Choosing practice management software: a guide for Australian accounting firms

Start with why you are moving

Most firms looking for an XPM replacement are not unhappy with one feature. They are tired of the gaps between systems: the engagement letter in one place, the ID check in another, the job list in a third, and the client's emails in somebody's inbox. Before you look at any product, write down the three problems that cost your firm the most time or risk each month. Those three problems are your buying criteria. Everything else is a nice to have.

A short list helps. For example:

• "New clients take two to three weeks from yes to work started."
• "We cannot see WIP by partner without exporting to a spreadsheet."
• "Our AML/CTF evidence lives in folders and email, so a review would take days."

If a product solves your three problems well and does the rest adequately, it is a good fit. If it does fifty things you did not ask for and misses one of your three, keep looking.

Where Xero Practice Manager stands

Plenty of firms searching for an XPM alternative are reacting to news from Xero. Here is what Xero has said in its own announcement. In a media release published on 3 September 2025, Xero announced Xero Partner Hub and said that for practices currently using Xero Practice Manager, beta access would be available in the coming months, with the full launch expected in early 2026. That release does not say XPM will be retired or give a date for any change to it.

So, as at 27 October 2026, the decision is yours to make on its merits. Read Xero's current announcements and help pages directly rather than relying on forum posts or vendor summaries, and treat any claimed end date for XPM as unconfirmed unless Xero has published it.

What to look for, area by area

Use the sections below as a scoring sheet. For each one, give a candidate product a mark out of five and note the evidence you saw in a demo, not what the brochure said.

1. Jobs and workflow

Jobs are the heart of a practice system. You want one list that shows every client, every service and every period, who it is waiting on, and whether it has been billed. Look for:

• Recurring jobs that roll forward each period without manual set-up (monthly bookkeeping, quarterly BAS, annual returns).
• Templates with tasks, budgets and default staff, so a new job starts in a consistent shape.
• A clear "waiting on" status: with client, with signer, with third party, with reviewer.
• Saved views per person: my work, overdue, with client, ready to invoice.
• A link from the signed engagement to the jobs it creates, so work is never started without a signed scope, and signed scope never sits without a job.

Ask the vendor to show a family group with a trust, a company, an SMSF and two individuals, and walk through how a year's work for that group is set up. That single demo tells you more than any feature list.

2. Time and WIP

If you bill on time, or even just measure job profitability, timesheet quality decides whether your WIP figures mean anything. Check how time is captured (stopwatch, manual entry, drafted from calendar and email), how easily time can be moved between jobs, and how WIP is reported by partner, team, client group and job. Ask to see lock-up (WIP plus debtors) and jobs running over budget without exporting anything.

3. Billing

Billing should read from the engagement, not be typed again. Look for fixed-fee and time-based billing, progress billing, billing a whole family group together or entity by entity, and payment matching so a paid invoice is reconciled without anyone ticking it off. Confirm how invoices reach Xero and which system is the source of truth for debtors.

4. Client records and family groups

Australian practices work in groups: individuals, their trusts, companies and SMSFs, often with the same people appearing as director, trustee, member and beneficiary. A good system holds one person once and links them to every entity, rather than creating a new contact per client. Check:

• Relationships between people and entities (director, trustee, appointor, beneficiary, member).
• Group-level views of jobs, WIP, fees and communications.
• Duplicate detection, since years of XPM use usually leave the same person recorded several times.
• Entity details prefilled from the ABR so names and ABNs are right from day one.

5. Engagement letters: APES 305 and the TPB Code

APES 305 Terms of Engagement (2024), effective from 1 January 2025, requires members in public practice to document and communicate the terms of engagement with a client. The Tax Practitioners Board recommends a written agreement setting out the terms of the engagement, and notes that separate letters are generally expected for related parties, and that letters for recurring engagements should be reviewed regularly, preferably annually.

Section 45 of the Tax Agent Services (Code of Professional Conduct) Determination 2024 requires registered tax practitioners to give current and prospective clients certain information in writing, in a prominent, clear and unambiguous way. That includes how to search the TPB register, how to complain, general information about the practitioner's and client's obligations, and any prescribed events or matters. The TPB says it applies from 1 July 2025 for practitioners with 100 or fewer employees and from 1 January 2025 for all others, and that the first three items are given on engagement or re-engagement and on request.

For software, that means you want engagement templates that carry your section 45 wording, signing that works on a phone, an annual rollover that reissues letters without rebuilding them, and a clear record of who signed what and when. See the engagement letters guide for the content side.

6. AML/CTF Tranche 2

AUSTRAC states that obligations for accountants and other professional service providers who provide the new table 6 designated services began on 1 July 2026. Those providers must enrol with AUSTRAC and generally complete initial customer due diligence before they start providing a designated service. Not every accounting service is a designated service, so the system needs to help you record which clients and services are in scope.

Look for customer due diligence workflows for individuals, companies and trusts, beneficial ownership capture, PEP and sanctions screening, a recorded risk rating with a reason, ongoing review dates, and a place to keep evidence that a reviewer could follow. Ask how the system handles internal reporting of unusual activity without tipping off the client. Our Tranche 2 guide covers the obligations in detail.

7. Identity verification

Proof of identity is needed for TPB client verification and, for in-scope services, AML/CTF customer due diligence. Ask what methods are offered (document plus selfie, bank-based verification), what it costs per check, whether the result and evidence are stored on the client record, and whether a client can complete it on their phone without an account.

8. Document storage and TPB record keeping

The TPB says records must be kept for at least 5 years after the service has been provided. The records include client details, engagement letters, identity verification notes, client permissions, key communications and tax invoices, along with records of the advice given. The TPB says this applies to services completed on or after 1 July 2025 for practitioners with 100 or fewer employees, and 1 January 2025 for all others.

So ask: where do documents and emails live, can you find them by content as well as by file name, can retention be set and enforced, and can you export everything in a usable format if you leave. Storage that holds the engagement, ID evidence, emails, call notes and workpapers on one client record makes a TPB or AUSTRAC review far easier than a shared drive plus four inboxes.

9. Client portal and queries

Many client portals fail for a simple reason: clients forget their password. Test the client side yourself on a phone. How does a client answer a question or upload a receipt? Do reminders stop once they reply? Do answers file themselves against the job, or does someone re-file them?

10. Phones and SMS

Calls and texts are client communications too, and they belong on the client record. If the platform includes phones or SMS, check if you can keep your existing numbers, whether texts come from a firm number rather than personal mobiles, how call recording and consent are handled, and whether call notes land on the right client.

11. Data sovereignty and the Privacy Act

Australian Privacy Principle 8 sets out the steps an entity must take to protect personal information before it is disclosed overseas. APP 11 requires reasonable steps to protect personal information from misuse, interference and loss, and to destroy or de-identify it in some circumstances. Ask every vendor where data is stored (including backups, logs and any AI processing), which subprocessors handle it, and whether any personal information leaves Australia. Get the answer in writing.

12. Security

Ask for evidence, not adjectives: independent certification such as ISO 27001, a SOC 2 report where available, single sign-on, multi-factor or passwordless login, role-based permissions, an audit trail of who changed what, and a documented incident response. Ask when the last penetration test was done.

13. Xero and ATO integration

Most Australian firms using XPM also use Xero for client ledgers and their own books. Ask exactly which data moves between the new system and Xero, in which direction, and how often. Ask how lodgement status and ATO information reach the job list, and which steps still happen in the ATO's own online services. If the vendor says "integrates with", ask to see the sync happen live.

14. AI, with the TPB and OAIC guidance in mind

The TPB's guidance on AI says tax practitioners remain ultimately responsible for the services they provide, that AI output should be checked with professional judgement, and that client permission is needed before client information is disclosed to a third party, which can include an AI tool. The OAIC recommends not entering personal information into publicly available generative AI tools, and doing ongoing due diligence on any AI product, including where it is hosted and whether inputs are used for training.

So when a vendor shows AI features, ask: where is the model hosted, is client data used to train anything, does a person approve every change and email before it happens, is there a log of what the AI did, and can the firm set limits or switch it off. See AI for accounting firms for more.

A migration plan that works

A practice system move is mostly a data and people project. The software is the easy part. This plan assumes a firm of 10 to 40 people moving off XPM over about three months.

Step 1: Decide what moves and what stays behind

Export and keep a full copy of everything before you start, even data you do not plan to migrate. Typical items to export:

Then clean before you move. Merge duplicate contacts, close jobs that are finished, and archive clients you no longer act for. Moving dirty data just moves the problem.

Step 2: Rebuild client groups properly

Groups are where most migrations go wrong. Spend time mapping each family group: who the people are, which entities they control, and how they are billed. Start with your top 50 groups by fees, since they carry most of the revenue and most of the complexity.

Step 3: Cut over WIP at a month end

Pick a month end as the cut-over date. Before it, bill or write down as much WIP as you reasonably can, then record the remaining WIP balance per job in the new system as an opening figure. After the cut-over date, all new time goes into the new system only. Do not try to split a single month across two systems. Avoid cutting over during peak lodgement periods or at 30 June.

Step 4: Run in parallel for a short, defined period

A parallel run of four to six weeks lets you check jobs, WIP and invoices line up. Keep it short and give it an end date, because two live systems double the admin and invite errors. One approach many firms find easier: start new clients and renewals in the new system first, then move existing work across in batches.

Step 5: Train by role, not by feature

Partners need WIP, lock-up and approvals. Managers need job lists, budgets and review. Staff need their daily list, timesheets and client queries. Admin needs onboarding, billing and engagement rollover. Run short sessions per role, name one internal champion per team, and agree a date after which the old system is read only.

Migration timeline at a glance

Keep read access to the old system, or a complete export, for as long as your record keeping obligations require.

Questions to ask any vendor

Total cost worksheet

Subscription price is rarely the full cost. Fill in this worksheet for each candidate and for your current stack, over three years.

A worked example: a 12-person firm that sends 300 engagement letters a year and spends an average of 40 minutes of admin time per new client chasing signatures, ID and details is spending about 200 hours a year on that one task. At a $60 an hour cost rate, that is $12,000, often more than a software line on the invoice. Count time as well as licences.

Red flags

• No clear answer on data location. If the vendor cannot say in writing where data and backups are held, assume it may leave Australia.
• Export is hard or costs extra. Your client records are yours. Getting them out should be simple.
• The demo avoids family groups. A product built around single clients will feel awkward for Australian group work.
• "Integrates with Xero" with no detail. Ask what moves, which way and how often.
• AI that acts without approval. Under TPB guidance you remain responsible for the work, so a person should sign off changes and client emails.
• Migration is your problem. If nobody on the vendor side has moved a firm off XPM before, plan for extra time.
• Long lock-in before you have used it. A multi-year term signed on the strength of a demo is a risk.
• Every compliance feature is "on the roadmap". Engagement letters, ID checks and AML/CTF records are needed now.

Where Nagaris fits

Nagaris is a practice platform for Australian accounting firms, and it is our product, so weigh this section accordingly. Here is what it does and how it relates to XPM.

• You do not have to leave XPM to start. Nagaris has a real-time, two-way integration with Xero Practice Manager. Changes made in Nagaris appear in XPM within seconds, and XPM changes appear in Nagaris about every 10 minutes during business hours. Many firms run side by side and move progressively, for example new clients first, then renewals.
• Or run jobs in Nagaris. One Services list shows every client, service and period, who it is waiting on, and whether it is billed and paid. Nagaris can also run engagements and services without a job layer, with invoices and costs straight from the engagement. We bring your existing job lists across and check every item against your engagements and invoices.
• Group-first engagements. Trusts, companies, SMSFs and individuals on one proposal, signed once, with jobs, budgets and tasks created when the client accepts. See group proposals.
• AML/CTF and ID. ID checks with PEP and sanctions screening at $5 a person, company checks from $9, and the risk assessment on one screen. See AML/CTF software and client onboarding.
• Data in Australia. Client data is stored on AWS Sydney servers. Nagaris is ISO 27001 certified and holds the highest level of Xero app partner accreditation.
• Clean data. New clients prefill from the ABR, and nightly checks compare your records with XPM, CAS 360 and SF360, including a duplicate finder for the same person XPM created once per client.
• Ask Nagaris, with sign-off. Every create, update, delete or email Ask Nagaris prepares waits for a person on your team to approve it.
• Pricing. Plans start at $495 a month (Launch, up to 500 active clients, unlimited users), with usage items such as $1 a signed document and 9 cents a text. Optional white-glove onboarding, where we bring across your files, emails and calendars and train your team, starts from $5,000 one-off.

See the full list on the features page and how jobs work on the workflow page.