Xero top tips

So, you’re looking to ‘do beautiful business’ in the words of Xero. That sounds great, but how? Xero is a very powerful tool, but only when used properly. If you start to follow our tips below, you should start to automate things and save time. If you follow them all, you may well reach bookkeeping Nirvana…

1) Repeating monthly invoices – If you’re invoicing customers the same amount each month, you can set up a repeating invoice in Xero. This can be sent automatically on the same day of each month. If you want to really automate things, use Go Cardless for Xero in parallel and you can set your customers up to pay via direct debit. Once payments are made, the reconciliation is done automatically in Xero. You have the potential for a completely automated invoicing process there. If you can agree direct debits with your customers, you will also save time on chasing your debts.


2) Use Dext for invoice and receipt management
– Dext is paperwork management software which fully integrates with Xero. To bring an invoice into Xero do one of the following:

1) Email it to your Dext email address
2) Take a scan with the Dext smartphone app
3) Login into Dext and add invoice files.

The Dext AI does its magic and pulls out all of the invoice details (Invoice number, VAT amounts, vendor name etc). You select the Xero A/C where you want to reconcile it to, publish to Xero and you have a ready-made bill in Xero. It’s quick, it’s accurate and – if used properly – you’ll have all the relevant paperwork linked to your bank transactions in Xero, and you will sleep peacefully for the rest of your life. Bring on that HMRC audit. We’re joking obviously, you never want to go through one of those ☹


3) Set up rules to auto reconcile transactions
– If you know you’re not planning to match up these transactions against invoices/ receipts, you can set up rules for where they will be categorised to. In Xero navigate to the bank account, and then to ‘Bank Rules’. You can set up new rules for spend money/ receive money/ transfer money.

Two good examples: 1) If you pay bank fees regularly, set these transactions to automatically be coded to the bank fees A/C in the P&L with the same reference. 2) If you regularly transfer money between multiple banks accounts in Xero, you can set transfer rules to automatically categorise these transactions.

It’s worth reviewing your monthly transactions, and setting some time aside to set up these rules. If you get this right, you can automate a good chunk of your bookkeeping.


4) Find and recode
– Really handy to make adjustments in bulk. You need to navigate to Accounting/ Advanced in Xero, then ‘Find and Recode’. You then need to set conditions for find the transactions you are interested in. You can search for a vendor (by Xero contact), or by a specific Xero account, or even entered by which shows who reconciled it. You can also use multiple conditions to get a really specific batch of transactions.

Once you have your list, you can then recode them – adjusting the contact, the account, and the tax rates as necessary. So next time you are looking at a long list of transactions, manually adjusting each one from consulting to IT costs – this is the hack for you!


5) The account transaction report
– ‘I just want to see what’s been coded in each account!’ We get asked this question a lot – and this report is the answer. It’s probably our most used Xero report after the Profit & Loss and the Balance Sheet (we’re accountants so we’ll always have a soft spot for those ones 😊).

Head to Accounting/ Reports in Xero, and then select the Account Transactions report. Then select the accounts you want to see, your date range, and in the columns section select the information you want to see. Then in the Grouping drop down you can pick how you want the info summarised.

Our two favourites: 1) Group by Account – That will show you all transactions in each account, nicely separated out. 2) Group by none – You will get a nice big data table with no spaces which you can export to excel and pivot to your heart’s content. This is the one for the excel number crunchers out there.

Another top tip in reports, it’s a good idea to star your favourite Xero reports and they will be saved in the favourites section at the top.


6) Lock dates
– This is a good habit to get into. For example, you are now into July, you have reconciled all transactions up to the end of June and you are happy with the figures. If you navigate to Accounting/ Advanced/ Financial settings, the lock dates section is at the bottom. If you selected the 30th June, then as the name suggest the figures in Xero are locked and can’t be changed.

This is useful if multiple people input into Xero, or you bring invoices in via Dext. The last thing you want is to present your June figures to an investor, only to come back next week and someone else has posted a manual journal, or brought in an older invoice to Xero from Dext so your figures have changed! No one wants to have to explain that.

Using this feature will get you into good habits, and it’s good practice to close off each month when you can. The difficulty here is that you need to try and have a good idea of all of your income and costs for the period before you lock it. E.g. if you know you will receive an invoice for a cost late, then you should really accrue for that cost before you lock the period. Otherwise, that cost will then need to be booked in full in a later month. Getting a bit accounting techy here, but we can help if you don’t get this point!


7) Use multiple tabs
– Seems obvious but Xero is a cloud-based system so can you run multiple tabs at the same time. If you’ve run a P&L report but then want to set up a bank rule, just open a new browser tab instead of closing down your P&L report.


The best top tip of all
get PennyBooks to do your bookkeeping! If it’s all just becoming too much, and you’d rather be focusing on winning new customers and growing the business then let’s talk. Let’s face it, you didn’t get into this for bookkeeping! Have a long hard look in the mirror and ask yourself if it’s taking up too much of your time?

James Watson