How Xero can help increase the UK GDP

I was lucky enough to be at the 4th official UK Xerocon at the Battersea Evolution last month, my how things have moved on since my first Xerocon at the ICAEW Chartered Accountants Hall. Back in 2012 there were just over 200 attendees. This year had a massive 1,300 delegates, unquestionably the biggest accounting gathering in the UK.

The two day conference was packed with top speakers from start to finish, however for this blog I’m just going to focus on the first two speakers, Rod Drury and Gary Turner. Between them they passionately set the tone for the next two days and helped get everyone thinking about what we can do to drive forward the UK economy, not just from a regional point of view, but also national.

Rod Drury

Xerocon 2016 was opened by Rod Drury, for those that are yet to be converted of the world of Xero, Rod is the CEO and founder of Xero. Rod could be forgiven if he were to rock up on the stage and gloat about Xero’s success and quote a few stats and leave the rest of the day to his team.  Not a bit of it, what the next the next 35 minutes presented us with was a very passionate, proud and humble man who clearly had a lot more to give.

A few incredible stats were presented to us:

·         Xero processed $310bn of transactions over the last 12 months

·         Employees have grown from 4 people to 1,350

·         600,000 business across the world use Xero

·         New Zealand has over 25% of small business via Xero, Australia has 10% and the UK growth is expected to follow suit

·         Xero manages 800TB of data over 700 servers

·         99.99% uptime

·         over 500 integrations directly into Xero

·         $200m in the bank for future investment

 

Despite all these stats, the key take away from Rod was that this was now the end of the beginning. Up until now it was all about creating a great cloud accounting package. That is now complete, and now there’s a need to look into new areas such as the “financial web” and “machine learning”.

The financial web will allow easier access to finance, as businesses will be better positioned with real-time management information, allowing banks and new lenders to finance growth into small business.

Machine learning sounded super exciting, Rod stood there and said he was embarrassed that users have to code up transactions within Xero.  Given Xero processes $310bn worth of transactions, Xero should know that a Vodafone payment should be coded to telephone as 1,000’s of other users already do it.  In order to take advantage of machine learning, Xero has taken the lead on other providers and by June will have fully migrated to AWS (Amazon Web Services) Servers.  Amazon lead the way in machine learning technologies.  Automatic posting is only the start so watch this space for future features.

After an inspirational 35 minutes, Rod gave way to Gary Turner the UK Managing Director.

Gary Turner

As UK MD of Xero, Gary turned the passion from a worldwide perspective to one very much focussed on the UK.  I was surprised to hear that in the UK, the productivity per worker was the second lowest in the G8 and that the US were 39% more productive.

He went on to say how important small businesses were in the UK economy in that 99% of companies in the UK are small businesses and of these, they make up 47% of UK revenue, and employ 60% of the workforce.  So, if these businesses could be helped to unlock their potential we could make giant strides in GDP improvement.

Gary shed light on what could be causing the low output rates in the UK when he confirmed spreadsheets where still the most popular accounting software in the UK, and that after 5 years in business 60% of startups no longer exist.  On top of this, 72% of small businesses don’t have a business plan, and 50% do not seek advice to help with their business.

The news was better for those businesses that invested in bookkeeping software; these were twice as likely to survive.

 

So how can Armstrong Watson and Xero help increase the UK GDP?

Armstrong Watson has been part of the Xero Partner Program for over 5 years and became Platinum Partners in 2014.  One of the main reasons we chose to partner with Xero because of the added value advisory opportunities cloud accounting provided, with real time data.  The stats that Rod announced back up this decision, as Xero continues to go from strength to strength.

If we know that twice as many businesses survive 5 years when they have computerised software, then it would seem very sensible to join Armstrong Watson and help us get as many businesses as possible onto Xero to start taking advantage of the great features, such as getting paid quicker with online invoicing.

Then we can make a start on the 70% of small businesses that don’t have business plans and put those budgets into Xero so we can monitor progress throughout the year.  At Armstrong Watson we can take this a step further, and create Key Performance Indicators specific to individual businesses, and meet regularly with our clients to achieve greater success.

If we can get more small businesses performing better then we can improve on the 47% of UK revenue made my UK small businesses. If we can do this, small businesses will make more money and allow the UK economy to grow and help increase the GDP.

If you would like to find out how Xero can improve your business do get in touch.

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