Accounting and bookkeeping practices embedding artificial intelligence into daily workflows report larger time savings and higher profit margins than less technology-intensive competitors, according to research from Xero.
The software company’s Modern Practice Playbook found that its defined group of top-performing employing practices generated average net profit margins 2.1 times those of lower-margin practices last year.
Xero classed top performers as practices with at least two full-time employees and net profit margins of 41% or more. Sole practitioners were excluded from that category because their lower overheads can produce structurally higher margins.
Practices across the full UK sample said AI saved an average 7.1 hours a week. When respondents estimated the value of time saved across their teams, the reported annual figure averaged approximately £108,000.
Among top-performing practices using AI actively in daily workflows, the claimed saving increased to 10.6 hours a week and about £202,000 a year. Those figures are self-reported estimates rather than audited financial outcomes.
Process design emerged as an important dividing line. Among practices using AI daily, 87% said their core business processes were documented and regularly updated. The proportion fell to 18% among practices that were not planning to use AI.
Kate Hayward, UK managing director at Xero, said: “It’s about freeing up time to bring this industry’s most valuable skills to the surface, it’s not about replacing people.”
The findings indicate that technology alone does not explain the reported performance gap. Practices obtaining the largest benefit were also more likely to have structured workflows, clearer service portfolios, deliberate pricing models, and stronger systems for recording billable activity.
AI tools rely on consistent data, defined responsibilities, and repeatable processes. Introducing automation into a poorly understood workflow can reproduce errors more quickly, create additional checking requirements, or leave employees uncertain about when human intervention is required.
Only 5% of the practices surveyed expected AI adoption to reduce headcount over the next year. Most respondents instead associated the technology with reallocating time towards work requiring judgement, communication, and deeper knowledge of a client’s business.
Advisory services produced the highest reported service margin at 51%, yet only slightly more than half of practices currently offer them. Capacity was cited as a barrier by 19%, while three in five practices said they were directing AI-related time savings towards advisory work.
Expanding advisory services requires more than spare hours. Practices need employees able to interpret financial information, understand sector conditions, explain uncertainty, challenge assumptions, and maintain trust with clients.
Hiring priorities are changing accordingly. Some 63% of respondents said they were altering the qualities sought during recruitment, with soft skills and relationship management cited by 28% and technology fluency by 27%.
Top-performing practices were almost twice as likely as the overall sample to recruit people into non-traditional positions such as data analysts and tax technologists, at 34% compared with 18%. The figures point towards a broader change in the composition of accounting teams rather than straightforward substitution of people by software.
Pricing is another part of the operating model. Top performers charged more than a third more for payroll services and were more than twice as likely to plan price increases above 20%. Two in five practices using value-based pricing said it had improved profitability.
The results are based on responses from 520 independent senior accountants and bookkeepers across the UK, collected between 7 and 26 May 2026. Responses were drawn mainly from third-party panels alongside Xero’s customer database and weighted to balance practice sizes.
The study identifies associations between profitability, AI use, process maturity, staffing, and pricing. It does not establish that adopting AI caused higher margins, and practices already performing strongly may have greater resources to invest in technology and operational improvement.
The reported gap nevertheless gives practices a practical benchmark. The largest gains appear where AI is introduced after workflows have been mapped, responsibilities clarified, and decisions made about how saved capacity will be converted into higher-value services.
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