Based on a webinar with Rechargly, The Bean Counters, and ApprovalMax, this blog explores how accounting firms can use automation and approvals in XPM to track costs accurately, prevent missed billing, and improve profitability.

Alex Millar

Co-founder & CEO

In this article

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From Hidden Costs To Clear Profitability: Using XPM Effectively

Most accounting firms want clear visibility over their profitability.

But when costs are entered manually, tracked in spreadsheets, or not connected properly to Xero Practice Manager (XPM), it’s easy to lose sight of what’s actually being spent and what’s being recovered.

At Rechargly, we recently hosted a webinar with Tyler Caskey from The Bean Counters and Justin Campbell from ApprovalMax, hosted by Alex Millar. The session explored where firms go wrong when tracking costs in XPM, how automation can help, and why proper approvals are key to improving profitability.

This blog shares the main takeaways from that discussion.

If you’d prefer to watch, here’s the recording:

Where Firms Go Wrong With Cost Tracking

The main issue for many firms is the lack of automated processes around cost tracking. When disbursements, time, or expenses are handled manually, firms spend more time managing data than understanding the results.

Without reliable processes, it is easy for errors to occur. Payments may not match what is entered in XPM, or costs can be missed completely. Manual data entry increases the chance of mistakes, especially when there is no link to a bank feed or supplier bill.

In many firms, costs are treated as an afterthought rather than an important part of practice management. As a result, the data needed to assess profitability accurately is often incomplete.

The Hidden Risk of Manual Processes

Manual tracking usually starts with good intentions. Some firms import data from spreadsheets into XPM each month, but over time the process becomes too difficult to maintain.

When only one person manages cost entry, accuracy depends on their time and attention. If that person is busy, costs may not be entered before billing, leading to inconsistent client invoices. Clients can be surprised when missed costs are later added in bulk, such as several months of subscription fees appearing at once.

This not only affects client experience but also profitability reporting. Firms that rely on manual processes often bill less than what they spend, and staff find the work repetitive and low-value.

Assigning cost tracking as a side task makes it more likely to be delayed. This causes irregular billing and creates the impression of disorganisation, which can affect client confidence.

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How Automation Changes the Workflow

Automating cost tracking removes many of these issues. When systems automatically bring costs into XPM, the admin team no longer needs to perform manual entry. This saves time and reduces the chance of error.

Automation also supports electronic approval processes. During periods when teams are working remotely, relying on email approvals can slow things down. Automated approval tools ensure costs are reviewed and approved quickly, with a clear record of who approved each bill.

Tools like ApprovalMax make costs visible throughout the process. In larger firms, this allows partners and managers to see which costs are approved and assigned to each job. Automating approvals in multi-entity groups can remove unnecessary email exchanges and improve oversight.

Consistency Builds Trust

Consistent billing is a key part of building trust with clients. When invoices go out on time every month, clients see the firm as structured and reliable. Irregular or delayed billing has the opposite effect.

A predictable billing cycle also helps internally. It ensures that all costs are captured within the right period and that data in XPM reflects the true financial position of the firm.

Approvals as Financial Control

Approvals are not only about compliance. They act as a control to protect profitability. Without an approval process, firms risk paying duplicate subscriptions or missing onchargeable costs.

ApprovalMax allows firms to create an approval matrix so that specific people are responsible for different types of bills. This improves visibility and helps larger or multi-entity firms manage approvals consistently.

Structured approvals ensure that partners can see costs before they are added to jobs and billed to clients.

Understanding What to Oncharge and What To Track

Firms typically manage two types of costs. The first includes costs that should be oncharged to clients, such as Xero, Dext, QuickBooks, and MYOB subscriptions. The second includes costs that are tracked internally, such as CAS360, SMSF, or processing fees.

Rechargly connects these costs directly into XPM, reducing manual work and ensuring data accuracy.

Many firms spend heavily on software without realising how much these costs impact revenue. In some cases, software costs can reach ten to twenty percent of total income, which makes visibility essential.