The objective is for professional advisers to identify valuable new insights in their clients’ data.
Anna Curzon, Chief Product Officer, Xero, comments: “Xero has always recognised that accountants and bookkeepers are the heroes and champions of the small businesses – working with them every day to help them succeed. Xero’s new products and features are designed with the advisor in mind — to help them grow, manage workloads and support them to provide a high value service to their clients.
“With more data flowing into the Xero platform, we are able to create seamless workflows and provide smarter insights to ensure advisors spend less time finding and managing their information and more time advising and helping grow the small business economy wherever they are based.”
Xero, ML and other tools
Xero has accelerated its machine learning capabilities and launched new tools. These will assist accountants and bookkeepers to:
- save time
- attract and setup new customers
- gain a deeper understanding of client financial health
- grow their practices.
The principle announcements made included:
- Machine learning capabilities for document processing and extraction: automation technology improves document extraction using machine learning in Hubdoc – which gives advisors more accurate information and faster than before.
- Short-term cash flow tool: this pilot is for small businesses to receive short-term cash flow forecasts, thereby ensuring healthy cash flows are available to support commitments (and immediate actions, if needed).
- Greater compliance visibility in Xero HQ VAT: comprising a new overview of compliance work directly within Xero HQ. This offers accountants and bookkeepers deeper insights about how to prioritise their compliance work. It also saves time and obtains up-to-date visibility, control and insight into a client’s ‘Making Tax Digital VAT Returns’
- Geo-targeting: designed to generate leads and facilitate onboarding of new clients. These updates to the Xero Advisor Directory make it easier for small businesses to find a local accountants or bookkeepers and/or support advisors to win new clients.
Hubdoc data extraction
In the 12 months since its acquisition of Hubdoc, Xero has announced significant advances in its machine learning-powered data extraction technology. Purchased to improve Xero’s automation capabilities, the business is now extracting 70% of all financial documents in Hubdoc using machine learning. This compares to 20% at the time of acquisition.
Thanks to major improvements in machine learning algorithms, Hubdoc is extracting vital financial data from:
- other financial documentation.
It is now processing ~200% more documents a day than a year ago. For Xero’s customers and partners this matters because it reduces the extraction time for customers, with document processing in seconds (instead of hours).
Curzon said: “We know that data extraction powered by machine learning is significantly faster and more accurate than humans. The improvements we’ve made to the Xero platform, speed up time-consuming tasks for accountants and bookkeepers which then benefit advising small businesses to make better decisions. Our teams are working towards 100% machine learning-powered data extraction to ensure other areas of the Xero platform automate the most time consuming, administrative accounting tasks for our partners and customers.”
Short-term cash flow forecasting
Xero is piloting its short-term cash flow tool (see above). It hopes this will provide small businesses with a 30-day view of their operational cash flow health – one of the prime indicators of business health. For example, more than half of all small businesses fail within the first five years of operation. The New York Federal Reserve estimates 82% of those small business failures are due to poor understanding and management of cash flow.
The new tool in Xero will provide a forecast of a business’ 30-day cash flow, including the impact of existing bills and invoices. Small businesses can use this forecast to:
- stay abreast of their financial situation
- understand their cash flow
- initiate remedial actions early.
Additionally, advisors can use the tool to:
- comprehend their clients’ immediate business needs
- work with those clients to recommend solutions or uses for cash surplus
- have deeper conversations to improve their clients’ financial literacy.
Xero is piloting the cash flow tool closely with advisors to ensure they are able to unearth accurate cash flow information and take appropriate actions. During the pilot, Xero plans to use data and advanced statistical methods to deliver AI-powered cash predictions.
Enterprise Times: What does this mean
In effect, Xero is trying to make it easier for accountants and bookkeepers to support – as well as attract new – clients. In so doing it enables them to grow their advisors’ own accounting practices. Equally, the Xero Advisor Directory, already a source of new business, will make it easier for small businesses to locate a suitable accountant or bookkeeper in their business locale. This should be a win-win situation for both advisors and smaller business: they can find each other.
The evidence that this is significant lies in the ~800,000 queries made on the Xero Advisor Directory every month already. The new improvements should connect small businesses to the right advisors even faster than before. Adding a richer and simpler approach to onboarding new clients – practices can create template-based charts of accounts within Xero – advisors will spend:
- less time setting up a new client
- more time getting to know the client’s business and working with them.
Accounting and bookkeeping may not be high profile. Improving performance, however, for both clients and advisors, counts. That said, it may well be Xero’s pilot cash flow tool which has the greatest impact – if clients understand not only what cash flow represents but why it matters.