6 Top Tips on Keeping Your Xero Tidy

Now is the perfect time to go through your Xero and give it a good tidy up.

We recommend checking your contacts, bank reconciliation and bills regularly to avoid errors and headaches. It will save you hours later trying to figure out what has gone wrong.

1. Contacts 

Is your Contacts list getting out of control? It is long and you have a few names for the same contact but you can’t remember which one you used last time?

It is good practice to do a little housekeeping on your Contact list in Xero. Some could be merged if they are duplicates. Maybe some are so old or even erroneous, and they could be archived.

How to merge a contact:

  • From the Contacts menu click the one or more contact you wish to merge into another contact
  • Click Options at the top and select Merge
  • In the Merge Contacts box select the contact that you want to merge to – this is the contact that will remain – choose Merge.

To Archive unwanted contacts, follow the above but in the Options menu select Archive.

Keep your accounts data clean and reduce the risk of missing something, for example if you look up an invoice in one account, only to find later it was on duplicate account.

2. Credit notes

Do you have unallocated credit notes showing in Bills Awaiting Payment screen? Where possible these should be allocated against invoices or cash refunds allocated to them.

To allocate credit note against invoice:

  • open the credit and to Credit Note Options menu.
  • select Allocate Credit
  • enter the credit amount against correct invoice
  • Click Allocated

3. Duplicate purchases invoices

It is a good practise to check if any outstanding purchases invoices in Awaiting Payment have been duplicated. Sometimes you can write the invoice number incorrectly or use purchase order number instead of the invoice number which would result in the same invoice entered twice. If that happened Xero won’t alert you that the invoice is a duplicate.

To quickly check if you have any errors:

  • go to Bills to Pay and select All
  • Search supplier name
  • Review outstanding invoices, amounts and dates

If you think you have paid the invoice, but it is still showing as outstanding you might have reconciled the payment as spend money and not as invoice payment. In this case, search for supplier or amount within the bank account transactions.

4. Outstanding bank items

With direct bank feeds, managing bank account transactions is fast and pain free. But sometimes Xero and bank statement balances do not match. There can be numerous reasons for this, for example unreconciled transactions entered in Xero, missing statement lines, duplicated transactions or errors recording transfers between accounts. See our article 5 Mistakes to Avoid When Reconciling Bank Transactions in Xero.

To check if your bank account balance and the balance in Xero match review the Bank Reconciliation Report.

5. Xero files

If you are using Xero files you can upload and store any document you need for easy access from anywhere. This will help you declutter your office and keep things in one place. Create a separate folder for bank statements, back up documents, supplier statements, HMRC items etc. All Standard and above users can see Xero Files and it is a perfect way to share documents securely with your team or accountant.

6. Bank rules

Are you using bank rules? Set up correctly Bank Rules will save you time when entering recurring transactions such as bank interest or direct debits where a bill is not entered. You need to set up the criteria accordingly, so the correct transactions are identified. For each bank statement line that matches a rule, Xero suggests a transaction using the condition you have set. See our Bank Rules in Xero article for more details.


While Xero is intuitive and easy to use it is not always simple. There are areas we find users make mistakes and find themselves stuck not knowing how to set Xero straight. If you need help fixing Xero, we are here to help. Give us a ring for a friendly chat today.

What is Xero Business Snapshot?

Business Snapshot is a dashboard-style report displaying business performance measures to help you better understand the financial position of your business at any given time.

Examining your key business metrics regularly will help you keep on track with your growth. The dashboard gives you a snapshot of your income and spend and highlights if there are any issues with payment collection from your customers. If you don’t look at your balance sheet regularly, this gives you a summary of your liabilities to have in mind when planning your cashflow.

Xero Business Snapshot


Dashboard features:

  • Profit and Loss – you can view your profit before tax for last month, last quarter, last year or year to date with instant comparison to previous period. Instantly see if your profit has increased or decreased as a percentage against previous period.
  • Income and Expenses – see a summary of your income, cost of goods sold plus operating costs as a figure and a chart. You also see the percentage comparison against the prior period.
  • Gross Profit Margin – monitor your gross profit margin and how it changes compared to prior period.
  • Latest Operating Expenses – instantly see the highest costs and comparison to previous spend. You can pick up areas where the spend has gone up or reduced significantly.
  • Financial Position and Cash – this gives you a snapshot of your balance sheet which is vital for understanding your liabilities at any given time.
  • Overall Cash Balance – see the total of all your cash across all bank accounts.
  • Average Time to Get Paid – the average number of days it takes your customers to pay you.  Identify in an instance if you need to address how you collect your payments or if you have bad paying customers.
  • Average Time to Pay Suppliers – how long do you take to pay your suppliers. If it is outside your credit terms, do you need to address this to improve your relationships with your suppliers?

Xero Business Snapshot 1


To benefit from using Business Snapshot dashboard you need to have at least a couple of months’ worth of transactions in Xero. Keep your bank reconciliation up to date too to see the correct cash balance.

Use the dashboard to discuss your organisation’s financial health with us or your accountant.

 

 

Are Your Jobs Profitable? Why Track Project Profitability With Xero

If you’re in the business of providing a service, you are likely to offer up your time and expertise to clients anywhere, throughout the day. Whether over the phone, via email or in person, any time spent on one client’s job is less time spent on something else and is therefore a cost to you. This cost can easily be missed if you’re relying on spreadsheets, notebooks or even scraps of paper. You might also have costs associated with delivering your service to your client which you want to recharge to them, and it might take a while to go back through the records and put these costs together.

Good news is – Xero offer Projects module to solve these problems in an easy and straightforward way within the accounting software. It comes with the mobile app, so tracking is easy and project accounting is a breeze.

Xero Projects is the simple way to track the time and money you spend on each job, allowing you to focus on the right work, improve efficiency and drive profitability.

With the Projects mobile app, you can add a project as soon as you start it, from wherever you may be. That means you can stay on top of your project expenses as they come in and record your time as you go about your business.

Why should you track your project profitability in Xero? Here are just a few reasons for using Xero Projects:

  • Have everything in one place, accessed with one Xero login
  • Intuitive, simple to activate and use
  • Supports fixed price, time and expenses invoicing
  • Assign your actual invoices, bills and bank transactions to project
  • Visibility across all jobs and how they’re tracking
  • Monitors budgets and job costs
  • Out-of-the-box reporting
  • Timesheet insights and reporting
  • Real-time view of all your Projects in one place
  • Monitor job costs from day to day to stay on track

Get your billing right every time

Track time, enter receipts and expenses, and record any deposits against each project so you can bill accurately on time and don’t miss anything.

Invoice the way that suits you

Create fixed price, time and materials, or progress payment invoices. Details can be uploaded automatically, saving you time and avoiding errors.

Gain insights you need to succeed

Monitor and track project performance with up-to-the-minute reports on time and costs to help you keep to budget and decide when to invoice.

Review actuals against budget

Add estimates for project costs to the project budget and monitor it to make sure you’re turning a profit.

Capture all of your job costs

Assign bills and expenses, and record deposits against each project so you can invoice accurately and on time.

Quote based on what’s gone before

Use the figures and reports from previous projects so you know what to realistically quote next time round.


Profitability and time are the linchpin of service businesses. Xero Projects is geared for businesses with straightforward time and job cost tracking needs such as design and web design agencies, marketing agencies, consultancies, and even businesses in construction industry. It will really appeal to those still fiddling around in spreadsheets, or who find most project management software too complex. If you need help with using Xero Projects, we, at Cloudit Bookkeeping will be happy to help you.

 

 

The Credit Control Revolution

 

One of the most awkward and uncomfortable situations in business is having to remind clients about late payments on your invoices. Even harder is trying to respectfully request immediate payment without the conflict associated with adding late payment charges.

Credit control is another name for ‘getting the money you’re owed’. Not many businesses have a formal credit control process when they start out. However, each business should consider whether it is doing everything it can to ensure that its customers are paying on time. Furthermore, the recovery of business debt can be frustrating, time consuming and often unsuccessful. This then effects the business cash flow and the accountant asking questions about the recoverability of debts.

The introduction of cloud technology has made it possible to move forward in the management of credit control. Through up to date information and clever technology, the process has become much more streamlined, automated and productive. The features both within the accounting packages and also specific apps help businesses take back control of their debtors with positive results on their cash flow.

Easy Invoicing

If you use cloud based accounting software like Xero, it makes keeping your invoices up to date very easy. Through using your customized invoices and saved templates, issuing invoices has become a relatively quick and easy process. You can also invoice using your Xero mobile app keeping up to date when you are out and about!

You can simply email your invoices directly from Xero and the customer receives it immediately in their inbox. You will no longer have to push this task to end of the month or incur any postage costs.

In Xero, you can customize the look of your invoice by using invoice templates. You can edit the default templates or create new ones. You can also set up branding themes for your invoices so you can select the one relevant to the customer you are sending it to. For Instance, by using the DOCX custom templates you can create up to 15 branding themes which opens to a wide range of invoicing options.

Payment services

The more ways you give your customers to pay you, the more likely it is that they will pay you, and the less time you’ll spend chasing the payment. Add a payment service to your online invoice and your customer can pay it with just a few clicks.

Payment services in Xero allows you to accept the payments online. When the customer views the invoice, they can use the “Pay now” button to pay you securely using your payment service.

When the customer makes an online payment via their Xero invoice, the payment service used will take the payment and deposit it into your bank account.

You can set multiple payment modes giving your customer a choice and making it easy and accessible to them. Getting paid is easy with a range of payment services that seamlessly integrate with Xero, including PayPalStripe and GoCardless. You can find more payment providers in the Xero app marketplace.

Advanced reporting

Through regular invoicing you can keep your sales ledger up to date whilst having the ability to run an Aged debtors analysis at any time with ease. With the advanced reporting available in Xero you can quickly identify customers with outstanding invoices, and you can go through the details of the customer accounts and see where action is required.

The Aged receivables report in Xero allows you to select the “as at” date which will report the outstanding transactions at that specific date. This therefore will give you a clear overview of who owes the business and how much at any time.

Reminders

Instead of you spending hours chasing overdue payments, Xero can send automated invoice reminders for you. All you have to decide is when and how often the reminders are sent out, like setting a reminder to email customer when an invoice is 7 days overdue or 21 days overdue etc. You can also see whether your customer has seen an invoice and if it’s been paid.

Xero have created templates with suggested wording for the reminders, but you can change these if required and also can add other information such as details about preferred payment solutions and links to the invoice PDF. You need the adviser or standard user role to set up and turn on invoice reminders for your organization.

Once invoice reminders are turned on, Xero’s default reminders are sent at 7, 14 and 21 days after each invoice due date (overdue). You can also add a reminder that’s sent to your customers before an invoice is due. Specify the number of days before the due date that you’d like it sent.

Xero approved debt management apps

There are an increasing number of apps that link with Xero to automate and improve your credit control, letting you get paid faster and saving you time. The fact that you do not have to chase all your customers and you do not have to use the same templates for them all means that the business remains in your control at all time. Apps like Fluidly, Chaser, Debtor Daddy, Satago helps you to manage debt collection and ensures that you remain in full control of the process.

In addition to automatically sending your email chasers, some of these apps also offer a credit control CRM to automatically log all emails and replies. In addition to this, some apps can provide you data-driven insights into your credit control function, to help understand which customers are good payers, which are bad, and to help you better decide who to grant credit to.


The use of cloud software has revolutionized the Credit control management. Online invoicing, automated reminders and up to date ledgers which means that the whole debt collection process is much simpler, faster and less painful for business owners. The outcome speaks for themselves with cash flow improved and more time available to dedicate on growing and developing the business. If you need any help regarding the credit control management, talk to one of our trained bookkeepers and we will be happy to assist you.

Bank Rules in Xero

Why are bank rules so important?

Because the secret to speed up the bank reconciliation process is automation. And bank rules are the key to automating a lot of the work when reconciling the bank account in Xero.

What are bank rules:

The better your rules, the fewer transactions you need to code yourself.

Bank rule is based on the preset parameters. This means if X happens, then code this transaction to Y account. For example, you might have a rule that anytime you are charged the bank fee on your account this transaction is coded to Bank Charges account in Xero.

This saves you typing in the information in the reconciliation screen every time there is a bank fee on your bank statement. Bank rules suggest a new transaction for you with preset contact name, analysis account, description and amount.

When to use bank rules:

Bank Rule transactions are best used for transactions that automatically come out of your bank account (i.e. which you don’t need to physically pay) or the really small things like parking or regular subscription.  Set up bank rules for your regular transactions such as:

  • Wages
  • Equipment Lease
  • Bank Fees
  • Merchant Fees
  • Interest
  • Monthly Insurance
  • Monthly business rates
  • Pension payments
  • Transfers to savings account

There are three types of transactions that bank rules can be created for in Xero:

  1. Spend money transactions
  2. Receive money transactions
  3. Transfers of money between accounts.

bank rules 1

All are set up in the same way and all can save you time and help ensure a consistent approach each month to the reconciliations.

How to create a bank rule:

You can create bank rule either from the bank account page, from the bank reconciliation or from the cash coding page. You can also create bank rule from the Bank rules screen from the Accounts menu by selecting the Bank Account to make a more complex rule with multiple conditions.

The first step in creating bank rule is to select whether it is a spend money, receive money or transfer of money transaction

The ‘Create bank rule’ screen has seven sections in it.

Xero bank rules

1. Every bank rule must have at least one condition, but you can add as many as you need to build the rule.

  • The condition line asks for ALL or ANY of the conditions apply. ALL is used if the rule should apply only when every condition is met, and ANY is used if the rule can be applied when at least one of the conditions are met.

bank rules 3

  • Then you can select an individual text field, such as Payee, Description, Analysis Code and Xero will apply the rule if that particular condition is met. If you select the ‘Any text field’, Xero will search the Payee, Description, Reference and Analysis Code fields on the bank statement line and apply the rule if one of the fields meets the condition.
  • The next condition field allows you to select one comparison option from the below:

 

Equals

Apply the rule if the value in the selected text field exactly matches

Contains Apply the rule if the selected text field contains the value entered
Starts with Apply the rule if the selected text field in the bank statement line starts exactly the same as the value entered
Is blank Apply the rule if the selected text field in the bank statement line Is blank.

The comparison options are linked with the value(s) given in the next box. For the options equals, contains or starts with, enter the relevant value(s) to meet the condition. For example, for the condition below, the bank rule would be applied if the Payee name and Description equals the values given.

bank rules 1

If you create a bank rule when you’re reconciling or cash coding, Xero will automatically add conditions based on the statement line, using an ‘equals’ comparison. Any conditions that you add will also use information from the statement line if possible.

2. The next section allows you to set a contact which can be the Payee, an existing or new contact, entered during reconciliation. If you want to group common items under one name instead of creating a new supplier for each entry, you can create a new contact to group them like all the transaction related to Parking expenses should go under the name ‘Parking’.

3. The third section is allocating fixed value line items. This section is optional.

bank rules 6

4. The next section is to allocate items in the required ratios. Here you must enter a description, account name, VAT rate and the percentage of the total value to be allocated to that account. If you want to allocate the total amount into two different accounts, you can always add a new line and divide the percentage accordingly.

bank rules 5

5. The fifth section is to set the reference. This can be selected from the drop-down box according to your requirement.

6. The sixth section is to set a target bank account on which you want to run the rule. You can also set up this rule to multiple bank accounts, so that you don’t have to create the same rule for each bank account.

7. The last step is to give the rule a title.

Click on the Save option and your bank rule is saved and from now, whenever Xero detects a payment that meets the conditions, it applies the rule automatically. All you have to do is to click ‘OK’ on the bank reconciliation page.

bank rules 9

What happens when you edit or delete a bank rule?

Editing:

By editing a bank rule, you can change any of the details you have entered at the time of creating it. You can either edit a bank rule while reconciling or from the Bank Rules screen. Editing a bank rule doesn’t affect any of the transactions you’ve reconciled with that rule previously.

bank rules 7

Deleting:

You can always delete a bank rule you no longer require by selecting it from the bank rules page in bank accounts. Deleting a bank rule doesn’t affect any of the transactions you’ve reconciled with that rule previously.

Bank rules is just one of many features you will find within Xero which makes your accounting process smoother, faster and more consistent. If you need any help setting up bank rules or other Xero features, talk to one of our trained bookkeepers and we will be happy to assist you.

5 Mistakes to Avoid When Reconciling Bank Transactions in Xero

Xero is cool and easy to use cloud-based accounting software designed for small and medium-sized businesses. However mistakes can occur and carelessness can result in many hours of wasted time trying to locate the error and rectifying it. Let’s look at some of the most common mistakes in bank reconciliation and how they can be avoided.

1. Trusting bank feed 100%

Direct bank feeds are amazing and most of the time we do not have any errors as they work perfectly. However, it can happen that there is a break in the feed and a day or more are missed, especially if you don’t reconnect the bank feed in good time. This will result in unrecorded expenses or customer payments unasigned to their invoice which you want to chase. Sometimes bank lines can be duplicated, for example on a credit card feed or bank feed where the transactions comes in on the day of the purchase and on the day it has cleared the account. If you reconcile all of these you will end up with double income and expenses in your accounts. To make sure everything is in order, regularly check your actual bank account balance with the running bank balance in Xero. If this does not match, you will need to compare your bank statements with Xero to find what is missing or imported twice.

bank balance

2. Paying invoices/bills

When marking sales invoices as paid in sales module or purchase invoices in purchases module, some users mistakenly record payment to/from the wrong bank account. This will cause reconciliation problems later on, as the invoice will not be available to assign bank payment against. To avoid this, always double check the selected bank account in the drop down menu when paying the invoice. Always run reconciliation report to check for anything out of place.

paying invoice

3. Bills to be paid vs reconciliations

When entering bills that need to be paid in Purchases section, some users tend to forget to mark them as paid. Instead they enter the expense again in the bank reconciliation section. Often payments are made direct from the bank or credit card but the bill entered is not being marked as paid. The result is a new transaction being recorded and expense or income duplicated in the accounts. If you are paying a bill that is already entered in Xero, you must be on the Match screen. Only use the Create screen when you are entering a new expense that isn’t already on the system and be consistent.bank match

4. Using ‘Unreconcile’ when you’ve made a mistake

When correcting entered and reconciled bank transaction selecting ‘unreconcile’ doesn’t reverse the error. The coded transaction sits in the bank account as an unreconciled item. This can cause doubled up transactions in your final bank reconciliation. Always select ‘Remove and Redo’ to clear the reconciled line and the transaction.

5. Making transfers between two bank accounts

When recording a transfer between two bank accounts, users tend to code it as a transfer in both accounts, which results in unreconciled transactions in both.  This gives you the wrong bank balance, if not corrected. To avoid this, record the transfer in one bank account. Xero will create the corresponding transaction in the second bank account. All you need to do is go to the second bank account reconciliation screen and match the Xero created transfer transaction.

bank transfer

 

Invoicing Survival Guide

There are a few things you must consider when creating and issuing an invoice.

Legally required information, consecutive number, payment account details and payment terms just to name a few. This handy guide covers it all and more. Pick it up from Xero website or download it here.

invoicing-survival-guide

To download the detailed invoicing guide, click here

 

How to Include Files with Online Invoices in Xero

Payment on Account in Xero

Upload WorldPay/SagePay into Xero

Click here to view the video on Youtube.

HOW TO GET ROUND SELF-BILLING ISSUE ON XERO

If you are in a situation where you need to issue a self-billing invoice to your supplier, you might find that Xero currently does not have this function. This is common in many industries especially where the purchaser has the answer on how much needs to be billed.

If you are stuck trying to figure out how to get round self-billing issue on Xero, we found a quick process using Purchase Orders. Here are the steps you can follow to achieve the required result:

  • Download and edit Purchase Order template – you can delete <<INVOICETITLE>> field and just type in ‘SELF-BILLING INVOICE’. Remember to change the names for other data fields to say ‘Invoice’ instead of ‘Purchase Order’
  • Create a new branding theme and upload the new PO template to it. Remember not to use this in your standard purchase order process.
  • Enter your self-billing invoice as a Purchase Order and apply your new purchase order theme to it.
  • Approve the PO. You can now send and print/download it from here to email later. Please note that ‘Purchase Order’ will appear in the email name if you send it from here directly.
  • Copy the PO to a Bill and mark it as fully billed. If you need to reprint it at any time, you can do it from Purchase Orders Billed tab. Bill itself will not have the template you have just created.
  • You can attach a Purchase Order PDF to the newly created bill for future reference.

Before you start the self-billing process you might want to read HMRC guidance on VAT: self-billing arrangements (https://www.gov.uk/guidance/vat-self-billing-arrangements).

And if you need some help setting this process up, we are here to give you a hand.