2 Mins
Good management accounts don’t happen by accident – they’re built through clear structure, consistent coding, and effective reporting tools. If you’re wondering how to set up management reporting in Xero + Fathom, this article walks you through a practical, step-by-step setup for transforming Xero and Fathom into a powerful management reporting system.
1. Review & Refine Your Chart of Accounts
A well-structured chart of accounts should distinguish between:
- Direct costs (materials, subcontractors, delivery)
- Indirect costs (rent, admin, software, salaries)
Allocate indirect costs logically e.g. based on revenue, headcount or square footage.
Keep it simple but meaningful – clarity beats complexity.
2. Set Up Tracking Categories in Xero
Use tracking categories to segment data by:
- Service lines
- Product types
- Projects
- Departments
- Geographical locations
Apply categories consistently to sales invoices, purchase bills, and expenses.
3. Sync Xero with Fathom
Once linked:
- Data updates automatically
- You can build custom dashboards
- Reports can be tailored to stakeholders
4. Create Custom Reporting Packs
You can generate tailored, repeatable reporting packs. As well as the usual balance sheet and P&L, you could include:
- P&L by revenue stream
- Margin analysis
- Monthly trend graphs
- Budget vs. actual
- Customer or product profitability
- Key financial ratios (e.g. gross margin % or debtor days)
5. Build Visual Dashboards
Use Fathom to show:
- Revenue trends
- Gross margin comparisons
- KPI performance over time
Visual insights drive better conversations.
6. Leverage Forecasting & Scenario Planning
Model:
- Cash flow
- Pricing changes
- Hiring
- Contract wins or losses
- Best/worst-case scenarios
This becomes essential during fundraising or strategic planning.
7. Add Commentary
Numbers tell you what happened.
Commentary tells you why – and what to do next.
8. Export Professional Reports
Fathom allows branded, board-ready reporting in a few clicks.
Top Tips
- Reconcile Xero regularly and ensure consistent coding. Set up a bank feed in Xero and bank rules for recurring transactions which allows you to reconcile with a single click
- Upload budgets into Fathom for powerful variance analysis. You can link your budget to the forecasting tool to build a P&L forecast directly from your budget
Ready to Get Clarity, Confidence and Control Over Your Numbers?
If you want deeper insight into what’s really driving your business – and the confidence to make smarter, faster decisions – we can help.
Our ABS team will make sure your systems, coding, and reporting structure are set up properly, giving you clear, reliable monthly management accounts that actually support decision-making.
Our Corporate Finance team will help you use those stronger accounts to:
- Build a credible growth story
- Strengthen valuation
- Prepare for fundraising, succession, or sale
Together, we give you the visibility and strategic support you need to plan for whatever’s next.
Conor Adamson
