We’re at an inflection point in the accounting industry. In the past 12 months we’ve processed more than $1 trillion worth of transactions and now, with the ability to leverage AI and machine learning, we can put all that data to work for our accountants, bookkeepers and small business customers.
“We thought there really was a once in a lifetime opportunity as accounting software went from desktop software to the cloud,” Drury told the more than 900 delegates, from accounting firms and add-on partners all across the US, at Xerocon. “The nature of work has changed.”
This transition is an example of how the financial web, which incorporates a network of organizations sharing financial data, is rewiring the small business economy. With more than 1,400 Xero product releases and feature updates shipped in the past 12 months, the pace of innovation is increasing.
Hilary Clinton said recently that “way too many dreams die in the parking lots of banks. In America, if you can dream it, you should be able to build it.” Clinton explained that for entrepreneurs’ business dreams to come true, they need to be able to access the capital they need to grow.
Using the financial web to help small business
Speaking at Xerocon, Drury explained that “Xero is where the rubber hits the road.” The data-driven nature of the financial web, where information flows between accounting and banking systems, is starting to unlock productivity and growth in small business markets, especially when it comes to accessing capital.
“We have the ability to use all this data to help small business owners access capital, make smarter business decisions and drive economic growth,” Rod said.
“We have delivered high integrity accounting on the platform that no one else has really done.”
“At the heart of this change is a fundamental shift in the way financial services are created, delivered and managed. Before the power of open Application Programming Interfaces (APIs), connected platforms and free-flowing data was realized, information was tightly held by institutions, making it difficult to understand a business’ true financial standing.
“For the past ten years, Xero has been establishing itself as a small business platform, connecting the dots between small businesses, their financial institutions, and enterprise. As a cloud accounting platform, Xero acts as a connector for the highly fragmented small business market, helping owners derive true value from their data. By providing a clearer picture of small business performance, new services can be provisioned, products accurately served, and compliance commitments met,” Rod said.
Accounting, automation and AI
By automating key business performance data feeds, extracting insights and displaying them on elegant dashboards – such as those in Xero – an institution can start to deliver proactive advice and services. We’re starting to see financial institutions flag small business owners when cash flow looks tight – like if there’s a payroll shortfall – and offer them some interim financing so they have a little breathing room.
“Automation and machine learning are improving traditional services by streamlining compliance processes and creating new business opportunities, many of which are either no-touch or limited-touch,” Rod said.
“Bankers can see a full set of historical and audited numbers, and with a professional accountant able to review the numbers each day, the risk of lending capital to a small business falls substantially.
“Through a fundamental rewiring of how small businesses operate, we light a fire under the engine room of our economies. Millions of new jobs will be created. New categories of work will be established on top of these new platforms and new services will be born.
“We expect in the next five years, the pace of innovation will be quicker than the last ten. And unlike previous technology shifts, the benefits won’t be experienced by just big enterprise – they will flow to the smallest businesses, deep down in the engine room of our economies.”
What’s next for Xero? Well, according to Rod: “Now we need to make accounting magical.”