We are often approached by businesses who are using Xero but know they are not using it as well as they might. Sometimes all they need is some training, on other occasions they would just like us to do it for them.
So here are six tips to help you use Xero effectively in your business.
Allocating income and expenses
Xero has a default list of account names with codes which are split into Revenue, Direct Expenses, Overheads, Assets and Liabilities. When allocating your income and expenses from the bank feed make sure you choose the appropriate code and be consistent. Using these accounts appropriately and consistently will give you accounts reports which will be more useful than if you are haphazard about recording transactions.
Don't duplicate
Decide whether you are going to allocate money coming in and going out directly from the bank feed or whether you are going to create sales invoices and add bills. If the latter you need to add these and then allocate the incoming receipt and the outgoing payment to the invoice or bill. If you mix the two methods you will be duplicating your income and duplicating your expenses.
Don't make work for yourself
Small payments such as those paid by a debit card don't need to have a bill added because you are increasing the process. A bill is added because it is not generally paid straightaway and therefore sits in your accounts as a reminder until it is paid, whereas a debit card payment is an immediate payment.
Bank rules - useful or not
These are useful if you have a lot of regular payments but as Xero remembers how you recorded the same transaction last time, as long as the name, account name, detail and VAT is correct you can just press OK. You may just need a simple change such as "May wages" instead of "April wages"
Use the reference and the description
It doesn't take long to add a bit of information in the description section and you will find it useful at a later date when you are checking your accounts. If you have entered a bill you will add information in the description for the bill but if you are just entering a receipt of money or a payment the information you put in the description can help enormously. For example adding Electric April, Electric May, etc will indicate very quickly if you are missing a payment.
Check the bank balance regularly
Xero bank feeds are not always consistent, especially with some banks. So check the account balance in Xero against the actual bank balance monthly to ensure you don't have any duplicates or missing transactions.
Contact us
Hopefully one or two of these tips might help you do your accounts better, but if you need some training or someone to do it for you, give us a call to see if we can help.
