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What is Xero Business Snapshot?

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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.

 

 

We do Xero bookkeeping

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Xero Bookkeeping on Biteable.

App of the Week – AutoEntry

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With every task we do, we always ask the question “Is there a better way?” And with day to day bookkeeping – YES, there is! That’s why AutoEntry is our choice of The App of The Week.

AutoEntry simplifies your business’ bookkeeping. It eliminates manual data entry for accountants, bookkeepers and small businesses. It automates the extraction and processing of bills, invoices, expenses and receipts and inputs them directly into your accounting solution.

It is perfect for small and medium businesses across all industries where volume of invoices and receipts is high. No more manual data entry of invoices, receipts, bills or statements. Simply email, scan and upload, or snap with your mobile app.

Features

  • Submit Documents – No more manually inputting invoices, receipts or invoices. AutoEntry extracts the data you need and publishes to your accountancy package.
  • Data Security – AutoEntry employs best practice security policies including encryption across the platform.
  • Full Line Item Capture – AutoEntry captures full line items, including the description, unit price and quantity for each line, with verified accuracy.
  • Item line settings – Apply rules to allow AutoEntry to ‘remember’ specific line item descriptions, or certain words within a description.
  • Purchase Order Matching – AutoEntry syncs captured invoices to matching open purchase orders.
  • Document Storage – Once AutoEntry has posted your data, it creates digital records, so users no longer needs to hang on to large quantities of paper documents, with client data stored securely in the cloud.
  • Integrate seamlessly – It integrates with your accounts software including Xero, QuickBooks Online, Kashflow, Sage 50, Sage One, Reckon, Freeagent and others.

 Additional Features

  • Data extracted & verified – Remove manual errors and rely on quickly searching secured stored, digital copies.
  • Smart analysis – Easily submit invoices, expenses and receipts as you get them, on the go.
  • Auto-publish – Seamless automatic publishing of verified data into your account software.

 How it works

  • Capture and submit documents – Forward emails from suppliers, snap receipts on the mobile app, or scan and upload to the website.
  • Accurate, automated data extraction – Data is processed and verifies before applying remembered Supplier, Tax Code and Category rules.
  • Seamless integrations – The add-ons ensure the seamless automatic publishing of verified data in your account software

Benefits

  • Save time – No more manually inputting invoices, receipts, expenses or statements. AutoEntry extracts the data you need and publishes to your accountancy package.
  • Paperless – With data stored securely in the cloud, there’s no need to store, file, print and copy paper documents anymore.
  • Integrations – Seamless automatic publishing of verified data into your accounting software.
  • Mobile app – Submit invoices, receipts and expenses on-the-go via the mobile app for iOS and Android devices.                                                                                                                       

Pricing

Powered by AI, AutoEntry is becoming increasingly sought after, due to its accuracy, speed and impressive range of in-built features. And, as well as being the smartest solution out there, with its flexible, pay-as-you-use pricing plans, AutoEntry also offers the best value for money. Users only pay for the documents they upload onto the platform, as needed month by month. Adding more companies or employees incurs no extra fees, meaning the whole team can make use of the solution without any fuss or extra expense. Advanced pricing plans available for firms with a large volume of documents.

By using AutoEntry, your businesses gain the following benefits:

  • Reduce the time and cost spent on manual data entry
  • Eliminate human error
  • Improve service turnaround times
  • Submit receipts and invoices on-the-go with its mobile app
  • Drive employee engagement
  • Store data more securely in the cloud

 AutoEntry + Xero

AutoEntry works by capturing and analyzing details from paper documents, before posting this information into a user’s Xero account. By leveraging the solution’s in-built intelligence, the data is entered into the correct fields every time, so there’s no fuss or room for error. 

 

Getting started

  1. Log into your AutoEntry account and go to ‘Company Setting’
  2. Click on the ‘Integrations’ tab and select Xero

Link your Xero with AutoEntry so that when you Publish your receipts or statements, they will directly be uploaded into Xero.

 With AutoEntry, you can say goodbye to piles of paperwork and hours spent typing up data, and get back to what really matters, serving their customers and growing their business. If you need help with setting up AutoEntry or integrating it with Xero we, at Cloudit Bookkeeping, will be happy to assist you.

Are you wasting time processing expenses?

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Expense claims are an administrative burden for all businesses. From taxis, flights, meals, supplies, and everything in between – there are countless expenses that need to be reimbursed to the people who work at the company. But it’s amazing how the simple task of reimbursing employees turns into a paper-filled back-office nightmare.

With many apps now available, the task of tracking and recording expenses is becoming easier and more efficient, saving business owners and their accounting team hours in administrative time.

We love Xero and their new Expenses function where employees can capture receipts and submit claims for their work expenses with their mobile device. Let’s have a look at how it works and how it can save you hours in dealing with paperwork.

Xero Expenses:

Xero Expenses works seamlessly with Xero accounting package, and has all the tools and insights small businesses need to efficiently track and manage expense claims. You can now Capture expenses on the go and keep everyone up to date with push notifications.

A better way to manage expense claims in Xero

The Xero Expenses offers small businesses a more efficient way to manage expense claims with:

Expenses Mobile

  • Faster expense captureto reduce data entry through automatic scanning of receipts and eliminating the need to store paper versions.
  • iOS and Android appspush notifications to let businesses, employees and advisors capture, submit and keep up to date on the status of expense claims from anywhere.
  • More flexible user permissionsto give complete control of whocan view, submit, and approve or pay an expense claim for or on behalf of someone else.
  • Simple and intuitive workflowsto make it easy to see where an expense is at, review and approve all unpaid expenses, and create batch payments to get employees paid promptly.
  • Greater insights and powerful analyticsto empower businesses and their advisors with a detailed and real-time understanding of spending habits and patterns.
  • And with multi-currency, relevant notificationsand seamless Xero accounting integration, the new Xero Expenses is smarter, easy to use, and designed to benefit both the small business and their employees.

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Advantages

  • Easily capture and submit expenses

You’ll find automatic receipt processing in the Xero Expenses. Small business owners can easily capture and submit expense claims through their mobile device on both iOS and Android. Simply take a quick picture of the receipt and let Xero submit the expense claim. The design and workflow improvements make it easy to capture and submit an expense claim without the paper chase or endless follow up.

  • Eliminate Hidden costs

With reduced data entry and by streamlining everything from submitting expenses through to reconciling transactions, you can eliminate the hidden costs.

  • Better visibility

You can see all the most important information at a glance, so you always know where your expenses and cash flow stand.Expenses chart

  • Enables Growth

Access valuable real-time reporting and powerful analytics to monitor patterns, plan ahead and make fast, informed decisions.

  • Flexible controls and permissions

The user permissions model gives more flexibility and control to the right people at the right time during the expense claims process. This significantly simplifies the workflow and boosts efficiency. That’s because only appropriate people in the business can view, submit, approve or decline, and pay an expense claim.

You can also find a highly-requested feature – the ability for a user (typically an accountant or owner) to submit an expense claim on behalf of other people in the organization. The relevant people will receive real-time push notifications on their mobile phones, which makes it easy for accountants, business owners and employees to keep each other up to date.

  • Easy review and payment

Xero expenses provide you list views and expense drill-down views, which can save you time and let you enjoy better functionality:

  1. The expense claim list immediately gives you a high-level view of your own or your employees’ expense claims in easy-to-consume groupings, such as by status or by employee. The most important information required for review, approval and payment are available at a quick glance. These include status, amount, expense account, description, vendor and date. From the list, just one click will let you drill down into the details of the expense – and provide a view of the receipt, tax details, tracking categories and associated label.
  2. You can view approved expenses claims that are awaiting payment within bills. Xero provide links to and from bills, so you can conveniently view bills associated to expense claim reimbursement side by side with vendor and supplier bills. This allows you to more easily make a decision around who and what gets paid in one simple view.
  • Expense analytics

Quite simply you have to know how your staff spends money and if they follow established rules and policies. An exciting new feature gives small businesses and their accounting partners deeper insights into spending and expense claims that will provide actionable findings. Accountants and business owners have access to a real-time and accurate view of their expenses.

With Xero Expenses function, expense claims are no more a burden. It makes create, review, approve and paying an expense claim not only easy but also quick. It saves a lot of time and provides you the opportunity to enjoy better functionality. If you need any help exploring Xero Expenses or any other Xero features, talk to one of our trained bookkeepers and we will be happy to assist you.

What does Proft and Loss report tell you about your business?

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What is a profit and loss statement?

A profit and loss statement shows how much your business has spent and earned over a specified time. This shows whether your business has made a profit or loss during that time – hence the name. A profit and loss statement might also be called an ‘income statement’, a ‘statement of operations’, a ‘statement of earnings’ or a ‘P&L’.

A profit and loss statement shows all your revenue and expenses. This includes things like payroll, advertising, rent and insurance. It will also show your earnings from sales and other forms of income.

Your total profit or loss for the time period you’ve chosen is what you’ve earned minus what you’ve spent. If this amount is positive, it’s called a net income. If it’s negative it’s called a net loss.

What does a profit and loss account include?

A profit and loss account will include your credits (which includes turnover and other income) and deduct your debits (which includes allowances, cost of sales and overheads). These are used to find your bottom line figure – either your net profit or your net loss.

What is a profit and loss account used for?

The profits shown in your profit and loss account are used to calculate both income tax and corporation tax. Failure to file either of these correctly can result in you paying added interest and penalties, so it’s important to get this report right.

The P&L account takes revenues into account for a specific period. It also records any expenses or costs incurred by these revenues, such as depreciation and taxes.

This can be used to show investors and other interested parties whether or not the company made money during the period being reported.

Why You Need to Prepare a P&L Statement?

  • Make Wiser Decisions

If you have your P&L statement on hand, you are able to look back on it to review how well your company fared over a chosen period of time. With the results in mind, you will then be able to make better financial decisions, as you’re armed with concrete knowledge of how your business is doing in terms of revenue and expenses. Provided that the numbers aren’t in the red, you will be able to invest money back into your business and make decisions that would have otherwise required dangerous guesswork.

  • Monitor your Business

Preparing a profit and loss statement and reviewing it regularly will give you insight into areas of the business where you are making money (or losing money). It will also provide you with where you are spending your money which can help you determine where you may be able to cut costs.

  • Have Proof of Your Business’ Success

Having your P&L statements on paper means that you’re able to show a chronological record of how well your business has been doing over the course of its operation, allowing you to play your cards right around investors, or with buyers if you have the intention of selling the business. It also serves as a measure of trust, as it may be requested by any new clients who wish to do business with you.

  • Prepares You to File Taxes

If you regularly update your P&L statements (as well as your other financial statements), you’ll have all the information you need for sorting out your business taxes when the day inevitably arrives. Updated financial statements also mean that your accounting software is also being regularly updated.

How to read Profit and Loss Report

P&L

If we want to understand a company report, we need to know what all the income, expense and profit figures mean. The Profit and Loss Statement is explained as follows:

  • Income

Add all income from sales for the period the profit and loss statement includes whether or not you’ve received payment for the sale. We might sometimes see this figure broken down into revenues from continuing operations and revenues from new business, which is a useful way of comparing like with like for a company that is expanding into new businesses or disposing of old ones — we can use the breakdown to help see how its core business is performing year-on-year. And different companies might show slightly different breakdowns, but we’ll always see a figure for total revenues.

  • Cost of sales

These are all costs directly associated with the sales mentioned above. They may include the cost of the product purchased and wages for people making the product. For example, if you are a consultancy, your cost of sales might include Advertising, Freelancer or sub-contractors etc.

  • Gross profit

Gross profit is simply the difference between your sales and cost of sales.
The gross profit margin is probably one of the most important figures to the business owner and manager. It shows the sales mark-up and can therefore highlight inefficiencies and pricing issues.

  • Expenses

Expenses or overheads are all other costs you’ve received invoices for during the period. These may include:

  • Rent and rates
  • Professional fees, such as legal and accountants
  • Advertisement
  • Travel
  • Entertainment
  • Vehicle costs such as fuel and maintenance
  • Technology and computer costs
  • Office staff salaries, national insurance, pensions, and bonuses
  • Stationery and postage
  • Utility costs such as heating, water, gas, and electricity
  • Depreciation: This line is an accounting adjustment and not directly used for tax calculation purposes. Depreciation represents the periodic, scheduled conversion of a fixed asset into an expense as the asset is used during normal business operations. Since the asset is part of normal business operations, depreciation is considered an operating expense.
  • Profit before tax and interest

This calculation is an indicator of a company’s profitability. By ignoring taxes and interest expense, it focuses solely on a company’s ability to generate earnings from operations, ignoring variables such as the tax burden and capital structure.

  • Interest

This entry summarizes interest and bank charges paid from your business within the accounting period.

  • Tax

Tax will be the estimated amount of corporation tax on the business

  • Net Profit or Loss

And finally, the net result is what’s left. It’s a calculation of all income less all expenses and purchases less interest and tax paid providing your overall profit or loss in the period of the accounts.

Interpreting and understanding the profit and loss account

If your business is fairly consistent, look for comparisons with previous years. If there are any deviations from the general trend, ask yourself if you are able to explain them.

Also, look for comparisons with your competitors and the industry the business operates in.

Ultimately, the profit and loss account should tell a story of what has happened during the year, so you as the business owner/manager are best placed to make sure the profit and loss account shows a true reflection of this ‘story.’

Your bookkeeper can help you to understand and interpret the figures in the profit and loss account and can highlight the areas that may require further investigation. They will also be able to identify any ‘anomalies’ which might trigger the attention of HM Revenue & Customs, such as a large increase in the cost of repairs or a dramatic downturn in drawings. If you need any help with interpreting your Profit and Loss Statement, we at Cloudit Bookkeeping, will be happy to assist you.

Bank Rules in Xero

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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.

What is bookkeeping?

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Bookkeeping is the recording of financial transactions and other information related to the business on a day-to-day basis. It is a vital part of every business.

Bookkeeping records collate information and provide business owners with vital reports on progress and growth. It also calculates tax liabilities the business has and will have in the future.

There are several standard methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system.

Single-entry bookkeeping uses only income and expense accounts, recorded primarily in a revenue and expense journal. Single-entry bookkeeping is adequate for many small businesses.

In the double-entry accounting system, at least two accounting entries are required to record each financial transaction. These entries may occur in asset, liability, equity, expense, or revenue accounts. Every transaction involves a debit entry in one account and a credit entry in another account. This serves as a kind of error-detection system: if, at any point, the sum of debits does not equal the corresponding sum of credits, then an error has occurred.

Common financial transactions and tasks that are involved in bookkeeping include:

  • Billing for goods sold or services provided to clients
  • Recording receipts from customers
  • Verifying and recording invoices from suppliers
  • Paying suppliers
  • Sales tax and VAT Management
  • Processing employees’ pay and the related governmental reports
  • Monitoring individual accounts receivable
  • Recording depreciationand other adjusting entries
  • Stock management
  • Costing & budgeting
  • Providing financial reports

Correct bookkeeping gives companies a reliable measure of their performance. It also provides information on general strategic decisions and a benchmark for its revenue and income goals.

Accurate bookkeeping is also crucial to external users, which include investors and financial institutions that need access to reliable information to make better investment or lending decisions, or the government.

You can learn double-entry bookkeeping and maintain your own books. But not all business owners have time or aptitude to learn tax and VAT rules and how to apply these to each transaction which goes through their business. This is where a qualified bookkeeper can make a huge difference. Bookkeepers can be employed by the business to oversee the financial side and provide crucial information to the owners and managers. They can also be hired on contract basis for a few hours per week or month to keep things in good order.

Will you spend your Friday evening working through your paperwork and reading HMRC website?

Maybe it’s time to search for a bookkeeper…