I was recently chatting with our Bookkeeping Manager, Steve Priddle and we were talking about the benefits of good bookkeeping, how it underpins business success because of the implications it can have on cash flow, cost management and understanding your business, whilst ensuring you’re legally compliant.
Steve told me about a client who came to us in a bit of mess. The business, (we will refer to as Charms Café) had been trading for eleven months. During this time, they had a subscription to Xero (accounting software), but had never actually used it. This is pretty common, we get all the right tools in preparation, but then don’t actually use them – sounds like me and my commitments to exercise! I’ve got some great gear… sitting in the wardrobe! Who hasn’t paid for a subscription (gym?) and not used it? It happens in business too, sure we have grand plans, but don’t set aside time to execute them, or learn how to use business tools or subscriptions.
So eleven months in, and Charms Café were well behind. They had been manually calculating GST along the way, but there was no record of wages (manually trying to work out PAYG on guesstimate wages was a big challenge!). No superannuation paid, and no idea how the business was tracking. BAS time was a nightmare. Again manually trying to calculate sales and deducting expenses and hoping for the best…Which we know, is not the best way to run a business.
Steve Priddle and the Ross Group Bookkeeping Team came to the rescue, and reconstructed Xero for the twelve month period it hadn’t been used. Loading up a years’ worth of payroll to ensure Charms Café was in a position to issue group certificates, accurately report on GST, and produce a profit and loss statement.
We also set up live bank feeds on Charms Cafés Xero account, which provides up to date information – live data on income and expenditure. The ability to receive up to date sales information and enter supplier invoices into Xero (weekly in this case) provides an accurate snapshot of the business. This type of data is supremely valuable, in addition to monitoring spend, expenditure and profit, we can also benchmark against similar industries regarding cost of sales and wage costs. For Charms Café we found wage costs were on track with industry standards, though cost of sales were running quite high compared to industry sales, recognising the need to make changes, by either increasing sales or cutting costs.
The structure provided by Xero and the useability of the system has assisted Charms Café in keeping up to date with their records and paperwork. Charms Café has gone from a ruddy shoe box to Sarah Jessica Parker’s shoe cupboard – they’ve made quite a transformation.
A change such as this is empowering for businesses, they gain power through data and reporting, and are well informed to make good business decisions. As Charms Café told Steve “You guys, and using Xero have made our lives so much easier, we can see how our business is tracking, we’re confident we’ve got everything in order, and now I’m sleeping again at night… I’ve stopped stressing about it”
Ross Group’s bookkeeping service allows you as a business owner to concentrate on your business, creating the space for you to focus on your area of expertise. Contact Steve Priddle to learn more about how effective bookkeeping can help your business today.
Contributed by Mel Ross with Steve Priddle.