Xero Analytics adds AI cash forecasts & ops metrics

Xero has outlined new and updated functions in Xero Analytics, its reporting and planning product. These include AI-driven insights, cash flow forecasting based on payment behaviour, and tools for tracking non-financial metrics alongside accounting data.

The product uses visual dashboards to provide an at-a-glance view of performance. It also includes report-sharing tools, from live view-only access for external stakeholders to exporting dashboards as files.

Xero Analytics sits within the wider Xero platform and focuses on dashboards, forecasting, and analysis. It includes a Cash Flow Manager, AI insights, and an External Data feature that lets businesses add operational metrics that do not sit in the accounting ledger.

Cash forecasting

Cash flow forecasting is a central element. The Cash Flow Manager, under the Planning tab, shows a projected bank balance and near-term movements, with views for the next week and the next eight to 30 days.

The forecast does not rely only on invoice and bill due dates. Instead, it uses algorithms to assess customer payment behaviour and the business's own bill-payment habits, aiming to predict when cash will actually arrive in, or leave, the bank account.

Users can choose which bank accounts to include in projections. The tool offers a graph view for net movement, cash in and out, or bank balance, and a calendar view listing expected daily inflows and outflows.

The Cash Flow Manager also includes drill-down detail, allowing users to click a date to view the invoices or bills driving that day's forecast movement.

AI insights

Xero Analytics includes an AI-driven insights feature that generates observations about business performance. It uses the industry selected in settings as an input, which affects how it presents patterns and potential actions.

In one example, after identifying a business as a surfboard shop, the tool flagged seasonal volatility and suggested using bundles and focusing on shoulder months. The same approach can highlight mid-year or holiday periods that contribute a large share of profit.

AI output also includes year-on-year comparisons. It can compare current performance against prior years, show whether profitability has improved even when seasonality remains, and highlight sensitivity to changes in demand or costs.

Operational metrics

Another area of development is the inclusion of non-financial data. The External Data feature lets users create custom fields for metrics such as walk-in visitors, online review ratings, and the percentage of returning customers.

Businesses can enter data directly or copy and paste values from a spreadsheet. Entries can be monthly or daily, depending on the metric and how the business measures performance.

Once entered, metrics appear in the Visualise section. Users can add these measures as widgets on the main dashboard, presenting operational and financial measures in a single view.

The tool does not always merge operational and accounting measures into a single combined graph. Instead, it supports comparison through side-by-side views on the dashboard, allowing users to check changes in measures such as footfall alongside net cash flow or net income.

Xero has positioned this as a way to add context that financial reporting alone may not provide. Businesses can examine whether revenue is being driven by repeat customers or one-off demand, and compare customer sentiment measures, such as ratings, with changes in sales and profit.

Dashboard sharing

Xero Analytics includes several options for sharing dashboards and reports with stakeholders. The Share Dashboard function generates a live link for view-only access, allowing recipients to view the dashboard without logging in to Xero. The link can show rolling data or data fixed to a date, depending on whether the sender wants a live view or a snapshot.

Users can also export dashboards as PDFs or send them by email. Some plans include options to send reports to messaging and collaboration tools, including WhatsApp, Slack, and Teams.

Visual reporting

The product includes visualisations designed to make trends easier to spot than in static spreadsheets. It also adds options to show trend and average lines on graphs, following customer feedback. Another recent change is an additional viewing period option, Monthly Financial Year-to-Date, alongside daily, weekly, and quarterly views.

Alex Hoffman, an instructor on the webinar, described a use case that combines profit and cash data for a clearer view of liquidity.

"I'll show you a great combo that solves the age old question, my profit is high, but how much cash do I actually have?"she said.

Xero expects businesses to use these features for ongoing monitoring, stakeholder reporting, and short-term cash planning within the Xero platform.