How can Xero accounting software help you grow your business while staying profitable?

Every SME owner or leader faces the challenge of maintaining a good profit margin, particularly when navigating a period of growth.?

To be as profitable as possible, you need to understand your figures and anticipate any likely costs to prevent budget overruns. Thus you can identify issues early before they turn into potential problems.?

The key to doing this is to have accurate and timely bookkeeping records that enable you to run reports and assess the financial health of your business.?

Assessing bookkeeping records can prove difficult for businesses using a ledger or spreadsheet-based accounting system. Spreadsheets not only make the process of producing an accurate financial report arduous and time-consuming but can be risky, leading to errors that can cost your business thousands of pounds.?

If your company uses spreadsheets to log activities such as budgeting, forecasting, tax calculations, inventory tracking, task management, and account reconciliations, your data could be easily flawed. Copy-paste or data entry mistakes and faulty equations are some of the common errors that can occur, putting you at risk of making decisions based on inaccurate information.

Adopting a cloud-based accounting software like Xero can help you stay on top of your finances.?Xero enables you to create a viable business model with the efficiencies, financing, and systemised processes needed to scale. In addition, it mitigates the risk of inaccurate figures and immediately makes real-time data on cash flow and other financial performance available.

Whether you already use Xero or are looking to invest in a digital accounting solution that offers you speed and reliability, our expert team has compiled a summary of their favourite Xero features to help you run your business finances more efficiently.

13 top tips to get the most out of Xero

Bank rules

Xero accounting software can easily be linked to your bank account, making it super easy to do bank reconciliations. Occasionally, your bank payments might not relate to a purchase invoice. To speed up the process, you can create Bank Rules for any recurrent transactions, such as:

• Salary payments
• Pension payments
• Bank charges

Find and recode

A fantastic feature and a favourite of ours is Find and Recode. It allows you to make changes to a large bulk of transactions at once. So, for example, you can quickly transfer transactions from one account to another without reallocating each transaction. You can also change in bulk the tax rate or contact incorrectly assigned to transactions. Xero's Find and Recode saves you significant time, turning a lengthy task into a few seconds.

File storage

The perfect feature to store all your important business documents in one place and have them at hand from anywhere at any time. Xero's File Storage makes file management, sharing, and access easy and convenient. You can attach files to almost anything – from invoices and receipts to bills and transactions. What's more, you can upload multiple files in one go from your computer or mobile phone using the Xero App.

Fixed assets register

With Xero's fixed asset register, you can automate your depreciation journals. The feature allows you to record and calculate book depreciation on your assets and?produce the fixed assets report with a few clicks.

Tracking categories

This feature lets you know how separate areas of your business are performing. Companies or individuals who can benefit from it, for example, are:

• Property Investors can track property by property
• Shop Owners can track by shop location

Item codes

If your business sells a set range of products or service packages, you can set up Item Codes in Xero to include the description, price, sales account, and tax rate for each service or product. You can then use Items as shortcuts when entering either Sales Invoices or Purchase Invoices. For example, selecting an Item from the drop-down menu means the description will be automatically filled in for you.

Payment services

If you like receiving payments quickly, you'll love this feature. It enables you to set up an account with Iwoca or PayPal and link to your Xero account. Your customers will then have the option to pay by card straight from the sales invoice you send them without needing to use BACS.

Quotes

Using Xero Quotes can help you firm up new projects with your customers. Quotes are straightforward to create and email directly to your client's inbox. Once the project is completed, you can convert the quote into a sales invoice, saving you time.

Repeating invoices

You can save time by using Repeating invoices for both sales and purchases in Xero. If your customers pay you a regular, recurrent amount for a service, for example, a monthly retainer, you can set up Repeating sales invoices to automatically send the invoice out on the same date every week, month, or quarter.?Equally, any invoices your business pays for recurrent goods or services, such as monthly rent, can be automated by setting up Repeating bills.

Payment dates for payment runs

If you have a daily limit on your bank account, Xero allows you to add a planned date to a purchase invoice in the awaiting payment tab to create a planned payment schedule. The schedule will total the value of invoices for each day, giving you complete control over how much money leaves and enters your account.

Lock dates

You can use Xero Lock dates to set a lock date when a reporting period is completed. Users won’t be able to add or edit transactions in Xero if the transaction date is earlier than the lock date. It is not a permanent setting; therefore, you can change or remove it anytime.

Bank feeds?

This feature allows Xero to import account transactions from your bank automatically. Once you set them up, they will enable your bank to (securely) push data into Xero. You can then match this data against your sales invoices or receipts or link it to a useful category. If you are still importing CSV bank statements, or worse, entering each transaction manually, one of your quickest wins will be getting your bank feeds up and running.

Inbuilt calculator?

Xero has an inbuilt calculator that allows you to perform basic math functions directly in specific fields. Using this calculator decreases the chance of an entry error, not to mention it saves you time looking for another calculator to use for simple arithmetic operations. It's also useful if you need to do some quick calculations to service a more complicated accounting formula.

The inbuilt calculator has addition, subtraction, multiplication, division, and group functionality. To use it, type in an equation — like 15 * 1.12 — right into a field. Then press 'enter' or 'tab', and Xero calculates the result.?You can use this calculator for transactions as well as manual journals. However, bear in mind that not all fields accept math functions.

Interested in learning more about Xero’s functionality and how it can help you scale up your business? Reach out and connect with David,? get in touch at 01789 294484, or visit, grenfelljamesassociates.co.uk. Grenfell James offers a fully tailored accounting service to business owners and SMEs across Warwickshire and London, using technology to simplify processes and accelerate business growth.?

About the author:

David Murphy, Tax Director at Grenfell James Associates, Accountants and Business Advisors for ambitious business owners. Connect with David.

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