I received notification today that there is a planned outage for Xero soon that will see them roll out of some changes to allow for an accountant’s ledger. The changes that the cloud will bring to accounting are a real interest area for me so I spent some time talking to Xero CEO Rod Drury about what it means.

Drury explained that the ledgers were a way for Xero to provide their accounting partners with a product that would meet the needs of their customers who currently turn up once a year with a shoebox full of receipts – it’s a way of allowing Xero-centric practitioners to use their existing client interface over all their customer – both those using a software product and those not.

The UI will be familiar to practitioners with existing customers in Xero – it’s a simple, cut down version of Xero for business;

It’s part of Xero’s stated objective of creating the ledger for the cloud – Drury explained that they’re using their existing integrations with WorkFlowMax to allow practices to run more of their practice management through an integrated suite of products. Drury also explained that Xero is looking to solve accountants pain-point around document management, and told me that they’re talking with Microsoft in an effort to find a logical integration that would see accountants perform their document management within SharePoint. Xero has produced this infographic to articulate the pain points for accountants that they’re solving:

Drury contends that now is the time of opportunity with this move, the traditional practice management software products are looking to move to a SQL/.NET platform and in doing so heir will be a degree of disruption and cost to accountants, Xero’s strategy is to take advantage of this disruption and offer practices a different (and in Drury’s view better) way of working with their data.

In an important note for those following the financial performance of Xero – customers of the ledger product are not reflected in Xero’s reported customer count as it is a low cost solution. Drury did not elaborate on how much ledgers will cost but did say that “we’re charging, but not much”. Ledgers are a good way of providing their partners with a more engaging solution, the intention being to increase the breadth of functional requirements that Xero can meet for accountants.

I have worked/am working with a number of accounting software vendors – see disclosure statement here.