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Xero to break into SME lending

Accountancy software giant Xero is set to break into SME lending by acquiring invoice finance platform Waddle and looking to launch new products.

The ASX-listed accounting software business has confirmed that it has agreed to acquire invoice lending platform Waddle, which leverages accounting data from Xero, MYOB and QuickBooks to offer lines of credit based on a business’ invoices.

The Sydney-based fintech also holds existing agreements with banks and lenders in Australia and the UK to help automate their invoice finance arrangements. 

The acquisition aligns with Xero’s strategy to grow the small business platform and to “address critical small-business financial needs”.

While the acquisition marks the first stage of Xero’s foray into SME lending, the cloud-based accounting software company has said that it will work with Waddle to “explore ways to expand [its] small-business customers’ access to forms of lending beyond invoice financing”.


“The acquisition positions Xero to partner with lenders globally to better serve small businesses’ working capital and other financial needs,” the NZ-based software company said.

The transaction, which is expected to complete before the end of calendar year 2020 (subject to closing conditions), is for an upfront cash payment of $31 million. However, there are subsequent earnout payments based on “product development and revenue milestones” of up to $49 million (half of which will be settled in ordinary shares in Xero and half in cash).

As such, the total potential consideration for the purchase of Waddle is $80 million. 

While the company will be owned by Xero, it is expected that Waddle will continue to offer services to customers and partners, including other accounting software providers. 

It will remain as a standalone company.


Xero CEO Steve Vamos commented: “The acquisition of Waddle is an important step in our strategy to help small businesses better manage cash flow and gain access to working capital. Waddle’s lending platform has the potential to enable a wide range of banks, fintechs and other lenders to better support small business financial needs. 

“We’re excited about the benefits Waddle can bring to many of our customers and banking partners.” 

The move marks the latest in a spate of SME lending acquisitions this financial year.

SME lender Grow Finance Group acquired Australian Invoice Finance Ltd last month; CML Group – the parent company of Cashflow Finance and Classic Funding Group – has entered into a binding agreement to purchase an invoice finance lender, Skippr Invoice Finance, while US financial services technology company Enova is to acquire SME lender OnDeck.

[Related: Business lender acquires invoice financier]

Xero to break into SME lending
Xero to break into SME lending

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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