More XERO Price Increases!

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Ticker Presenter (00:02)
Xero has been streamlining financial processes and optimizing business performance. However, a second and recent price increase has people questioning the value of the platform. For more on this, I'm joined by Angela Degaras, Chief Financial Officer at Loanoptions AI. Wonderful to have you with me. What sizes of businesses are actually making use of Xero at the moment? Give us a lay of the land.

Angela Dagaris (00:24)
Yeah, absolutely. So we're still seeing Xero as a dominant player for startups and startup and small businesses. We're finding them that they've got one or two staff members. They require payroll. They might have a credit card or a few bank accounts and therefore need some daily reconciliation. And Xero has really done a great job over the last few years being the dominant player with their fantastic marketing and some products.

Ticker Presenter (00:49)
It certainly sounds like it's been integrated into a lot of businesses. But how is this price increase impacting small business, especially with the cost of living crisis we're seeing at the moment? It does it feel That's unfair for those out there who are doing it tough?

Angela Dagaris (01:04)
Absolutely. So we even saw ASIC report the record number of small businesses now going to administration, the most they've seen in the last 30 years. So we've seen increasing labor prices and material prices. So the timing really couldn't be much worse for those small business owners that are really struggling to just keep the doors open.

Ticker Presenter (01:23)
How much was the increase? If I can jump in, it was quite a large amount, a surprising It's a interesting amount, I believe.

Angela Dagaris (01:31)
Absolutely. So we've seen increases over the last 12 to 24 months on a few of their products, some increasing a staggering 40% year on year. And it is a bit of a slap in the face when you do a Google and you see that they've had record revenue prices and have actually had share price increases over the last few months because of this.

Ticker Presenter (01:50)
Yeah, absolutely. I see a lot of people out there very frustrated. So how does this increase the impact of total cost of financial teams and I guess, compliance as well when it comes to managing all the things that Xero takes care of?

Angela Dagaris (02:03)
Yeah, absolutely. Look, it makes it super tough for a small business owner because as I said, they may just have a bookkeeper part-time or a finance team member, and their staff, their salary increases have gone up year for one year. So we're also seeing, unfortunately, accountants and tax compliance costs go up. So this further adds pressure to that small business owner, where we know right now increasing prices to the end customer has been really difficult. So they internally have to try and find efficiencies in their business.

Ticker Presenter (02:32)
Yeah, it starts to compound, doesn't it? When you break it all down. Now, let's talk a little bit about what they're actually offering within the pay rise. Are there any streamlined processes worth that price increase? Because you can't just raise the price unless you're offering something new and improved, surely.

Angela Dagaris (02:50)
Absolutely. And look, unfortunately, right now, they haven't been able to back it up with those solutions. So there's a lot of talk about AI and streamlining, and we see a lot of fintech companies They're really leveraging it. Xero has been slow to move on it and slow to adopt. So we're still seeing internal teams having to find ways to streamline their daily bank reconciliations, expense claim, processing and payroll. And to make it worse, they're also having to buy the add-ons through Xero because Xero don't offer it as a natural solution. Right now, there is no way that they can justify that price increase apart from these promises that these will come soon enough.

Ticker Presenter (03:29)
Interesting. Angela, I'm curious to know a little bit about you and your team just quickly, because the fact that you've come on to talk to me about what's going on out of zero makes me think that you guys know a thing or two. You've got your finger on the pulse. Tell us a little bit more about the work that you guys get up to.

Angela Dagaris (03:43)
Yeah, absolutely. So Loan options AI absolutely streamlined the loan process. If you look at our major product, which is there for car loans, we're able to get you a car loan finance within half an hour, start to end. You plug in your name, all your license details get uploaded. There's a whole heap of automation, not only for you as a customer, but also for our brokers. That to me is leveraging AI. Xero is still a very manual, compliance-heavy product where you do need to have some decent bookkeeping and accounting knowledge. So it's unfortunate that I haven't leaned more into the technology that my children who are in primary school can pretty much adopt right now.

Ticker Presenter (04:24)
Very well said by you. And if people want to find out a little bit more, perhaps get in touch with you and the team. Where's the best avenue to do that?

Angela Dagaris (04:32)
Absolutely jump on loanoptions. Ai. We've got a whole heap of information there, and you can see us on LinkedIn and other social media platforms also.