As the owner of a growing small business, you know how important it is to keep a handle on overheads. You’re juggling increased costs while running your creative venture, which often involves tough decisions about where to cut back. If you’ve seen Xero’s announcement about raising their prices from September, you may feel tempted to cancel your subscription to save costs – but hold your horses! When used to its full potential, Xero will help you cut costs elsewhere in your business and improve profit margins. Let’s explore how to get the most out of it.
Prioritise a solid financial foundation.
First thing’s first: even if you’re looking to cut costs, your business’s accounting is one area where it’s not wise to scrimp! Reducing your investment here can often do more harm than good in the long run.
Investing in good financial systems (aka digital accounting software plus an expert accountant) frees up your time to work on the business and gives you visibility over your performance. It’s far easier to identify areas of improvement and take steps that really make a difference to your bottom line.
Use Xero’s range of features to its full potential.
Xero is jam-packed with tools designed for small business owners. From performance insights to faster payments, here’s how to get the most out of the software.
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Use the invoicing tools.
- Customise your invoices to request payment from customers more quickly.
- Enable Xero to send automated email chase-ups for late payments.
- Give your customers more ways to pay with Xero’s range of options.
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Use the Budget Manager.
- Set monthly targets for the overall business so you can track your results against where you need/want to be.
- For project-based work, monitor and compare progress against budget.
- Find out the % of budget you have left per project or area of the business.
- Review these trends on your own or with your accountant to spot issues and take action quickly. The data shows how much profit or loss you’re making versus what you expected to make. It tells you whether you need to adjust things to avoid running out of cash and how much you need to save for tax.
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Make the most of tracking categories in Xero.
- For example, track grant funding, spend against funders, restricted funds, or other incomes you want to monitor separately.
- View the separate financial performance of different areas in your business, e.g. design services vs product sales.
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Customise your reports.
- View only the information you need in a way that suits you.
- Set up the reports and save them for use each week, month or quarter.
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Create business snapshot graphs.
- Visualise and understand your business’s performance in clear graphs instead of lists of numbers.
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Use forecasting tools.
- Predict your future cash flow with Xero’s short-term cash flow projection tools (from 7 to 90 days).
- Make the most of forecasts to identify risks to your cash flow, highlight who you need to chase for payment and inform investments in your business.
FreeAgent is a great alternative for smaller businesses.
Not at the stage where you need the advanced tools Xero has to offer? FreeAgent is the software we recommend for smaller, self-employed and limited company businesses.
While it doesn’t have as many features as Xero, it’s got a user-friendly interface and is easy to keep up-to-date. If you don’t need a wide range of integrations, FreeAgent is a more budget-friendly option.
Why it’s great for creative businesses:
- Value for money
- Visibility over tax bills
- FreeAgent provides clear estimates of your tax position during the year.
- You’ll be able to see your upcoming tax deadlines, as well as your predicted liability for VAT, corporation tax and self-assessment tax.
- Faster debtor payments
- Automated chaser emails for customers who are slow to pay.
- Integrations with PayPal, Stripe and other payment solutions make it easier for customers to pay you.
- User-friendly
- FreeAgent has a smartphone app with a modern interface that’s easy to use.
- Upload receipts, claim expenses and submit mileage claims on the app.
- The app notifies you if your bank feed doesn’t line up with your bank balance, so you can quickly resolve issues.
- Convenient
- Submit your self-assessment return straight from the software.
- Want peace of mind you’ve done it correctly? We do detailed checks and submit your self-assessment for you (or we can provide a sense check if you’d like to submit it yourself). Visit our self-assessment page for more info.
Start maximising your accounting software.
At Fearless, we help creative business owners achieve the things they want through top-notch finances. Want in? It all starts with a chat. Fill in our start form and we’ll be in touch.