Xero has recently added two new features to help you during this period of the COVID-19 pandemic. Today, we’d like to share an introduction to the Business Snapshot feature. To find the Business Snapshot feature click on the business tab then select “Business Snapshot.” It should be second from the top in the business menu.
Besides providing you with a valuable analysis of your business, if you’re a visual person and like graphs, this is a fun feature to use. Some of the things you can view on the business snapshot are income, expenses, profit or loss, efficiency, overall cash position, and average time to get paid.
Before you start looking at your business snapshot, you need to select a time period. You will see this as a dropdown box at the top right of the Business Snapshot screen. We like the year to date option because Xero will automatically compare to the same period in the previous year. This is helpful given we are experiencing such unprecedented economic times right now.
Let’s dig into some of the specific features and how you can use them in your business.
If you have a product-based business, the efficiency box tells you how much of your income is left to pay expenses after covering your cost of goods sold. This is helpful to know when determining your prices. If you have less left after covering your cost of goods sold, you may want to consider a price increase if the market can handle it.
This box tells you the combined balance of all your cash accounts. Remember that Xero treats credit cards as a cash account, so this box is handy for knowing if your cash flow is positive while also considering your credit cards—something that is easy to forget.
Average Time to Get Paid
This tells you how many days it takes your customers to pay you. You must use Xero’s invoicing for this to calculate properly. If this number seems high to you, then it’s a good time to consider why. If your customers have been affected by COVID-19, this could be the reason this number is higher than you’d like.
One of the best things about Xero’s Business Snapshot is the built-in comparisons. You can instantly see how all your numbers stack up against the same time in the prior period. This is helpful when trying to make changes in your business.
So, if you notice all of your expenses are in line with last year’s except for advertising, you might want to dig a little deeper. Did you decide to try something new that cost a little more than your typical advertising? How did it work out for you? Did you see extra sales from it? These are the kinds of questions you need to ask yourself when analyzing the health of your business.
If you’d like a walk-through of Xero’s new Business Snapshot feature, connect with us. We’re happy to help.