Done Deal: Xero chosen as preferred cloud accounting platform by Liberty Tax
Toronto connection between North American tech hub and NextPoint SPAC
TORONTO, July 16, 2021 – Xero, the cloud accounting platform used by Canadian accountants and their small business clients, has been chosen by Liberty Tax as its preferred cloud accounting software for its new small business service offering.
Founded in Canada, Liberty Tax is the second largest institutional tax preparer in Canada (third largest in the United States). It files around 1.6 million returns annually and has more than 12,000 tax professionals in the U.S. and Canada providing tax preparation services for individuals and small businesses. The company will be expanding its services and launching a service for small businesses that includes monthly bookkeeping, payroll services and business loans.
There is a Toronto connection between the two entities. Liberty is owned by NextPoint Acquisition Corporation, a Toronto-based special purpose acquisition company (SPAC), traded on the TSX under ticker symbol NPF. Xero established Toronto as the company’s North American hub for product development and technology innovation, marking a major commitment to the Canadian market and Xero’s investment in North America.
NextPoint also acquired LoanMe, a tech-enabled consumer and small business loan provider, earlier this month. With Liberty and LoanMe, NextPoint can boast a countercyclical business model with diversified fee and lending revenue: tax preparation and related (43%); consumer lending (36%); small and medium-sized enterprise ("SME") lending (16%); and other services/new product roll-outs (5%).
Liberty will rely on and integrate with Xero’s cloud accounting software platform. “We recognize the importance of our individual and small business clients and their need for real time access to their financial information to help inform decision making,” says Brent Turner, CEO, Liberty Tax. “We believe combining the expertise of our tax professionals with the financial tools and insights the Xero platform provides will help boost the value we provide to our clients and members.”
Xero platform provides new opportunities to Liberty Tax
Historically, Liberty Tax has only offered primarily tax return services. Standardizing on the Xero platform enables Liberty Tax franchisees to expand their offerings for clients and advise them year-round, rather than only during tax season. Liberty will expand the integration of the Liberty Tax Mobile app to provide connectivity to the Xero platform for a multitude of small business services — all accessible from the app on the client’s phone.
This marks the first development in a banking as a service model that Liberty Tax plans to offer to individual and business clients. Through the Xero platform, Liberty Tax professionals and their clients will also have access to insights on day-to-day and month-to-month activity, along with real-time views on key metrics such as cash flow, invoices and payments, and business forecasting.
“Over the past year, we’ve seen companies accelerate their digital transformation efforts in order to adapt to rapidly changing environments,” says Tony Ward, President, Americas at Xero. “Cloud adoption and gaining real time visibility of financial data, coupled with advisory services from Liberty Tax professionals, can help supercharge small business success.”
Xero also integrates with more than 1,000 third-party apps, offering small businesses the opportunity to find solutions that are best suited for their industry and unique needs. The Xero ecosystem can help Liberty Tax unlock greater efficiencies and bring on more complex clients.
Published by Canadian Accountant with files from NextPoint and Xero.