Data confidence: the ultimate power move for business owners
Two years ago, the world was thrown into crisis. What started as a ‘let’s just get through this’ for business owners has become a catalyst for permanent change for business of all shapes and sizes.
Many businesses have pivoted, transformed and come out the end of two years of chaos in good (or even great) shape. Many others have not been so lucky. One thing is true for all – the way we do business – and how we do business – has changed irrevocably.
The importance of the business owner – bookkeeper – accountant relationship
From my experience, quality data, efficient accounting workflows and ongoing collaboration between owners, bookkeepers and accountants are all essential for business survival. I learned this the hard way, in the wake of the global financial crisis (GFC), when my company went from $1million profit to $1million dollar loss. We may be what feels like the back end of lockdowns and a global pandemic – but we will be dealing with the economic impacts of this for years to come.
While the GFC severely impacted my company, it was poor decisions (due to inaccurate financials), a lack of communication with my advisors, and an employee committing expense fraud that ultimately forced me to close the doors. The silver lining – it motivated me to develop XBert, software dedicated to helping business owners and their advisors make the right decisions through quality data.
While these issues can happen, even in good times, it’s more important than ever that business owners and advisors have accurate data to make the right decisions.
You need to know what’s going on with your financials
In my previous business, I continued operating and kept staff on I couldn’t afford, based on bloated cash reports from unreconciled transactions and bookkeeping mistakes, like duplicate invoices. This lack of oversight also meant it was too late when I finally discovered my colleague was claiming illegitimate personal expenses that they couldn’t repay.
It seems like common-sense but you must have a clear picture of business health to ensure you’re making the right decisions. To do this, you need to assess information from many sources. You also need to know the status of records and bookkeeping tasks at any time. And when you’re running a business, all of this can take time and brain space you just don’t have.
Without the right tools, this can be time consuming and error prone. Audits and manual checks can take hours, and human error can lead to issues being missed. This can include duplicate bills, increased debtor days or incorrect account coding, to name a few.
This is where arming yourself with the right technology can simplify the process and ensure accuracy. For example, XBert uses machine learning and AI, that integrates with Xero to analyse your accounting data hourly (like invoices, bank statements and transactions and payments), to automatically detect patterns, anomalies, and errors in accounting data.
Errors are costing you money – and you might not even know it.
A massive 59% of files analysed by XBert contain ABN or GST issues. With a large chunk of business owners attempting to reconcile the books themselves – this is a recipe for disaster not just for the business but for the bookkeepers and accountants on the receiving end of those files come tax time.
Advisors are not just experts in tax preparation and compliance. They can also help analyse and interpret trends, provide holistic approaches to financial management and develop growth strategies. Having a professional bookkeeper and accountant team across your books is smart business. Learn from my mistakes and seek their guidance - early.
If I had, I may have saved my company. The numbers didn’t add up and trying to understand the reports from my finance team took too long. There was an endless back and forth of questions and corrections. I should have asked skilled advisors to step in.
Whether you’re a business owner or advisor, you must continue to connect with your team, customers and clients from wherever you are. You need to know what’s happening now and what has to happen next.
If we’ve learnt one thing these last two years, it’s that change is the only constant. The business landscape has certainly changed forever. Humanity is resilient and creative. We’ll continue to evolve, innovate and reinvent business. But what never moves from the priority list is understanding your business, and the financials. Knowing exactly what’s going on with your books, is the ultimate power move. It gives you the confidence and freedom to make decisions that actually benefit your business, every time.