An online retailer was drowning in unreliable Xero data and couldn't trust his own numbers. We rebuilt the accounts, shifted the focus from sales to margin, and turned growth into provable profit — with a £10m target now firmly in sight.
This client runs their entire operation through Xero — sales, stock, day-to-day finances, all of it. But over time, several different people had been using the software in their own way, without much accounting expertise behind them. The result was that the numbers stopped adding up.
The problem
Reports couldn't be trusted, and the director had no reliable way to check whether what Xero was telling him actually matched what he knew about his own business. He knew data entry was only part of the problem. What he needed was someone who understood the software properly — not just how to type numbers into it. Since he'd worked with us before, he came back to us for help.
What we did
We started where we always do: by understanding how the business actually worked, and how Xero was being used day to day. From there, we cleaned up the accounts from the ground up, making sure bank reconciliations were accurate and any anomalies were sorted out.
Once the numbers could be trusted, we produced proper management reports — and that's when the real picture emerged. The business was caught in a classic growth-versus-profitability trap. With thousands of products live on the site, all the attention had gone into driving sales, but margins were quietly weaker than they should have been: four years ago, turnover sat just under £1 million, with gross profit at only 21%. The director's instinct was to keep pushing sales; we brought the focus back to margin, making sure every sale was actually making the business money, not just adding to turnover.
Digging deeper uncovered more problems still — including supplier invoices that were incorrect or overcharged, quietly eating into margin without anyone noticing. It also became clear that Xero itself had reached its limits: it simply wasn't built to analyse sales in the depth this business now needed across such a large product range.
Where things stand now
Since then, we've helped streamline costs across the board, giving the director a clear, workable grasp of his administration expenses. Marketing spend, once a fixed and unpredictable cost, is now variable and far easier to track against results.
The numbers speak for themselves: gross profit is now 35% on a turnover of £1.5 million, up from 21% on under £1 million four years ago. Our role has grown right alongside the business — from high-level reporting, to detailed profitability analysis, to redesigning the systems and software behind the scenes. The next target is £10 million turnover, and with the foundations now in place, it's a realistic goal well within reach.
It's a good reminder that even a business that knows Xero well can still end up with figures that don't tell the full story. That's where having expert eyes on it makes the difference — unlocking what the software can really do, and making sure it keeps working for the business as it grows.
If you have Xero, we can review it and give you a free consultation.