Accounting and bookkeeping are crucial areas of business in most companies and are expensive too, given the number of human hours they require. But this is the digital age, so can the power of technology help reduce, and eventually eliminate, these human costs?
For Steve Vamos, the answer is a resounding “yes”.
The technology expert, who has held senior positions at the likes of Apple, Microsoft and IBM, took up a new challenge last year to become chief executive of Xero, a New Zealand-domiciled, Australia-listed cloud-based accounting services provider with a strong foothold in Singapore.
Behind the decision is his belief that accounting and bookkeeping functions will be free from human intervention in the long run.
“In the future, accounting and bookkeeping should be fully automated and routine tasks will give way to more strategic analytical work,” Vamos told FinanceAsia in an exclusive interview.
“Ideally, accountants and bookkeepers should be switching to new roles that deliver more value and service to customers, such as advising clients on how to improve operational efficiency,” Vamos said.
Vamos is at the forefront of facilitating such transitions now that he has taken the helm from Xero’s founder Rod Drury, who stepped down from his role almost 12 years after founding what was then a small startup in Wellington.
The company, which employs over 2,000 people across 17 offices in eight countries, helps its clients manage accounting and bookkeeping through its online platform.
By replacing the tradtional trusty ledger and double-entry bookkeeping system, the cloud allows credits and debits to be recorded digitally and information to be exchanged faster between businesses, banks, suppliers and customers.
Xero's cloud platform also helps them to keep track of their cash flow by providing real-time financial data by partnering with banks and financial service providers.
Xero’s tagline “when small business is beautiful business” speaks well about the firm’s focus on small and medium-sized enterprises. Asia, which saw an unprecedented rise in the number of startups and SMEs in recent years, is naturally the firm’s next big target.
Asia’s overall penetration rate for cloud-based accounting software stands at around 20%, which is much lower than about 40% in Australia and New Zealand, according to Vamos.
The company has already made significant achievements since opening its first Asia office in Singapore two years ago. So far, it has established partnerships with the Lion City’s three biggest banks – DBS, OCBC and UOB – to facilitate bank feed integrations in order to provide its SME clients with their financial data in a more timely manner.
In 2017, the company processed S$20 billion ($14.8 billion) worth of transactions on its platform, equivalent to roughly 5% of the city’s gross domestic product that year.
In Hong Kong, Xero is in partnership with HSBC and DBS, and in Malaysia it is a partner of CIMB.
All these partnerships mean Xero’s SME clients can manage their expenses, payments and payrolls on a single digital platform.
Xero is already doing business with clients from almost every Asian country, but Vamos said the company aims to make deeper inroads into non-English speaking countries in the long run.
The company is financially well-prepared for expansion, having raised $300 million from a convertible note offering last year that was named FinanceAsia’s Best Hybrid Deal in Australia and New Zealand.
Xero is working on new products from the financial and transactional data collected from its clients. For instance, Xero is developing new functions to help their clients with e-invoicing and e-tax filing, as well as accessing borrowings more cost-effectively.
It is already advising the Singapore government on implementing these SME finance initiatives.
In the long run, the company aims to use the data to analyse business performance and provide business advisors with more operational details on a daily basis.
However, Vamos said the company will need to tread very carefully since it involves utilising the data of its clients, which may spark data security concerns.
Still, Vamos believes it is a matter of time before companies start to realise the benefits from these initiatives.
“To me, people are furious [about unauthorised access to private information] not because of the data breach itself. They are unhappy because they are not informed beforehand,” Vamos said.
“As long as companies are well educated about how we use their information and the benefits they would bring to their business, I am confident many companies will be willing to share their information.”