Sam Howells, Lewis Ballard
26
Jon Dudgeon, Blu Sky Chartered Accountants, North Shields | Xero partner
27
Different size firms:
a close-up look
In this section, we profile different size firms, from sole practitioners to very large firms,
as measured by the number of employees and contractors they employ.
Comparison of different size firms
This table compares firms of different sizes, allowing you to see things like how your
practice’s operations, marketing and performance stack up against those of your peers.
Practice size
No. of
respondents
Revenue
growth in
the last 12
months
No. of smaller
businesses*
served in
the last 12
months
% of
clients
already
using
online
accounting
No. of new
clients in
the last 12
months
Firm
revenue in
the last 12
months
Sole
practitioners
101
10.9%
33
65%
9
£152,689
Small firms
241
16.1%
124
62%
21
£371,722
Midsize firms
78
9.5%
387
43%
42
£847,709
Large firms
65
9.5%
546
36%
52
£1,972,504
Very large firms
58
9.6%
1,006
29%
82
£8,226,425
Average
12.7%
288
53%
32
£1,417,457
* Businesses with up to 20 employees
Table 8. Averages for different size accounting firms
28
Firms by number of business
clients using online accounting
0-5
6-35
36-99
Practice profile
Number of firms participating
37
54
6
Revenue growth in the last 12 months
6.5%
14.4%
6.5%
Annual revenue per small business client
£4,377
£2,453
£3,183
% of business clients using online accounting today
55%
69%
75%
Number of small business clients served in the last 12 months
8
30
75
People performance and management
Revenue per employee including contractors
£78,000
£106,000
£283,000
Number of small business clients per employee
8
30
75
Employees required to complete timesheets for any purpose
11%
32%
33%
Employees required to complete timesheets for billing clients
17%
29%
33%
Number of clients talked to or chatted with online on a typical day
2.1
2.6
3.3
Practices actively looking to add staff
30%
35%
30%
Clients and marketing
Number of new clients in the last 12 months
3
11
13
Regretted client departures in the last 12 months (as a % of all clients)
9.8%
2.8%
2.3%
Marketing investment or spend in the last 12 months
£400
£1,100
£2,300
Advisory revenue in the last 12 months (for all types of advisory)
£28,000
£49,000
£57,000
Pricing and billing (% of clients)
Bill for the number of hours (and partial hours) of service provided
34%
39%
49%
Quote a fixed amount for a service and bill when the work is complete
37%
20%
33%
Fixed-fee monthly or quarterly service plan and automatic payment
15%
25%
15%
Monthly service plan and clients pay for additional project work
14%
15%
3%
Another method of billing
0%
0%
0%
Profile of sole practitioners
This table profiles sole practitioners according to their number of online business clients.
It shows averages for the firms in each group
29
Firms by number of business
clients using online accounting
0-5
6-35
36-99
Approach/positioning in the marketplace
WeWork shared community, talent, team
22%
21%
33%
Business mentor/counsellor
19%
19%
17%
Fast and effective service centre
19%
15%
17%
All-inclusive ‘Amazon’ shopping centre
16%
13%
17%
Specialised surgeon
13%
8%
17%
Holistic health centre
6%
8%
0%
Tech-loving accountants
3%
10%
0%
Urgent care centre
3%
6%
0%
Personal fitness trainer/coach
0%
0%
0%
Services offered
Bookkeeping
92%
93%
100%
Payroll
73%
87%
100%
Accounting
68%
65%
100%
Tax preparation
54%
65%
100%
Advisory services, eg, budgeting, cash flow forecasting,
business planning
41%
57%
83%
Accounts receivable/control
38%
41%
17%
App/software (other than accounting) setup, configuration and
support services
19%
35%
17%
Audit
3%
0%
0%
Table 9. Profile of sole practitioners
30
Profile of small firms
This table profiles small firms (those with 2 to 9 employees including the owner) according to
their number of online business clients. It shows averages for the firms in each group.
Firms by number of business clients
using online accounting
0-5
6-35
36-99
100-299
Practice profile
Number of firms participating
23
110
50
54
Number of employees including contractors
3.5
4.4
5.0
6.3
Revenue growth in the last 12 months
14.8%
14.8%
17.2%
17.5%
Annual revenue per small business client
£4,337
£2,407
£3,084
£2,469
Business clients using online accounting today
50%
55%
70%
70%
Number of small business clients served in the
last 12 months
14
97
109
227
People performance and management
Revenue per employee including contractors
£41,500
£50,000
£95,000
£110,000
Number of small business clients per employee
4
22
25
44
Increase in employee compensation in most recent
cycle, excl. partners
3.6%
2.6%
4.3%
4.9%
Regretted staff departures in the last 12 months
(as a % of all employees)
4.3%
4.5%
8.7%
8.6%
Employees required to complete timesheets for
any purpose
42%
51%
48%
47%
Employees required to complete timesheets for
billing clients
43%
48%
43%
33%
Number of clients talked to or chatted with online on a
typical day
2
3
3.9
5
Practices actively looking to add staff
49%
67%
69%
81%
Clients and marketing
Number of new clients in the last 12 months
5
15
23
37
New clients per employee
1.4
3.8
5.1
6.5
Regretted client departures in the last 12 months
(as a % of all clients)
7.1%
4.3%
2.7%
1.5%
Marketing investment or spend in the last 12 months
£1,600
£1,800
£2,900
£4,400
Advisory revenue in the last 12 months
(for all types of advisory)
£69,000
£80,000
£88,000
£122,000
31
Firms by number of business clients
using online accounting
0-5
6-35
36-99
100-299
Pricing and billing (% of clients)
Bill for the number of hours (and partial hours) of
service provided
21%
27%
15%
8%
Quote a fixed amount for a service and bill when the
work is complete
16%
30%
23%
27%
Fixed-fee monthly or quarterly service plan and
automatic payment
31%
30%
41%
33%
Monthly service plan and clients pay for additional
project work
31%
13%
20%
32%
Another method of billing
2%
0%
1%
1%
Approach/positioning in the marketplace
All-inclusive ‘Amazon’ shopping centre
17%
25%
23%
33%
Business mentor/counsellor
13%
19%
26%
20%
WeWork shared community, talent, team
30%
16%
15%
12%
Specialised surgeon
22%
10%
6%
12%
Fast and effective service centre
13%
7%
4%
8%
Holistic health centre
0%
10%
13%
8%
Tech-loving accountants
4%
6%
6%
4%
Personal fitness trainer/coach
0%
8%
4%
2%
Urgent care centre
0%
1%
2%
0%
Services offered
Bookkeeping
96%
95%
96%
100%
Payroll
83%
94%
100%
98%
Accounting
74%
87%
92%
96%
Advisory services, eg, budgeting, cash flow forecasting,
business planning
74%
86%
80%
96%
Tax preparation
65%
82%
92%
93%
App/software (other than accounting) setup,
configuration and support services
43%
37%
48%
61%
Accounts receivable/control
48%
44%
34%
31%
Audit
4%
15%
12%
11%
Table 10. Profile of small firms
32
Profile of midsize firms
This table profiles midsize firms (those with 10 to 19 employees including the partners)
according to their number of online business clients. It shows averages for the firms
in each group.
.
Firms by number of business clients
using online accounting
6-35
36-99
100-299
300+
Practice profile
Number of firms participating
17
15
36
9
Number of employees including contractors
15
15
15
15
Revenue growth in the last 12 months
2.6%
8.8%
11.9%
15.8%
Annual revenue per small business client
£1,559
£3,133
£1,972
£1,325
Business clients using online accounting today
14%
41%
50%
75%
Number of small business clients served in the last
12 months
275
325
398
655
People performance and management
Revenue per employee including contractors
£61,000
£76,000
£73,000
£80,000
Number of small business clients per employee
23.0
27.0
33.0
55.0
Increase in employee compensation in most recent
cycle, excl. partners
3.1%
2.8%
4.9%
4.2%
Regretted staff departures in the last 12 months
(as a % of total employees)
5.9%
11.1%
6.5%
7.4%
Employees required to complete timesheets for
any purpose
82%
77%
78%
64%
Employees required to complete timesheets for
billing clients
79%
69%
70%
59%
Number of clients talked to or chatted with online on a
typical day
3.4
3.5
4.5
6.3
Practices actively looking to add staff
59%
64%
87%
89%
Clients and marketing
Number of new clients in the last 12 months
26
26
48
75
New clients per employee
1.7
1.7
3.2
5.0
Regretted client departures in the last 12 months
(as a % of all clients)
2.4%
2.9%
1.9%
1.7%
Marketing investment or spend in the last 12 months
£5,200
£6,600
£10,600
£9,300
Advisory revenue in the last 12 months
(for all types of advisory)
£124,000
£163,000
£177,000
£195,000
33
Firms by number of business clients
using online accounting
6-35
36-99
100-299
300+
Pricing and billing (% of clients)
Bill for the number of hours (and partial hours)
of service provided
44%
26%
16%
18%
Quote a fixed amount for a service and bill when the
work is complete
32%
20%
25%
21%
Fixed-fee monthly or quarterly service plan and
automatic payment
19%
24%
35%
33%
Monthly service plan and clients pay for additional
project work
5%
23%
24%
28%
Another method of billing
0%
7%
0%
1%
Approach/positioning in the marketplace
All-inclusive ‘Amazon’ shopping centre
53%
29%
33%
25%
Business mentor/counsellor
13%
36%
31%
0%
Specialised surgeon
7%
14%
3%
13%
Fast and effective service centre
7%
7%
8%
13%
WeWork shared community, talent, team
20%
7%
6%
0%
Tech-loving accountants
0%
0%
6%
25%
Holistic health centre
0%
7%
8%
13%
Urgent care centre
0%
0%
0%
13%
Personal fitness trainer/coach
0%
0%
6%
0%
Services offered
Accounting
100%
100%
100%
100%
Payroll
100%
100%
97%
100%
Bookkeeping
100%
93%
100%
100%
Tax preparation
100%
100%
100%
89%
Advisory services, eg, budgeting, cash flow forecasting,
business planning
100%
93%
94%
89%
Audit
76%
53%
50%
22%
App/software (other than accounting) setup,
configuration and support services
29%
33%
53%
22%
Accounts receivable/control
24%
27%
33%
44%
Table 11. Profile of midsize firms
34
Profile of large firms
This table profiles large firms (those with 20 to 49 employees including the partners)
according to their number of online business clients. It shows averages for the firms
in each group.
Firms by number of business clients
using online accounting
6-35
36-99
100-299
300+
Practice profile
Number of firms participating
17
15
36
9
Number of employees including contractors
35
35
35
35
Revenue growth in the last 12 months
2.6%
8.8%
11.9%
15.8%
Annual revenue per small business client
£6,400
£4,206
£2,035
£3,019
Business clients using online accounting today
14%
41%
50%
75%
Number of small business clients served in the
ast 12 months
275
325
398
655
People performance and management
Revenue per employee including contractors
£75,000
£93,000
£51,000
£84,000
Number of small business clients per employee
11
21
16
30
Increase in employee compensation in most recent
cycle, excl. partners
2.9%
2.7%
2.5%
5.8%
Regretted staff departures in the last 12 months
(as a % of total employees)
3.6%
5.9%
5.4%
4.4%
Employees required to complete timesheets for
any purpose
87%
85%
92%
53%
Employees required to complete timesheets for
billing clients
88%
84%
92%
48%
Number of clients talked to or chatted with online
on a typical day
2.6
4.2
3.4
6.3
Practices actively looking to add staff
98%
89%
85%
97%
Clients and marketing
Number of new clients in the last 12 months
43
52
44
74
New clients per employee
1.2
1.5
1.3
2.1
Regretted client departures in the last 12 months
(as a % of all clients)
2.2%
2.3%
1.9%
1.8%
Marketing investment or spend in the last 12 months
£11,100
£16,400
£16,900
£21,400
Advisory revenue in the last 12 months
(for all types of advisory)
£74,000
£227,000
£165,000
£387,000
35
Firms by number of business clients
using online accounting
6-35
36-99
100-299
300+
Pricing and billing (% of clients)
Bill for the number of hours (and partial hours) of
service provided
26%
39%
23%
11%
Quote a fixed amount for a service and bill when the
work is complete
48%
33%
40%
28%
Fixed-fee monthly or quarterly service plan and
automatic payment
17%
12%
19%
33%
Monthly service plan and clients pay for additional
project work
10%
16%
17%
26%
Another method of billing
0%
1%
1%
2%
Approach/positioning in the marketplace
All-inclusive ‘Amazon’ shopping centre
40%
53%
57%
45%
Business mentor/counsellor
50%
24%
13%
27%
WeWork shared community, talent, team
10%
18%
4%
0%
Tech-loving accountants
0%
0%
0%
18%
Fast and effective service centre
0%
0%
9%
9%
Specialised surgeon
0%
0%
13%
0%
Personal fitness trainer/coach
0%
6%
4%
0%
Holistic health centre
0%
0%
0%
0%
Urgent care centre
0%
0%
0%
0%
Services offered
Payroll
100%
100%
100%
100%
Bookkeeping
100%
100%
96%
100%
Accounting
90%
94%
100%
100%
Tax preparation
90%
94%
100%
100%
Advisory services, eg, budgeting, cash flow forecasting,
business planning
90%
94%
96%
100%
Audit
80%
88%
88%
54%
App/software (other than accounting) setup,
configuration and support services
50%
41%
46%
62%
Accounts receivable/control
50%
41%
17%
31%
Table 12. Profile of large firms
36
Profile of very large firms
This table profiles very large firms (those with 50 or more employees including the partners)
according to their number of online business clients. It shows averages for the firms in
each group.
Firms by number of business clients
using online accounting
6-35
36-99
100-299
300+
Practice profile
Number of firms participating
6
6
26
19
Number of employees including contractors
92
100
108
101
Revenue growth in the last 12 months
8%
11%
10.7%
8.4%
Annual revenue per small business client
£7,292
£1,542
£5,148
£3,987
Business clients using online accounting today
10%
17%
25%
43%
Number of small business clients served in the last
12 months
350
650
1038
1282
People performance and management
Revenue per employee including contractors
£75,000
£54,000
£99,000
£106,000
Number of small business clients per employee
5
9
12
16
Increase in employee compensation in most recent
cycle, excl. partners
3.5%
2%
3.5%
3.6%
Regretted staff departures in the last 12 months
(as a % of total employees)
4.9%
4.9%
6.8%
6.9%
Employees required to complete timesheets for
any purpose
81%
96%
90%
95%
Employees required to complete timesheets for
billing clients
83%
86%
81%
93%
Number of clients talked to or chatted with online
on a typical day
2.5
2.3
5.2
4.7
Practices actively looking to add staff
93%
83%
99%
89%
Clients and marketing
Number of new clients in the last 12 months
52
62
84
96
New clients per employee
0.6
0.7
0.8
1.0
Regretted client departures in the last 12 months
(as a % of all clients)
3%
1.9%
1.8%
1.8%
Marketing investment or spend in the last 12 months
£66,200
£61,500
£81,000
£74,800
Advisory revenue in the last 12 months
(for all types of advisory)
£575,000
£247,000
£667,000
£591,000
37
Firms by number of business clients
using online accounting
6-35
36-99
100-299
300+
Pricing and billing (% of clients)
Bill for the number of hours (and partial hours)
of service provided
34%
22%
30%
36%
Quote a fixed amount for a service and bill when the
work is complete
37%
48%
42%
32%
Fixed-fee monthly or quarterly service plan and
automatic payment
5%
11%
13%
15%
Monthly service plan and clients pay for additional
project work
23%
19%
9%
17%
Another method of billing
2%
0%
6%
0%
Approach/positioning in the marketplace
All-inclusive ‘Amazon’ shopping centre
80%
67%
48%
41%
Business mentor/counsellor
20%
17%
20%
35%
Specialised surgeon
0%
17%
16%
24%
Tech-loving accountants
0%
0%
4%
0%
WeWork shared community, talent, team
0%
0%
4%
0%
Holistic health centre
0%
0%
4%
0%
Personal fitness trainer/coach
0%
0%
4%
0%
Urgent care centre
0%
0%
0%
0%
Fast and effective service centre
0%
0%
0%
0%
Services offered
Accounting
100%
100%
100%
100%
Payroll
100%
100%
100%
100%
Tax preparation
100%
100%
100%
100%
Bookkeeping
83%
100%
100%
100%
Advisory services, eg, budgeting, cash flow forecasting,
business planning
100%
100%
96%
100%
Audit
100%
100%
96%
100%
App/software (other than accounting) setup,
configuration and support services
50%
50%
54%
58%
Accounts receivable/control
33%
17%
54%
37%
Table 13. Profile of very large firms
38
How we can help
Once you’ve decided that Xero is the way forward for your practice, a Xero account
manager is the perfect person to help you get going. It’s their job to help you with
every aspect of the transition to Xero, and be there for you every step of the way
If you’re not already a Xero partner, sign up to the Xero partner programme at
xero.com/partners or get in touch by emailing partnerteam@xero.com
Once you’ve become a Xero partner, getting yourself and your team certified is
key to ensuring your practice understands Xero and how it can help your clients.
Our most successful partners are the ones whose teams are certified and where
everyone is singing from the same sheet. Many practices adopt a model where staff
can dedicate a percentage of their work hours (say 10%) to getting certified and
staying up to date on Xero. This quickly becomes productive, as certified staff are
much more effective when helping clients or working on Xero-related tasks in the
business.
We understand that making a significant change within your practice isn’t easy,
which is why we’ve launched migration certification. Migration certification is
perfect for the person at your practice responsible for migrating large numbers
of clients to Xero, and is filled with guidance, resources and tools to support
the switch.
Of course, you need to keep your books current when you’re changing software,
and we have several really good options to help you.
Talk to a Xero account manager today
We’re here to help, with Xero account managers and practice consultants standing
by ready to help you create a business plan for moving your practice forward in 2018
and beyond.
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