Using Fathom To Analyse Your Business Financials

Fathom is a financial analysis and management reporting tool that uses your accounting data in Xero to help you monitor trends, identify areas to improve and assess the performance of your business.

Why would you need this when the financial reports are already in Xero?

While you could interpret the same results from the reports Xero provides in your Profit & Loss and Balance Sheet - what Fathom does is simplify the information to present a quick and easy dashboard of your financials to assist in the decision making process.

Fathom does the calculations for you.

Fathom has a library of over 50 financial KPIs that you can measure - enabling you to track performance against the budget or set targets. The KPIs are a mix of figures directly out of your accounts, and financial ratios that provide insight into the overall health of your business. When you first connect Fathom to Xero you can customise which KPIs are most important to your business, and assign a weighting of their importance.

KPI selection for financial analysis

The KPIs are grouped according to the area of the business being analysed - profitability, efficiency, activity, liquidity, gearing, cashflow & growth.

Standard measures include - total revenue, gross profit margin, profitability ratio, margin of safety, return on assets, activity ratio, accounts receivable days, cash flow margin and many others.

Outside of financial measures, you can also import in other KPIs to track in your reporting.

With Digit for example, we measure KPIs including new customers, lost customers, referrals, conversion rate, average sales per customer, new versus repeat business & number of compliments (seriously, who wouldn't). Fathom has a library of predefined KPIs for use in reporting, or you can create your own.

KPIs are custom for your business and industry

Once you import your financial data - exploring the results is simple.

The KPI dashboard shows you the full list of KPIs, your current results, the target, whether the target was achieved, the trend, and benchmarking statistics

summary of financial performance and trends

Clicking on a KPI provides you with a description of the KPI, suggestions for strategies to improve, and the historical trends.

learn what KPIs mean and how they impact your business

The profitability dashboard shows you your Revenue, Gross Profit, Operating Profit, Breakeven Point and Margin of Safety. It's a great tool for helping determine whether to hire a new employee.

understand your business profitability

Other tools including analysis of your growth, cashflow, and trends - along with a goal seek tool that allows you to select a KPI, and a target, and adjust the contributors (or drivers) of that KPI to achieve the given goal.

For example - if your goal is to improve your Gross Profit Margin by 5%, you can model what changes are required to your variable cost of sales (decrease), or price (increase) to achieve that goal.

learn the financial drives to achieve your goal

Lastly the reports can be generated as PDF files for presentation to a board, or offline review. You can choose from the full report (compared against previous month, quarter or year), specific sections (such as KPI summary, profitability, cashflow or growth analysis), variance reports, or export to Excel. Click here to view a sample management report.

Overall - Fathom is a great tool for quickly delving into the financials of your business and see what is happening under the hood. It presents information in an easy to use format, and in combination with an independent business advisor allows you to make better business decisions

Do you want to grow your business?

We can help you uncover the key metrics that drive your business, and discuss your numbers

Learn how
xero experts
Andrew Erkins

A passion for technology and people inspired Andrew to co-found Digit. With a background in information systems, he loves business strategy and figuring out what makes things tick (and how it could tick better)

learn more

Do you want to grow your business?

We can help you uncover the key metrics that drive your business, and discuss your numbers

Learn how

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