As a business owner, I know how important it is to understand where your business is financially.  Most importantly… Do I have enough money in the bank to keep my business running? Depending on your industry, debtor payment terms are often the 20^th of the following month, meaning I need to have enough cash to pay employees, taxes and suppliers in the weeks leading up to the 20^th.

This is one of the main reasons I switched my accounts to Xero 5 years ago (and I haven't looked back). Each month in Xero, I enter all supplier invoices, calculate employee wages, prepare PAYE and GST returns and invoice my clients. I also reconcile my bank account regularly and often do this from my smartphone or iPad when I have a spare 5 minutes.

By keeping Xero up to date, I am able to generate reports that show me exactly what my current cash needs are and whether my incoming cash will cover the outgoing cash requirements on the 20^th. Sometimes there may be a cash shortfall, which sometimes happens when supplies are purchased in one month but a job is invoiced in the following month (usually due to the weather). By using Xero, I know what my cash requirements are and can plan for a shortfall in advance of the payment date.

If you haven't heard of Xero or if you are thinking of converting to Xero, come along to our "Introducing you to Xero" seminar on Tuesday 13 October 2015 in our Kerikeri office. Email us at kerikeri@pkfpl.co.nz or phone us on 09 407 7142 to book your seat.

PKF Poutsma Lemon Limited

Janine Telfer