6 Mins
You’ve got the bank feeds set up, bank rules mean that most of your transactions are automatically coded up and posted at the click of a button, and you’ve mastered uploading invoices via the cloud for processing. The data input is done. Now it’s time to focus on the output.
Here are the Top 5 Xero Reports You Should Be Regularly Checking!
1. Profit & Loss Report (P&L)
The P&L report shows your income, expenses, and overall profitability over a given period. It helps you understand whether your business is making money and where you might need to cut costs or increase sales. On the reporting screen, click on any of the figures to see the breakdown of transactions making up the balance shown.
How to Access It in Xero:
Go to Accounting > Reports > Profit & Loss and select your desired date range.
What to look for:
- Do your income & expenditure figures align with your understanding of the business?
- Are there particular income or expenditure codes that you are particularly concerned about? Are they increasing or decreasing, and is that a good thing?
Take your P&L review to the next level: Use the ‘Compare with’ dropdown at the top of the report screen to see current period figures alongside previous periods’ figures. That way, you can pick up on trends. You can also run a P&L report for specific cost centres or income streams by using this report in conjunction with Xero’s Tracking Categories function.
2. Balance Sheet Report
Along with a Profit & Loss, the Balance Sheet is one of the core financial reports that is vital to understanding the health of a business. It provides a snapshot of your company’s financial position—its assets, cash balances, monies due, and owed—at any point in time.
How to Access It in Xero:
Go to Accounting > Reports > Balance Sheet to review your business’s overall financial health.
What to look for:
- How much cash do you have in the bank?
- Do you have enough current assets to cover your current liabilities (the amounts due for payment within a year)?
- Overall, is your Balance Sheet showing a positive or negative balance, and how is it changing over time?
Take your Balance Sheet review to the next level: From the Balance Sheet report, you can keep track of the position of your capital & drawings account or directors’ loan account—just make sure that the codes are set up correctly in the chart of accounts. As with most Xero reports, just click on any of the figures to see the breakdown of transactions making up the balance shown.
3. Aged Receivables Summary Report
If you use customer invoicing within Xero, then this report is a must for keeping track of which customers are yet to pay you, giving details at a glance of how old and how much the debt is for. Making sure customers pay within your settlement terms is key to ensuring your cash inflow remains healthy.
How to Access It in Xero:
Go to Accounting > Reports > Aged Receivables Summary to see outstanding invoices categorised by due date.
What to look for:
- Which customers have outstanding balances? Do they need a reminder?
- Has a customer breached their settlement terms (or are they about to)?
- Consider older balances. Unless payment terms have already been negotiated, do we know why the customer hasn’t paid yet? If recoverability is doubtful, further action may be required.
Take your Aged Receivables review to the next level: The above report is a summary of customer balances. Sometimes it’s more worthwhile to drill down into the detail. For this, use the Aged Receivables Detailed report (Accounting > Reports > Aged Receivables Detail). This gives a more detailed breakdown of outstanding balances at an invoice level so you can see if the balance due relates to just one sale or many.
4. Aged Payables Summary Report
Akin to the Aged Receivables report, this time it shows what balances you owe suppliers. It’s a vital report to help you keep on top of your debts and see what bills are coming up for payment.
How to Access It in Xero:
Go to Accounting > Reports > Aged Payables Summary to review outstanding supplier bills.
What to look for:
- Are there any overdue supplier payments that need to be actioned immediately?
- What bills are coming up as due for payment?
- Are there any early payment discounts you can take advantage of if you have the funds to settle bills now?
Take your Aged Payables review to the next level: Just like with the Aged Receivables report, a more detailed Aged Payables report can be found in Xero (Accounting > Reports > Aged Payables Detail). Use this to drill down and identify any negative transactions showing on the report. Have supplier payments been made for which you have no invoice? This will need investigating and rectifying so that business expenses aren’t understated.
5. Business Snapshot Report
The ultimate report taking your use of Xero to the next level, the Business Snapshot report uses all the data from within your system to provide valuable management information and financial analysis. With visuals alongside numbers, the snapshot gives an immediate idea of business profitability, showing trends in income and expenditure and the financial position of the business at a glance.
How to Access It in Xero:
Go to Accounting > Reports > Analytics – Business Snapshot to monitor key business metrics at a glance.
What to look for:
- How are profits looking compared to the last period?
- What are the business’s largest operating expenses? Are these costs under control?
- What is the average time to get paid and pay suppliers?
- If in receipt of loan funding, are bank covenants being met?
Take your Business Snapshot review to the next level: Now that you know you can access this data easily, set some targets! Identify what the key metrics are for your business and what can be improved on. Set a goal—a metric or measure to aim for—formulate a plan of how to achieve it and then implement that plan. Further down the line, as the results filter through to your accounting data, the Business Snapshot will reveal, at the click of a button, whether your efforts have been a success!
As a Xero Gold Champion Partner and with over 100 years of experience in advising clients on both bookkeeping and year-end accounting compliance, Henderson Loggie is well-placed to help you achieve the next level. If the information in the reports above doesn’t seem right to you, we can assist by undertaking a review of your Xero data to identify any issues that may be causing it—from balances pulling into the wrong section of the Profit & Loss or Balance Sheet to bank balances not reconciling to bank statements—and provide solutions to rectify accordingly. Alternatively, if you are ready to take your data to the next, next level in financial analysis and reporting (including forecasting!), we are on hand to help you get there. Contact us below.