Xero has introduced what it says is the first personalised machine learning capability for a small business cloud accounting system. Its main role is to automatically allocate the correct account code to invoices.
Xero says it uses detailed statistical analysis to learn from and assist the individual business and their partner based on their own specific circumstances. “The automation will mean small businesses no longer need to worry about where their invoice is filed - an invoice for time spent on site should be recorded against ‘Sales – Labour’, not ‘Sales – Materials’, for instance.”
According to Xero there are more than 10.1 million unique account codes in Xero created by small businesses, meaning items are often entered incorrectly, creating hours of work for the accountants who need to correct them.
“Small businesses take an average of one minute and 38 seconds to create an invoice in Xero — that works out to 13,600 hours across the 500,000 invoices raised in Xero each day,” the company says.
“For every second machine learning helps to shave off that average edit time, Xero’s machine learning automation will collectively save small businesses around a working month every day.”
Xerox claims that, after just one invoice, its machine learning techniques understood invoicing behaviour in general better than Xero experts. “By the fourth invoice, early machine learning implementations are accurate over 80 percent of the time and by the 50th they consistently reach over 90 percent.”
Xero is positioning the technology as an aid to accountancy firms. It quotes Andrew Erkins, director, business development and technology at bookkeeping firm Digit Books, saying: “Before we work with a client, we always review their balance sheet to see if items are correctly allocated. They very rarely are, and so a lot of our time is spent playing catch-up, fixing errors. Xero’s machine learning can help us spend less time on these low value exercises, and more time adding value to our clients by providing expert advice."
Xero says the machine learning capability is the first step in its plan to build a bespoke, personalised assistant for small businesses and their accountants “to cut the administrative burden, prevent mistakes, and enable them to spend more time growing their business.”
It be made available initially to a group of small business customers and their accounting partners for testing before being launched to all Xero customers later this year.
Xero business product lead Luke Gumbley said the personal assistant was “just the beginning” of Xero’s machine learning journey. “In the future, Xero will be able to use aggregated, non-identifying data to identify trends, patterns, behaviours and industry insights.”