The majority of Xero files are set up by accountants or bookkeepers for their benefit… not for the benefit of the business owner.
In 2011 when I first started setting up Xero files I did what we all did then and what many accountants and bookkeepers still do now, I set up the files using the standard configuration provided by Xero.
What I realized over the following few years was that the information in the reports was fine for me as the Tax Accountant to prepare annual financial statements and tax returns but it wasn’t providing much information that was of use to my clients, the business owners.
One of the benefits that were touted early on about Xero was the time and cost savings. So suggesting to a client that they needed to spend some money and time in correcting the setups in their Xero file wasn’t something people wanted to hear. I now know that making sure that these changes are done is essential for better understanding of the numbers.
Since selling my accounting practice in 2015 to work solely with business owners to help them understand their numbers, I’ve done countless upgrades to Xero files to make sure that the owners get the relevant numbers that are specific to their business and in doing so have uncovered the secrets about Xero that your tax accountant doesn’t want you to know.
You see Tax Accountants are just that. They look after your taxes for you.
They’re not trained in business advisory and don’t have the knowledge and skill-set to understand how to provide meaningful management reports. They don’t have the expertise to know how to obtain the relevant information to ensure that the reports are customized to suit your requirements.
The secret is to re-configure your Xero file to ensure that you get customized results and find the hidden information that is in your Xero file.
The more detail you have on your specific numbers; the more information you have at your fingertips to make better business decisions.
Not only do you have more detail, but the way in which the reports are configured is done specially for you. In one case we have broken down the costs into very detailed categories and are reporting them for each different service offering. The business has recently added a new service offering and was able to not only track the revenue from it but also the costs and see how they compare to the figures from the other offerings.
This is the first step to understanding the numbers, taking control over the business and interpreting what the numbers mean. The more information you can get from your Xero file the more informed you are about what is happening in the business, and over time you’ll learn to interpret the numbers and see through the numbers.