Levelling the playing field: How fintech is benefiting the UK’s small businesses

Small and medium-sized businesses (SMBs) account for around 99 per cent of UK companies, employing more than 15 million people and turning over £1.8 trillion. They’re the lifeblood of the UK economy, but until now haven’t enjoyed access to the business applications and financial services their larger counterparts take for granted.

Managing cash flow and struggling to access capital puts the brakes on productivity, growth and even threatens the existence of these small businesses.

To level the playing field for small businesses, online accounting software provider Xero collaborates with banks, fintechs (financial technology firms) and the world’s best app developers to create the richest ecosystem of apps and services in the sector, all with the aim to help small businesses thrive.

Businesses can securely connect their bank and other apps to Xero to reduce the burden of manual tasks through powerful automation, and have a single dashboard of key metrics on their performance.

“We’re providing a beautiful, digital, joined-up vision for small businesses that’s hitherto been too complex and costly to realise,” says Edward Berks, Europe, Middle East and Africa director for fintech and ecosystem at Xero.

“For a long time, small businesses have not benefited from the innovation and investment made in corporate and retail financial services. But open banking and broader changes in the technology and competitive landscape are contributing to a surge in innovation in small-business banking from the UK’s big banks and challengers such as Tide and Starling.”

Xero’s fintech vision is part of a wider app partner ecosystem which contains more than 700 apps divided into categories such as inventory, payments and debtor tracking. “Every business has its own set of operational requirements and objectives. So we’ve created a one-stop shop, where business owners can find what’s right for them, whether they run a horse-dentistry practice or a textiles business,” says Mr Berks.

“To afford such a breadth of capability to our customers, collaboration and partnership have been essential. We provide the best book-keeping experience to our customers and to the accountants they rely on, and work hard to ensure that the very best small-business apps and services work seamlessly with our platform.”

The emergence of open banking will further streamline the way small businesses access financial data and services, Mr Berks adds. For almost ten years, Xero has led the way in this space, with its “direct bank feeds”, enabling businesses to pull their bank data straight into their Xero accounts without the need for paper bank statements and manual data entry.

Already, Xero customers have access to the best payment services from PayPal, GoCardless, Stripe and Worldpay, enabling secure payment for their services up to 19 days faster,* boosting their cash flow.

And the company is working with lenders such as MarketInvoice, iwoca and Satago that provide loans and invoice finance specifically for small businesses. These firms use data straight from a customer’s accounts to streamline applications for lending, often providing cash in a matter of hours.

“We’re finding that accountants are recommending apps and services that integrate with Xero to better serve their clients,” says Mr Berks. “Our customers consistently tell us that they value the views of their accountants and book-keepers above those of any other adviser”.

Xero continues to grow its base of 250,000 small-business cusomters in the UK and more than 1.2 million worldwide. Consequently, technology and service providers wanting to reach the SMB market are waking up to the important role being played by cloud accounting platforms such as Xero, and those progressive accounting firms that are investing in their business advisory capabilities.

This promises even greater access to the very best technology and a further removal of friction in everyday activities such as getting paid and making payments.

As Mr Berks puts it: “For the first time, it’s possible for small businesses to access the competitive and operational advantages that have for too long been the preserve of corporates. This revolution has the potential to make a very real impact on the UK economy by improving the competitiveness and productivity of small businesses.”

*Average improvement for Xero users in the UK who had Stripe and PayPal enabled as their payment providers between July 1, 2016 and January 31, 2018

To find out more, visit xero.com