Xero Is Building A Vast Bank Of Data On Business That Could Shed New Light On The Economy

Accounting software company Xero could have one of the best data sets for a health-check on Australia’s small business market.

Speaking at Xerocon in Sydney today CEO Rod Drury said the company now had over a year of online invoicing data in Australia.

In the 12 months to June 30 Xero’s 147,000 Australian customers sent about 15 million invoices to over 1.4 million people with a total worth of $32.9 billion.

Over the same period 14.8 million invoices worth $29.4 billion were received by its Australian subscribers.

The company can also track how long it takes for small businesses to pay invoices received and how long it takes for SME’s bills to be paid.

Speaking before an audience of 1,300 accountants at the conference, Drury said in the past 12 months the average time for invoices to be paid had fallen from 43 days to 31 for people using the Xero platform.

Small and medium sized businesses employ more than 40% of the workforce in Australia and account for more than 40% of GDP. Reserve Bank of Australia Governor Glenn Stevens said yesterday that he was specifically looking to smaller companies to drive growth, “smaller and newer players, most of which operate ‘below the radar’” will respond to the incentive by investing and creating growth.

Xero’s software pulls in a bunch of data to allow businesses to monitor cash flow, business bank account levels, gross profit margins, profit on sales and debtor days. The aggregation of this data, overall and sector-by-sector, is starting to give insights into the health of businesses and profitability of the overall small business sector for the first time.

Globally the company has more than 330,000 customers. Over the ditch, Xero has a quarter of all New Zealand’s small businesses using its software. In the 12 months to June $58.9 billion in transactions were processed – equivalent to 38% of the country’s GDP.

The level of data and insights available with that sort of marketshare is incredible, something the company is starting to come to terms with.

“The ability to use that data to drive insights has just never been seen before,” Drury said.

“What we’re into is how do we turn that into insights but also drive action,” he told Business Insider.

“There’s lots of people that do that on survey but we can actually do that on real numbers.

“It’s a long journey so that’s why we’ve done quite a lot of work around electronic indicators so we can see what industry you’re in, what region you’re in.”

Drury said Xero had moved from just a software company to a tech company with a seat at the table with government and big organisations including the Commonwealth Bank and Telstra. “They’re starting to realise it,” Drury said of big business and government. “We can start surfacing information and pricing risk.”

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