Addressing three key customer needs through financial services

At Xero, a single goal guides everything we do: the desire to improve the lives of people in small businesses, their consultants, and communities around the world.

It’s a purpose that appeals to me for a number of reasons. My own parents were small business owners, and growing up saw the challenges (and opportunities) that came with it. And when I’m not managing Xero’s approach to financial services, I work with a small dance company in Melbourne.

I recently had the opportunity to discuss how Xero is changing its customers’ lives on the Future of financial services Conference. This annual event brings together some of Australia’s largest and most innovative financial services providers for discussion.

When we think about the future of financial services and make sure we bring it to life at Xero, we know we need to focus on solving the biggest challenges facing small businesses.

First, we help small business owners regain time. It is their scarcest non-renewable resource.

Second, we are constantly focused on how to reduce business owners fear for their financial condition.

And third, we can use a wealth of customer data, for example to support real decisions that enable real access to capital.

Hours to minutes

You may have heard the saying that it takes an hour in the rehearsal room to produce a minute on stage. With the contemporary dance company Melbourne Chunky move, every hour saved in managing the business allows time for collaboration, creation and ultimately the opportunity to deliver critically acclaimed performances to a paying audience.

There are many ways to save time at Xero and we are constantly thinking about how we can enable small business owners to do more through our platform. We have direct connections to over 300 banks and financial institutions, so transactions in Xero can be reconciled quickly.

For example, let’s say we save a company two minutes for every 50 transactions. That’s over an hour and a half of rehearsal time. Imagine if those minutes were collected from Xero’s 1 million subscribers across Australia. Then imagine how you are compared to Xero’s 2.7 million subscribers worldwide.

These time savings allow small business owners to focus on their business and ultimately have the potential to increase productivity and empower a sector that already accounts for around a third of Australia’s economic output and nearly half in the UK.

Relieve anxiety

We know and understand that in addition to lack of time, small business owners suffer from major financial anxiety.

“There remains chronic uncertainty about the economic consequences of the pandemic and understandably small business owners experience significant stress and anxiety,” said Julia Gillard, former Australian Prime Minister and Beyond Blue Chair.

In the UK, a survey found that 86 percent of people with mental health problems said their financial situation had made their mental health worse.

Growing up in a family where my dad ran his own small business, I remember waking up in the middle of the night to see my parents in front of the computer wondering about our financial position: were we paid, to whom did we owe when? was it our fault?

Xero customers tell us they want us to make it easy for others to pay and get paid. This is why we partner with financial service providers – so that entrepreneurs can do this seamlessly while doing their job like accounting or payroll.

Xero data shows worldwide that invoices with connected online payment services such as Stripe or GoCardless are paid up to twice as fast as invoices that are paid by other means such as manual bank transfer or check.

In addition, new Xero products are like Xero Analytics Plus provide further insight into cash flow. These features augment forecasts and reports, and identify and forecast regular cash expenses and income from one week to three months in the future.

Businesses can see their expected cash flow, the impact of upcoming expenses like payroll – and discover ways to get money into business by invoicing customers earlier, changing payment times, or requesting a down payment.

Knowing your future financial condition and knowing that there might be something you can do about it can give you valuable security.

Access to capital

Saving time and reducing anxiety are important goals. But there’s a third goal that we strive for at Xero when we think of financial services, and that is access to capital.

For example, a dance company might want to buy a new bench with studio lights. Instead of securing a loan from the studio owner, Xero customers can leverage the power of their financial intelligence to obtain unsecured funding. With the data we see, we can help lenders make faster, automated decisions about their borrowers – our customers seeking access to capital.

The point is, Xero can leverage data to benefit small businesses and tailor the delivery of financial services accordingly.

And Xero does these things through partnership – partnership with the customer, partnership with an accountant, and partnership with a financial services provider. It’s the fastest way to scale, and it offers clients timely and differentiated credit options. And Xero can help financial partners manage risk.

The benefits of this scheme will not only benefit small businesses, but the economy as a whole. We know that small businesses are a critical contributor to Australia’s GDP, employing nearly half of all workers. And we believe that with our joint help, this proportion can become even greater.

By carefully handling the data we have at our disposal, we can solve some of the biggest problems facing our small businesses – reduce fears through transparency and simplicity, provide access to capital through innovative use of data, and most importantly, give back the scarcest non-renewable resource: time.

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