Zebra (Image credit :Pixabay/AjayLalu)
Xero has implemented automatic reconciliation for Stripe transactions. The two companies are already partners and this latest announcement tightens the integration between the two solutions even further.

How Stripe reconciliation works

Craig Walker, CTO at Xero (Source Xero.com)
Craig Walker, CTO at Xero (Source Xero.com)

Stripe reconciliation takes advantage of another of the Xero innovations, automatic bank feeds. When the Stripe payment comes through the bank feed Xero will match all relevant transactions to the Stripe payment. This is accomplished with a single click. If more than one transaction is relevant then Xero identifies this. It will also match multiple invoices against the single payment for example. If the values are not equal then Xero will partially match the transactions. In this case the user needs to enter the transaction manually which is no worse than before. Xero has already created the detailed help required to accomplish this.

It appears that the system does need a degree of interaction. It is interesting that Xero does not automatically match the transactions and merely flag the user with an alert about the partial match. The next step for this solution might be just that, with the user still able to review the matches before doing a final approval.

Xero Chief Technology Officer, Craig Walker commented: “We’re constantly focused on designing beautiful experiences and automating as many manual processes as we can. Last year, Xero began automating Stripe fees, and now we’ve completely automated the matching work for you, eradicating what was a largely manual process to reconcile payments. …Our goal is to make getting paid with Stripe as smooth an experience as possible so you can spend less time chasing payments on outstanding invoices and more time growing your business. We’re also trying to look at ways we can improve your cashflow, and we’re working hard to bring you more innovations in this space.”

Advantage Stripe ?

For Stripe this is the next step in its close integration with Xero. The partnership with Xero makes sense with both QuickBooks and Sage having equally tight integration between their payment solutions. Stripe does have relationships with other vendors but this one sees it working ever closer with Xero.

For small businesses the combination of Xero and Stripe is becoming more powerful. Cristina Cordova, head of business development at Stripe commented: “Sinking resources into needlessly laborious tasks isn’t a good use of time for any small business. We continue to develop tools and features that make starting and scaling an internet business easier, and we’re excited to work with Xero to simplify payment reconciliation for our users.”

Automation is the key to the future

Last year the message at Xerocon in London was that finance systems will bring great automation to businesses. This is another example of Xero leading the way with a practical solution. The integration between Xero and Stripe already allows customer invoices to get paid faster. This new development removes some of the administration burden on customers who had to reconcile those same payments. It leaves more time for small business owners to drive their business forward rather than administer it.

Xero Chief Partner Officer, Anna Curzon said: “By investing in building a global platform and supporting the advisors who support small businesses, we’re working to help these entrepreneurs reach their full potential. Machine learning and artificial intelligence are helping unlock the potential of the Xero community’s vast connections and unique dataset to drive the establishment of personalised automation systems for small businesses. It’s never been a more exciting time to be in accounting. As small businesses’ contribution to the global economy grows, so does the accountant’s role, as advisors in supporting small businesses who run the world.”

Could this partnership become a merger?

The relationship between Xero and Stripe seems tighter than with any other cloud accounting solution. So is a merger or acquisition likely between the two?  With Stripe valued at $9.2 billion during its last funding round it seems unlikely that Xero would be able to afford that. Xero has a market cap of approximately $2.8 billion, but it is publicly listed. There is a synergy between the two cloud companies that might boost Xero in the US. The combined company would have the might to challenge Sage and QuickBooks on a more holistic front.

Stripe has had a history of strategic acquisition. It acquired Payable, a partner of two years last week. An acquisition of Xero would be on another scale though and would need significant backing from their equity partners. It would also need to be a friendly merger rather than a hostile acquisition. Likewise for Xero to invest in Stripe it would need to find significant funding.

What does this mean?

For now Stripe reconciliation is a step on the long road to helping small businesses improve their processes. The integration further automates those processes enabling businesses to improve their cashflow and better run their businesses. Xero is likely to make more announcements around automating processes within their solution over the coming months. Its focus and innovation in this area is one that others are trying to catch up with. Announcements like Stripe reconciliation will be replicated like their automated bank feeds have been but they are still the ones breaking new ground.


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