UK Accounting & Bookkeeping Industry Performance Report 2018

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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.
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client firm service business account employee Number revenue
http://www.techcelerate.ventures
Trusted partner for Series A Investment
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
client firm service business account employee Number revenue
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.
39
40
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