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Know your numbers - Drilling down on your margins

Anna Stubbs • May 31, 2023

Gains can always be made at the margins. These small incremental gains over a month or a year can have a significant impact on your bottom line. This could be additional profit you make from a single project, a single product or service, a particular geographic area, or a certain type of customer.



Drilling down into your sales and margins gives you great insight into which parts of your business are performing well and which ones need improvement.

Some ideas to help you measure your margins:


1. Use real time and up to date data.
Ideally, use a cloud-based accounting system with daily data feeds from your bank.


2. Determine which ways you want to ‘dissect’ your sales.
E.g. by product or service line, by groups of products, by salespeople, or by region. A region could be defined as online sales versus shop sales.


3. Capture sales by these categories at the time of sale or invoicing.
Adjust your account codes accordingly or use reference fields.


4. Capture the direct costs of these sales by using an inventory or time recording system.
If you’re selling a mixture of labour and materials, make sure you correctly capture both the labour and the material costs.


5. Compare the actual results you are getting with your month by month budget.
Do this at least on a monthly basis.


6. Compare your results with industry expectations.
Consider accessing benchmark statistics from your industry or, better still, get together regularly with similar types of businesses to compare your results. These could be identical non-competing businesses in different locations (meet online) or industry-related businesses in your own region.


7. Seek feedback from us as to how you can improve your reporting of your margins.
We come into contact with many businesses like yours and are familiar with best practice, as well as what doesn’t work!


The first step in improving your results is understanding exactly where you are right now – warts and all. Talk to us about how to drill down into your margins.


"You can't manage what you can't measure." - Peter Drucker

Making Tax Digital to be extended to more sole traders and landlords

By Anna Stubbs • April 9, 2025
Hiding in the HM Revenue & Customs (HMRC) announcements published on 26 March was a technical note entitled ‘Modernising the tax system through Making Tax Digital‘. This note announces that the income threshold for Making Tax Digital for Income Tax & Self Assessment (or MTD for ITSA) is to drop to £20,000 per annum for sole traders and landlords. If you fall into this category, this means moving your tax completely over to digital by April 2026. But don’t worry, let’s see what MTD for ITSA is all about.

Reducing the uncertainty: financial forecasting and planning

By Anna Stubbs • April 9, 2025
Uncertainty can be a major threat to your strategic financial planning. Being unsure of what lies around the corner makes it difficult to make those important financial decisions around operational budgets, investment and growth funding. But by using forecasting and scenario-planning, you make it easier to manage your finances and reduce some of the financial uncertainty.

What's new in Xero (Spring 2025)

By Anna Stubbs • April 9, 2025
Some great new enhancements have come to Xero in the first few months of the year, here's some important features that have been released: Enhancements to the new invoicing Keyboard shortcuts. Drag and drop attachments. Date Picker quick select. Exchange rate adjustments in the invoice. Tracking categories for invoices. Automated bill entry The ability to upload bills directly to Xero, create one or many bills by dragging and dropping multiple files. Xero creates draft bills with the key details, and the original document is attached. Other important features (region dependent) Bank feed updates (Australia adds Suncorp Bank, United States gains PNC Commercial). Simplified whole operations with improved sales orders (United States). Easier 1099 reporting and filing (United States). Streamlined tax workflow and compliance (United Kingdom). Easier reporting (United States Schedule C compliance report, New Zealand not-for-profit tier 3 & 4 PBE reports). For the full breakdown read Xero's update .
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