It doesn’t really surprise me that the majority of my clients are completely clueless when it comes to managing the business finances. I was exactly the same two years ago!
It hasn’t been until I started using Xero that I have seen a great improvement in my financial ‘relationship’.
For the uninitiated, Xero is a cloud-based accounting software for small and medium businesses. In layman’s terms, it basically means a nice, pretty little program you can use online to record all your business transactions. I’ve been getting lots of questions about Xero and whilst I’m no accounting expert, I hope that by showing you how I use it in my online business, you can see how it can be used for yours.
There are three specific reasons why I use Xero in my business.
1. Record all my financials
Well, this one’s pretty obvious. It automatically links my bank and PayPal accounts and all I need to do is reconcile these. Before, I was getting lost among the different accounts and not keeping a solid record of my finances. Which meant things were getting lost. Not ideal.
2. Constant tracking of my profit-loss.
Because it’s important to know what’s going out and what’s coming in.
In two seconds, I can pull up a report of exactly how much money I brought in that month and how I spent it (and where I spent it). I can see in an instant which months have been going well and which haven’t.
Some months I’ve pulled in just short of 10k, only to see my outgoings about the same. Gosh darnit. That to me screams BAD HABITS. More money just means I spend more – so it’s something I’m working on behind the scenes. I would never have picked that up one year ago. In fact, I would have continued to spend like crazy because when the money starts to come in, geez it feels good. And those shoes were totally on sale #keepingitreal
3. Preparing for tax return with my accountant.
One of the great things about Xero is that my accountant can have direct access to my account. I literally don’t need to send them anything, like I have had to in the past. It’s just one less annoying step that ultimately saves me time and energy.
Xero is really just a tool to manage your business and your finances. But I’ve noticed something else that it’s great at – and probably the biggest surprise of Xero is my new, stronger relationship with money.
I’ll be honest here. I’m not the best when it comes to money. The emotional baggage is bat-shit crazy at times and I need to work on it. Which I’ve been doing so much better since using Xero. And it’s all come down to the fact that I actually check in and track my money now. I used to completely avoid it until tax time.
Now, I can see how much I’m spending. There’s some serious money leaks that have been fixed so much quicker as a result. Plus my boundaries within my business have also become clearer. Like, I won’t be doing any speaking gigs for free next year (with very few, specific exclusions) and I won’t be making many trips to up to Melbourne. I’ll post more about this soon.
If I’ve talked you into it and you want to get onto Xero, be sure to contact a local accountant or bookkeeper. Word of warning though: be very clear what the deal is. There are some horror stories out there of accountants taking Xero accounts hostage. Ask your accountant/bookkeeper how much control they will have. You want to have it in your name and give them only as much access as they need.
So in summary, using Xero can really transform your financial systems behind the scene. This isn’t a sponsored post at all – I’m just a raving fan and have received so many benefits from it. I reckon you’d love it just as much as I do.
If you need help to learn how to set up and use Xero effectively, then I’d HIGHLY recommend this program (current intake closes 8th December – my birthday!):