The cloud accounting platform Xero wants to become the engine by which small businesses aou0nd the globe digitize their back office. This month the New Zealand-based SaaS company has made two meaningful acquisitions to this end.
The first was Xero’s $183 million acquisition of Danish workforce management software company Planaday. The deal was a nounced on March 4. The projected close is by June 30. That’s the end of Q1 of Xero’s 2022 financial year. More on this later.
The second deal, announced yesterday, is Xero’s acquisition of Tickstar, a Swedish e-invoicing platform company. Essentially what Tickstar does is allow companies like Xero to connect to global e-invoicing networks. Acquiring Tickstar means Xero will not have to rely on third parties. Now it can host its own access points.
“The acquisition of Tickster is an important step in our strategy to help small businesses digitize more of their workflows and get paid faster using cloud-based technologies,” said Xero’s Chief Product Officer Anne Curzon, in a statement.
The Future of B2B Payments
Granted, this all sounds rather arcane. But it’s a critical piece of infrastructure for a company like Xero that handles millions of online B2B transactions. And its importance will grow. As more and more small businesses shift from dropping paper invoices in the mail to sending electronic invoices, companies like Xero need to know they can handle the scale.
In a company blog post, Curzon said the acquisition is important given the rapid growth of e-invoicing.
“We believe e-invoicing is one of the next big innovations that will help small businesses and advisors streamline their accounting work and get paid faster,” Curzon wrote. “E-invoicing provides significant efficiencies — reducing administration time, invoicing errors, and the risk of invoice fraud.”
Once the deal closes, Xero plans to use Tickster’s functionality to support its e-invoicing solution. It will also continue to operate Tickster’s Galaxy Gateway solution for both existing and new customers. Stockholm-based Tickster launched in 2007.
Managing a Changing Workforce
The Planaday acquisition moves Xero more into the workforce management space. And specifically into the newly important business of managing remote workforces and flexible employment schedules.
So here’s what Xero says about what Planaday does.
“Planday integrates with Xero, other accounting solutions, and third-party workforce-related apps, to deliver a real-time view of staffing needs and payroll costs, alongside key business performance metrics.”
Planaday started out in Copenhagen in 2004 offering employee scheduling and time management tools. It also offers chat features that allow remote teams to communicate in real-time.
Here is why Xero made this deal, in its own words.
Planday is a powerful platform when combined with Xero or other accounting and business solutions. It can deliver a real-time picture of labour costs versus key operating metrics such as revenue. This allows a business to adjust staffing levels as trading conditions fluctuate, and gives advisors greater insight into a client’s operations.
Planday also supports advisors’ compliance needs by creating a data trail for the related bookkeeping and HR services they provide to clients.
As always, Xero will remain committed to encouraging and supporting an open ecosystem that prioritises customer choice, allowing them to select the solutions that best suit their needs.
We anticipate small businesses will play an important role as the global economy emerges from a challenging period. If we can make life better for our customers, the benefits have the potential to extend well beyond small business to their families and communities. We look forward to working with Planday on this mission today and in the years to come.