We caught up with Ryan Lazanis, founder of Xen Accounting, recently to talk about the power of cloud accounting technology and its role in the often-dated accounting space. Here’s what he had to say.
Q) First things first – can you introduce yourself and explain what Xen Accounting does?
A) I’m Ryan Lazanis, founder of Xen Accounting. We are a fully cloud-based, paperless chartered accounting firm. We are geared for tech-savvy entrepreneurs and small businesses in the tech space. It’s really about leveraging and using the technology available to us to help automate the day-to-day accounting as much as possible. At our core, we offer your typical tax planning and business consulting services but we put a heavy emphasis on the cloud by taking your accounting fully to the cloud.
Q) Could you describe your professional background?
A) I’m a chartered accountant (CPA, CA). I came from a very traditional small accounting firm. Accountants are typical pretty conservative and slow to change so I think that’s one of the reasons why the industry hasn’t moved forward even though technology has. So, I saw a need to move with the times and that’s why I started the firm.
Q) So, the technology is here, but why the cloud? Why this particular brand identity?
A) Cloud accounting isn’t brand new, it exists in other parts of the world but Canada has been slow to adopt this. We are only seeing the beginnings of this movement happening right now in the country, we are truly at the beginning. The accounting process has, typically, been very inefficient – manual accounting processes and dealing with your accountants. But there is technology and apps you can use to automate things and streamline things. This is the direction we are headed in.
Q) How big of an impact is cloud accounting having on those traditional services? Are you seeing a dent being made?
A) I think what we will see is a total redefinition of what an accountant actually does. Typically, an accountant has been more of bean counter, doing manual processes, inputting receipts from a business owner’s shoebox in an Excel spreadsheet or one-by-one into a desktop accounting system. But now, we can replace the shoebox with apps and that will streamline things even further. So, the accountant isn’t going to be doing those manual processes anymore. They can add value in other areas of the business.
Q) The idea of re-defining roles isn’t always the easiest thing to understand or accept. What kind of concerns have you heard from potential clients and those who are new to cloud accounting? And what about those who have been accountants for a long time and are comfortable in those roles?
A) I think from the client perspective, they absolutely love it; they don’t care how you are going to do the accounting. As long as they get the insight into the numbers that they need, they’re happy. They don’t want to drop documents off at their accountant’s office. They don’t want drive to the office just to sign documents. They have better things to do with their time.
The younger generation of business owners loves this kind of thing. And that is really a market we are focusing on. In terms of the accountants, a lot of them aren’t aware of the stuff going on in cloud accounting and there is definitely some resistance there. They have been comfortable with processes and systems and software for a long period of time. So, getting involved in something like this really takes a very different mindset to embrace where this is going. But you will see more progressive accounting firms popping up that will utilize this type of technology.
Q) Can you recall a memorable instance or one of your favourite anecdotes about a client adopting cloud accounting and saw that this was the way to go and changed their business?
A) Nearly every client we have brought on board has come from a traditional-type firm. So every client that has come on board has seen a big change. I think the most common example is that they are saving a lot of time. The first client that we had, right away he was saying hours of time each month just from one simple app to replace his shoebox of receipts. So, right from the get-go I saw there was a big difference from how things have been done and where things are headed. And every single client is coming from that traditional place and we’re seeing they are a lot happier with the way things are done now.
Q) How important is the ability to get a precise, up-to-date look at your numbers? Speed is just one benefit, right?
A) The real-time access is a huge benefit. A lot of time, the business owner is sending documents to the accountant throughout the year. After the year-end is gone, after the business has already gone through the full year, then they see how the business has performed. Unfortunately it is already too late to make any changes or to pivot – it is too late for that. So, now when you have real-time access, the accountant and the business owner see the same numbers at the same time every day, every week, every month and everyone is on the same page. If you need to change course, you can.
Q) So, what are the game-changing aspects of cloud accounting?
A) It is the real-time data, but it is also the possibilities of automating your accounting, to a certain extent. Cloud accounting software, the one that I am using in particular, has an open API that allows people o develop different apps to integrate with it and really get a modular-type approach to your accounting. So, depending on your business processes, you might want to automate certain parts and then feed that into your accounting system. So, it’s real-time access to the numbers and that modular-type approach are the two main benefits.
Q) What about your monthly subscription model? How does that compare to traditional accounting fees? What are the benefits?
A) That’s almost like a SaaS model – that monthly recurring revenue. That differs from many accounting firms because they charge that hourly rate. But now you’re seeing a shift, in my opinion, to value pricing – so your accounting work for the year, it will cost a certain amount and you’re not going to be charged every time you write an email or every time there is a phone call. It’s a more difficult thing to price, but in the end, clients appreciate it. It shows you are working with them you’re not there just to bill them.
Q) That’s interesting. So, there is an element of trust that comes along with this technology?
A) It’s an on-going relationship. I’ve noticed that, where I am now versus where I used to work, I have much closer relationship with clients. Even though things are done 100 per cent virtually and even though things are done via Skype, web conference or on the phone, I feel like I have a closer relationship. In smaller firms, you only speak to a business around year-end. You are not speaking to them on an on-going basis. This way you have open dialogue throughout the year. Being cloud-based make you much more available.
Q) What’s next for both yourself and Xen?
A) We are looking to become the thought leader in this space. This is a new space in Canada and we want to establish ourselves as the thought leader in it. And, of course, keep innovating as much as possible, using the technology as it becomes available: automate areas of accounting where applicable and help make it as efficient as possible. Things aren’t perfect yet but they are a lot better than they used to be and there is a lot of room to grow. We become the first professional accounting firm in Canada to accept Bitcoin as payments, for example.
It’s paving new ground. There are not many people in the online accounting space, it can head in many directions. So, it’s paving a path and innovating as much as possible.