Money is a tricky topic for a lot of business owners. There’s the matter of how to account for it, how to present it, and of course, how to raise it. Some business' don’t prioritise accounting and financial transparency, while others inflate the importance of fundraising to a disproportionate degree.
So, in this day and age where accounting has been made a lot easier and financial information more transparent, how should business owners approach their numbers?
Numbers should tell a story
Proper accounting is more than just compliance. It’s an opportunity to paint a picture of your business—where its strength and opportunities lie, as well as its risks and challenges—which, in turn, can help business owners make better decisions.
But accounting is a technical skill, and not all business owners are necessarily savvy in this field. This is where a good accountant can come in.
More SMEs are leveraging accounting solutions like Xero to get yesterday’s data. Back in the day, this was an accountant’s job. It would take them up to three days to collect information from the client and the bank before they could present the numbers. But because Xero does all this already, accountants get to take a more strategic role as an advisor, reading and interpreting the numbers into actionable advice.
This is important because business owners don’t always think about this. They see positive numbers and think they’re doing well, so no need to bother checking what’s under the hood, right? In the past many accountants saw themselves solely as the people who could help business owners pay less tax and comply with the law. But now, thanks to new solutions and emerging technologies, like Xero, they get to be so much more than that.
Financial transparency is important to investors
When pitching a business to investors, getting the right number—whether it’s net profit, sales, margins—is key. But the kind of data you present depends a lot on the stage of your startup and the kind of investor you’re looking at. Tools like Xero are extremely useful in this case because it provides real-time insight into a business’ cash flow. Especially since cash flow management is one of the top issues for SMEs, this sort of transparency is essential to grow and scale.
Xero empowers businesses
Using Xero means that business owners can have an easier experience with accounting and make better decisions based on their financial data. By making accounting easy, it empowers business owners to focus on scaling and doing beautiful business.
Interested in more information? On episode 4 of Xero On Air, host Graham Brown and Sam Gibb, an investor and partner at venture capital firm Endeavour Ventures, discuss the topic in depth. You can listen to the full podcast here.