Data is useless - till you do something with it

What are you using your business data for?

If you use Xero or another accounting app, it hopefully provides all the information you need for compliance (year end accounts, VAT etc). But are you using the data in your system for anything else?

All too often businesses focus on getting data in to meet compliance deadlines, but they never look at their own information to see how it could help them move forward. If they do look at the data, they often don’t take any action based on what they find (analysis paralysis).

3-point action plan

For those who are regularly looking at their business data and taking action - congratulations. For those who may need some help, here is a 3-point plan to get you started:

1. Choose what data to look at by determining what your key metrics are (often called Key Performance Indicators or KPIs). Don't get bogged down at this stage. If you don't know what your KPIs are, the Xero Performance Dashboard will help (see below). The important thing is to start looking at your information, and over time you will learn which sets of figures are the most useful.
2. Fix an appointment with yourself at the same time every month, and include anyone else as necessary for data provision and analysis.
3. Record the actions you will take based on what you see. In the early days, it may be that you need more data. For example, you can see that your gross profit margin is down for this month but can’t see why - so the action may be to explore the reasons. When you find the reasons, you may be able to take action to rectify the drop or avoid it happening in the future.

Getting your data from Xero

Getting your key business data is simple in Xero, as there are so many reports you can run. A great place to start, however, is the Xero Performance Dashboard.

To get to the Xero Business Performance Dashboard, go to the Menu Reports> All Reports> expand the Financial Reports, and you should see the Business Performance report. Here you can see comparison graphs of key accounting ratios, including net and gross profit percentages.

TIP: Put a star in the top left of any of the performance charts, and it will appear in your home dashboard.

Another report that can be very useful (and that can be found in the same place in the Financial Reports section) is the Executive Summary report, which is also crammed full of key accounting data and variances.

For more help with business data and reporting in Xero - or to explore some of the other less well known aspects of the system that can make life easier, contact us here.