How to stop your clients using Xero and automation to make a bigger mess faster
@UnicornAus
Craig Badcock is the sole director of Unicorn Business Solutions He founded his first accounting firm when he was just 27 years old and has built 2 Chartered accounting firms from scratch. He understands that your biggest expense does not appear on your profit and loss – it is the cost of missed opportunity. Craig, now an advisor to the advisors, helps small business owners build a business that works for them rather than the other way around.
Live alerts, efficient budgeting tools and timely reports are substantially useless without data integrity and small business owners just don’t have the necessary skills or resources to produce accurate numbers...
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could be profound. ver get sick and tired of fixing messy client files? Our experience is that most small When Craig Badcock at Unicorn business owners want accurate Business Solutions takes on new records on a timely basis even clients their financial records though they don’t fully appreciate are always a mess. Most of the how important this balance sheet accounts are is. They would rather incorrect and the Profit “The right have a tidy Xero file & Loss at best gives a numbers are than an untidy Xero vague approximation file. even more of the real results. Unfortunately, this important that To move small situation hasn’t getting the business owners changed with the numbers right.” towards accurate increased use of Xero numbers every month and Xero add on products. we have found the following Clients are just making a bigger process. mess faster. So, why do we need to change this? Small businesses are the engine room of our economy and according to some studies 4 out of 5 fail before the end of their 5th year. The main reason they fail is poor financial decision making and the main reason for this is poor quality financial information. If we can help to provide them with quality financial information, the impact on the economy could be substantial and the impact on the lives of individual business owners, their families and their employees 100 / Issue 13
Increase the client’s interest in their numbers Small business owners don’t understand financial statements and even if they did, they don’t tell them everything they need to know.
never available. The right numbers are even more important that getting the numbers right. Following a discussion about where the numbers in the model come from and how the key drivers can be increased, we ask the client what those numbers could be. In this example, the $1,491,411 upside leads to a sudden increase in the client’s interest in numbers. We then help the client set KPI targets and build a monthly Profit & Loss and Cash Flow budget and monthly reporting system. This process often leads the client into our coaching program, but that is for another article. Make it easy for them to get their numbers correct every month
We start by building a simple financial model and demonstrate how small changes can make a big difference to profit and business value (Figure 1).
Having the client motivated to produce accurate numbers every month isn’t sufficient to overcome a skill and resource shortfall. The next step is to correct the mess and train the business owner or person responsible for data entry.
We ask lots of questions and build this model based on estimates because the accurate information is
It is also important to make sure they are using the most efficient and effective system available.
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