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Addressing three key customer needs through financial services

Leigh O'Neill

Leigh O'Neill

Oct 5, 2021

At Xero, a single goal guides everything we do: the desire to make life better for people in small business, their advisors and communities around the world. 

It’s a purpose that resonates with me for a few reasons. My own parents were small business owners, and growing up I saw the challenges (and opportunities) this brought. 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 makes life better for its customers at the Future of Financial Services conference. This annual event gathers some of Australia’s biggest and most innovative financial service providers for a discussion.

In considering the Future of Financial Services, and how we ensure we bring this to life at Xero, we know we must focus on solving the biggest challenges faced by small businesses.

First, we help give small business owners back time. It’s their scarcest non-renewable resource. 

Second, we continually focus on how we can reduce business owners’ anxiety around their financial position. 

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

Hours to minutes

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

Saving time comes in many forms at Xero, and we are constantly thinking about how we can enable small business owners the opportunity to do more through our platform. We have direct connections to over 300 banks and financial institutions, making reconciling transactions in Xero fast. 

Let’s say for example we save a business two minutes on every one of 50 transactions. That’s over an hour and a half of rehearsal time. Imagine these minutes accumulated Australia-wide, across Xero’s 1 million subscribers. Then imagine them across to Xero’s 2.7 million subscribers globally. 

These time savings give small business owners a chance to focus on their business, and ultimately have the potential to boost their productivity and amplify a sector that already contributes about a third of the economic output in Australia and almost half in the UK.

Easing anxiety

Along with being time poor, we know and understand that small business owners suffer high levels of financial anxiety.

“There remains chronic uncertainty surrounding the pandemic’s economic consequences and understandably, small business owners are experiencing significant stress and anxiety,” says Julia Gillard, former Australian Prime Minister and Beyond Blue Chair.

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

Growing up in a family where my Dad ran his own small business, I can remember waking in the middle of the night to find my parents huddled over the computer, wondering about our financial picture: had we been paid, who did we owe, when did we owe?

Xero customers tell us they want us to make it easy to pay others and get paid. That’s why we partner with financial service providers – so business owners can do this seamlessly while in the midst of jobs like accounting or payroll. 

Xero data shows globally that invoices with an online payment service attached, such as Stripe or GoCardless, get paid up to twice as fast as invoices paid through other means, such as manual bank transfer or cheque. 

Furthermore, new Xero products like Xero Analytics Plus give further insight into cash flow. These features supercharge forecasts and reporting, detecting and predicting regular cash expenses and income anywhere from a week to a quarter of a year in the future. 

Businesses can see their expected cash flow, the impact of upcoming expenses such as payroll – and discover opportunities to bring cash into the business by invoicing customers sooner, changing payment times or requesting a deposit. 

Knowing your future financial position, and knowing you may be able to do something about it, can bring valuable peace of mind.

Access to capital

Saving time and decreasing anxiety are important goals. But there’s a third objective we’re seeking to address at Xero when we think about financial services, and that’s access to capital.

For example, perhaps a dance company wants to buy a new bank of studio lights. Rather than secure a loan with the studio owner’s home, Xero customers can use the strength of their financial information to obtain unsecured finance. Through the data we see we can support lenders to make faster, automated decisions about their borrowers – our customers, who are seeking access to capital.

The point is, Xero can leverage data for the benefit of 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 service provider. It’s the fastest way to scale, and it offers customers timely and differentiated lending options. And Xero can help financial partners manage the risk. 

The benefits of this arrangement accrue not just to small businesses but the broader economy. We know that small businesses are a crucial contributor to Australian GDP and employ almost half of all workers. And we believe that, with our combined help, that proportion can grow even larger. 

Through thoughtful use of the data available to us, we can solve some of our small business customers’ biggest problems – reducing anxiety through transparency and simplicity, providing access to capital through innovative use of data, and most importantly giving back the scarcest non-renewable resource: time.

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