By now, most of our clients took an advantage of Xero. (well, most of Australian business owners, as Xero really does seem to take on the world)
Having data automatically downloaded from their banking into the accounting software not only saves time but also gives them opportunity to stay on top of their numbers and notice issues before it’s too late.
It also opens up this “DIY bookkeeping” era, which is fine and cuts costs… but how well do you do it?
Over time, we came across various mistakes people make and summarised points to consider:
1.Purchases (bills) payments
Once these sync into your Xero and then bank feed downloads the payment, it is as easy as hitting the OK button.
It works similarly for the invoices you issue to your customers. Things may get little bit tricky if the client doesn’t pay exactly right amount or uses wrong invoice number as reference for their payment.
The easiest way to match these is to go to “Find & Match” tab and do a search either by name or reference number or by the amount.
When you have found the invoice you want to match you will have to tick the box on the left hand side. If they are only part paying the invoice, you will need to hit the “split” button in the middle.
Tip: Do not go into your purchases/ invoices to mark them as paid there. You can simply wait until the payment shows on the bank feed. Again, you not only save time but also limit the risk of error (i.e. marking them as paid from a wrong bank account)
3. Rules rule!
After the steps 1 & 2, create bank rules!
For anything you don’t get/ keep receipts for or simply if you don’t use the “purchases” function within Xero, set up rules for any transaction that is likely to repeat.
This will make coding of any future transactions so much easier as Xero will automatically pick which account they are supposed to be coded to based on the rule you have set up.
You can find a video on rules HERE: https://vimeo.com/89045082
4.Transfers between the accounts
Code transfers between the accounts, credit cards or Paypal
Tip: Record the transaction as a transfer when coding one account. Once done, it will automatically appear as a transfer when reconciling the other account that you transferred the money to and you’ll just need to hit the OK button.
For any odd bits that are very unlikely to repeat, you can just create expense or income item to reconcile. Make sure that you check the GST rate.
Always make sure to check your bank reconciliation report.
- Reports tab – All reports
- Select Bank Reconciliation Report
- Select the bank account that you have reconciled and the correct date
- Select update
- Compare Xero reconciliation report against your actual bank statement and these should match!
If you need a hand or think you need a one on one Xero training, don’t hesitate to give us a call on 07 3160 7386.
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