Our data shows that small businesses are far more successful if they have an accountant. And many of them already do: as we announced at Xerocon, 92% of all Xero files are attached to an accountant, and that the number is continuing to climb.
With such a prevalence of small business-advisor relationships proving fruitful, it’s clearly a valuable interaction to understand. To help scratch the surface of its potential, we invited Interactive Accounting and online gift retailer LVLY, into the office as part of the Xero customer series to discuss the role the partnership has played in the startup’s quick business success.
A perfect match
LVLY positions itself as the ‘Uber of gifts’ with a unique portfolio of Australian brands, same-day delivery service and a core purpose of being ‘the only brand in Australia dedicated to making people’s day’.
Despite launching just 18 months ago, the company recently broke even – a milestone that co-founder Hannah Spilva attributes to the partnership with her accountant and the transparency and ease of the Xero platform.
“When we started LVLY, neither myself or my partner had a financial background, so it was crucial for us to find an accountant that understood startups, could help us navigate the financial growth of the business and challenge us to work harder,” she said.
A partnership with startup specialists Interactive Accounting was the right match, and the co-founders began their journey in learning the basics of financial management.
“What’s really exciting about the Xero platform is that it’s for anyone,” said Ryan Tietjens, Director of Interactive Accounting. “It’s easy to understand, whether you’re an early pre-revenue startup or a more experienced business doing upwards of $80mill a year.”
Getting Xero right from the start
Hannah said one of the most important lessons she learned starting out was to not just use Xero, but use it correctly.
“I think Xero gives you lot of confidence because it’s so intuitive,” she said. “Part of the learning curve for me was allowing our accountants to play a role in educating us on how to use Xero properly and how to get the most out of it. We are still going through this today and have only just begun to scratch the surface.”
Ryan echoed the sentiment, adding the importance of accuracy from the start.
“Many times, a business owner will only come to us because they have made a mistake that’s caused them some financial trouble. Generally the cause is that something was set up incorrectly in Xero at the start.
“Most people that go into business don’t have an accounting degree,” he said. “Mistakes can easily be made, especially in the startup phase. By putting processes into place from the beginning, we can help educate clients look after their files correctly and save them from making a costly error.”
Empowering small businesses to flourish
Along the way, Interactive Accounting has helped LVLY with a number of items, including getting on top of their cash flow.
“They really challenge us to do things better,” Hannah said. “For instance, our payments used to sit in Stripe for seven days without going through to our bank account. We just let that happen. Then these guys came along and said, ‘You know how you keep talking about how cash flow is a real problem? Well you can change that.’ This type of advice has been so valuable to us.”
Ryan said he’s watched the accounting relationship evolve rapidly in recent times.
“The relationship is changing from what used to be small businesses seeing their accountant a few times a year to daily conversations,” he said. “We work with our clients regularly to help them make the decisions that will have the greatest impact on their bottom line. With new technology, it really benefits the customer that we are becoming more efficient and can spend more time helping them plan for the future.”
Hannah said that the partnership advice, along with having total financial visibility and control, has given them to tools to be a profitable company.
“That may sound ridiculous because you would think that you’d have that from day one,” she admitted. “However, from discussions with other startups, we know they definitely don’t have control of their cash flow or visibility in how much inventory they are holding. I feel like we have been completely empowered to really understand where we are at financially.
“We were able to make some really clear KPIs on how to reduce costs and track that every month. If it wasn’t for the transparency of the Xero platform and the accountant relationship we could build from it, none of this additional value and advice would be possible – and we wouldn’t be the profitable business we are today.”
*For more details about the survey, and for advice on tackling late payments, visit www.xero.com/au/cashflow-gap