Xero: Fintech Is Driving Financial Integration for Small Businesses

We know you don’t have a lot of time to learn and think about the Fintech revolution, much less a cloud accounting company like Xero. But, there are massive changes going on that could ultimately make financials and financing much less of a burden. And maybe even – dare we say it – fun and rewarding?

Imagine that all of your financial and financing “stuff” worked together just like all the apps on your smart phone. Imagine that artificial intelligence eliminated most of the drudgery from bookkeeping. Imagine that your accountant could easily view your numbers with no effort on your part. Imagine that all of your credit card charges, e-commerce customer transactions, incoming payables, accounts receivable and other dynamic charges magically appeared before you in an easy to understand format. Imagine all of that being shared with a marketplace of funders bidding to provide you with competitively priced debt just when you need it.

Sound good?

That’s the world that Xero, among others, is trying to make possible. If that sounds inspiring, you might want to read this interview with the CEO of Xero Americas, Keri Gohman. If you haven’t heard of them before, maybe it’s because Xero is based in New Zealand. They are building a global footprint, however, with their cloud based accounting software.

Ms. Gohman has a long career in financial services include a long stint at Capital One, a top bank with a large credit card business. Not surprisingly she has helped partner Xero with Capital One. The parent company has built many such relationships globally, and she says more are to come here in the US.

The Xero Americas Interview Highlights

The interview is really a bunch of softball questions to give the company a chance to tell its story. Nonetheless we found it useful to hint where the world is going for financials and financing of small businesses. Here are a few of the interview highlights:

We have a unique opportunity to not only automate and simplify accounting using the latest technology and beautiful design principles but also bring together what we call the Financial Web – the banking, accounting and business management tools and advice required to make businesses successful.

Imagine looking at your business numbers with “beautiful design principles!” Maybe that would help overcome your fear of math? Or your lack of a firm background in accounting?

At Xero, we’re trying to address a major pain point for small business owners: they struggle to see their full financial picture. They want to see, in real-time the money coming in and out of their accounts. They also want to reduce the time they spend on financial management and for their financial information to be secure.

This is an extremely clear articulation of the customer pain point. What would you add or subtract in your case?

While we’re not quite meeting that bar of a seamlessly integrated financial world yet, we’re making progress with what I’d call the foundation.

Translation: it’s going to be a while but there’s a good start. For your business, you will need to consider how big your financial and financing pain is, and translate that into your willingness to jump to a new solution. Or, if you haven’t yet chosen accounting software because you haven’t launched, maybe you can be an early adopter in the US.

Note that the company has a very large global customer base, so it’s reasonable to think the core software is performing very well. Xero was founded in 2006, it is publicly traded on the New Zealand and Australian stock exchanges, and had revenue of more than US$200 million in 2016.

Accounting is yet another example of an industry that is transforming. By leveraging technologies like machine learning, accounting can go from being an arduous time suck to an automated time saver. Work will become not only easier and faster, but accounting professionals can free themselves from time-intensive bookkeeping and manual data entry for the small-business owner to spend more time on value-added advisory services and even virtual CFO management.

The machine learning revolution is coming to help you soon! It enables driverless cars from Tesla and others, help around the house from Amazon’s Alexa and others, voicebots like Siri from Apple and others.

We’ll keep you posted when you really need to pay attention.

 

Don Gooding

2 comments

  • My e-commerce company just recently made the switch to Xero from Quickbooks Online. Best move I’ve made financially since starting my business! Xero integrates smoothly with our cloud-based inventory management software, my bank account, our credit card accounts, and my cloud-based payroll company (Gusto). For the first time in eight years, I finally have up-to-date and accurate financial reports! This is huge for us in being able to track our expenses and become more profitable.

    After going through a string of bookkeepers and accounting services over eight years, I finally discovered that there are now a growing number of new cloud-based accounting services. They all use Xero because of its ability to integrate with other cloud-based software in order to automate data entry. Our new accounting company, Catching Clouds, is based in Colorado and all their clients are e-commerce clients.

    Financially, we are lightyears ahead of where we were last year!

    • Thanks for that insight Sarah. It sounds like you are very happy with the move and I look forward to hearing about your future progress!

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