Xero has become the industry best practice for accounting systems for the SME market, but the true value of the system has only become apparent in recent years.
I first started using Xero in 2011 when It was very new to Australia and I realized that it would be perfect for my clients who were either in start-up phase or who had been using spreadsheets to keep their records.
It took me eight months before I decided to use It for my business as well and I very quickly realized that I’d made a big mistake in not transitioning to Xero much sooner. Once I started using Xero every day for my business I couldn’t wait to tell my clients how awesome it was and how they too could benefit from the time savings.
Those were the early days and a lot has changed since then, including massive improvements and features we hadn’t even considered. Now it’s not just about the time savings on bookkeeping and data entry, it’s more about the value you can get from the data and the ability to customize reports to your specific business.
My five steps to customising your Xero file are as follows.
Look at the income and break it down into the different service offerings of the business. Each service offering needs to be reported separately to give you a clear picture of the business.
Look at the costs of delivery including the time it takes to provide the service. This may require implementing a form of time recording to keep track of how much time is spent in each of the different service offerings. This provides more clarity as you will be able to see which services are making the most money and which may be costing you money.
Breakdown the expenses into more detailed lines to provide visibility over exactly where money is being spent. This is particularly useful for subscriptions and other costs that are automatically charged to your credit card. Often, costs are charged to your credit card and whilst the bookkeeper happily processes the data entry, you may not be using the service any longer, but with the number buried in a general category you may not realise you’re still paying it.
Xero reports can be configured to what you need. It’s easy to group expenses, for example, having one for sales & marketing, another for rent & occupancy costs, another for financial costs, and so on. This means you can see what percentage of your revenue you spend on the different groups.
Put systems and deadlines in place for the end of month reconciliations to be completed, the reports prepared and reviewed. By doing this you’ll be on top of your numbers, feel in control of the business and be able to take swift action if you need to either ramp up the income or cut expenses.