When it comes to finances, you must know the health of your business. It's not enough to know how much money you have in your bank account, you must understand how and where you spend it, what your liabilities and assets are, and how cash flows in and out of your business.
The better you understand your financial metrics, the easier it will be to make decisions.
“Financial statements and metrics are more than just numbers that go up or down month after month: they tell a story about your financial health, your ability to grow, and your ability to sustain and weather trying times,” writes Martin Kamenski, President and CEO of eMyth, and a former CPA.
At a minimum, you must be able to create and periodically review:
- Income Statement
- Also known as Profit & Loss Statement (P&L), this statement shows your income and expenses over a period of time. It's a great way to see where your money is coming from and where you're wasting it, so you can trim the fat.
- Balance Sheet
- Unlike P&L statement, balance sheet is a snapshot in time. You're able to see your assets, your liabilities, and your equity at any given time – what you own and owe. The idea is to make sure your assets equal your liabilities (balance out), to have healthy business.
- Statement of Cash Flows
- This important, but often overlooked, statement helps you understand where income is (or will be) coming from, and where it is (or will be) going. It's like checking your business' pulse. It is used for budgeting and planning.
In order to be able to see financial health of your business, you need to use a good accounting software that's easy to use and generates these reports.
Event Planner's Toolbox: Xero »
Before we talk about Xero, know that we use Xero for accounting ourselves. In the early days, we were using Wave Accounting since it was free. It was good. As our business grew, we found that Wave Accounting was too limiting – especially when it came to reports.
That's when we searched for a new accounting software, and the choice came down to either QuickBooks or Xero. With Xero, being our final choice due to ease of use, automation, integrations, and internationalization.
Now, let's break down why Xero is a good choice for your event planning business.
1. Ease of Use
When we compared Xero with QuickBooks, ease of use was a very important factor. Accounting is already tedious and complex, the software had to be friendly and easy to use to allow a regular user use it.
Don't misunderstand, you do need to learn how to use Xero – just like any other accounting software. But the learning curve is much lower than QuickBooks, at least that was my experience. Xero user interface is intuitive, and makes sense. Once you understand how everything works and how it's laid out, you'll be good to go.
2. Use On-the-Go
Even though Xero is a cloud software, it offers mobile apps to manage everything. It becomes important when you travel. You can snap pictures of receipts with mobile app, view and create invoices, and reconcile transactions.
As an event planner, this mobile app will be invaluable to you. As you travel and need to purchase items for an event, you can quickly snap pictures of receipts to keep track of your expenses. You'll be able to track your last minute purchases at Staples, because you ran out of name tag holders or forgot to buy markers.
One key feature we were looking for in our new accounting software was automation, to speed up bookkeeping. Xero allows automating transaction matching, which reduces time necessary to reconcile everything. You setup automatic rules, and Xero does the rest. Saves us a lot of time and effort.
Plus, Xero imports all data from our bank accounts and PayPal accounts. So we don't have to manually import or enter the data. Saving us time again!
We use multiple systems for multiple reasons, and we wanted to be able to have flexibility to connect everything with Xero. In addition to a robust API, Xero comes with over 500+ integrations with other services.
For example, if you're using Eventbrite to sell tickets you can connect Eventbrite with Xero using Zapier. The integration will sync your ticket purchases with Xero. Every ticket purchase will be added as an invoice, so you can reconcile everything later. This allows you to have financial data available immediately in Xero, so you can properly budget everything.
Using Zapier, you can definitely integrate other event registration services with Xero.
If you're not in US, you can still use Xero. One of the key benefits of Xero is that many businesses around the world can use it. It's not a US-only accounting software.
Plus, Xero is able to track multiple currencies if you're charging in more than one currency.
6. Payments & Bills
If you take payments online from clients and attendees, you can use Xero to get paid quickly. It integrates with PayPal, and other payment gateways that allows your payees to pay online. Paired with mobile app, you can invoice clients on the spot and they can pay you on the spot too.
Plus, you can track purchase orders and bills in Xero. Everything you need to manage your money, Xero has it and it's easy to use.
We began talking about financial metrics and reporting, and that's where I want to finish. This became the most crucial feature for us.
As we input and track all data in Xero, the business performance dashboard and reports are giving us an accurate view of our the financial health of the business.
In addition to the features and benefits described, Xero does include many others:
- Fixed assets
- Track sales tax or GST or VAT
- If in US, you can import QuickBooks
If you're looking for accounting software to manage your event planning business, I highly recommend Xero. At least, checkout their free trial with demo data so you can see if it's right for you. It was the right choice for our business, only you can tell if it's right for your business.
If you have any questions, feel free to comment. We're here to help.
This post includes affiliate links.