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Xero Tips & Tricks

Updated: Dec 27, 2023

In the last few years there has been a huge number of small businesses moving their accounting software to an online environment and switching over to using Xero. This change has meant that small business owners, bookkeepers, administration staff and accountants alike have had to learn new software and had to adapt their business to this new way of doing things.

Whilst most people now have a grasp on how to do the basics in Xero, such as reconcile their bank accounts, prepare their BAS etc (or we hope you do anyway) we think it is time for people to really unlock the true capabilities of Xero.

There are many features in Xero that are not being utilised fully and could help you truly save time and money in your business. Below we have listed 5 of the features that are easy to set up, but we find a lot of people are not using yet.

Bank Rules

A quick and easy one to start with is using bank rules. I see a lot of Xero files that have not set up bank rules and are just reconciling each and every transaction as they go. Bank rules are an easy way to automatically reconcile your bank account accurately. The aim is to set up a rule that identifies transactions by a distinguishing feature, ie supplier name or description and tell Xero to always code it to a certain account. For example, you may set up a rule that says every-time you see the word interest and NAB you code the transaction to interest paid.

By setting up rules you are eliminating the simple, recurring transactions from bank reconciliations which will save you valuable time! (trust us on this one)

Automate Invoicing

Xero invoicing has many built features that will allow you to automate the full cycle of processing of your invoicing, from preparing, sending, following up and then collecting payment.

The first thing to consider is are you sending your invoices by email or are you printing and posting? If you are still posting, have you considered how much this is costing you? Every invoice posted costs $2, not to mention the time cost of a staff member preparing and posting the letter. Xero has an easy to setup email template to send all invoices electronically. This means the client is receiving their invoice immediately and will assist you in speeding up your collection time. Plus you are helping save the trees, it’s a win win!

If you send the same invoice to a client on the same schedule (eg rental invoice) you can set up a recurring invoice in Xero. This means that the client will be sent the invoice automatically every month without you needing to intervene. Using recurring invoicing means that you will only need to deal with the exceptions to your invoicing rather than spending time on the everyday transactions that you have.

Have you automated your invoice reminders? The whole goal of invoicing is to collect your money as quick and as easily as possible. Xero allows you to set up automated reminders for invoices. You can choose when the reminder gets sent (ie 7 days after due date) and can send multiple reminders. You can customise it so invoices below a certain value do not receive reminders and certain clients won’t receive reminders. There are some great in built email templates to allow you to politely remind your customers that payment is required. Again, another easy way to automate a task that generally is time consuming and not enjoyable.

The final tip with invoicing is to setup payment services on your invoices. You can set up a payment service, such as Paypal, Stripe or at All In Advisory we use Payrix. By setting up the payment service, every invoice that is sent out via email as a pay now button included in it. This allows the customer to click that link and make payment on the spot using their computer, tablet or mobile phone. Payrix allows payment via direct debit, BPAY or credit card. When payment is made the invoice is automatically marked as paid in Xero and all that is left to do is code the bank transaction. By making the payment process easy for the customer, we have found that the number of days to collect payment has decreased significantly. Again, the whole point of invoicing is so that you can collect your money. Why wouldn’t you make this as easy and quick as possible.

Auto Super

If you have a Xero premium subscription with 5 employees or more, you have access to Auto Super free of charge. Auto super allows you to pay all of your employees super obligations through a clearing house.

Auto super in Xero takes minutes to set up and completely automates the process of paying superannuation guarantee for your employees. At the push of a button a payment is taken from you bank account and distributed out to the appropriate superannuation funds.

We recommend that all clients that have access to Auto Super use it. It saves you time in that all of the information for super is already in your Xero file. There is no additional data entry required. It also significantly improves the accuracy of your superannuation payments.

Xero keeps track of all of your obligations and ensures that the correct amounts are paid to the correct employees. This ensures the reconciliation process for your superannuation guarantee is quick and effortless.

ABA files

When paying payroll or a large volume of invoices via a batch payment, you can export an ABA file from Xero. This ABA file can then be imported into your online banking platform to automatically pay all employees and suppliers that you included in the batch payment.

The benefit to using ABA files is two fold. The first, which is a theme in this article, is the time it saves you. You no longer have to upload each bank payment individually into online banking. If you are paying a large number of staff or suppliers, this time saving can be huge. The second benefit is the increase in accuracy. When copying amounts to be paid from your accounting product over to your internet banking you are increasing the risk of transcribing errors. We have all done it before when we get 2 numbers back to front, or got the decimal in the wrong spot. Not only can these errors be costly, but again, rectifying them can be very painful and time consuming.

Add Ons

One of the biggest benefits of using Xero is that it creates a base product that you can customise to your business by adding in other software products. This makes it a much more powerful tool and allows you to truly automate your business.

If you are yet to add on any of the 100’s of apps in the Xero app marketplace, one of the first ones we would recommend is Dext or Hubdoc (which comes free with Xero business ledgers). The goal of this product is to automate the entry of bills and expenses into Xero. You submit your payable invoices via email, a photo on the app or by scanning and directly uploading. Dext or Hubdoc will then use optical imaging to read the details on the invoice including the supplier, invoice number, date, due date, amount and the GST amount. With some setup, it will also choose the correct category to code to in your chart of account. These details can then be either automatically or manually pushed over to Xero, where it will store it in the accounts payable system and match it against the bank transaction when it is paid. A huge benefit to this is that the image of the invoice will forever be attached to a bill in Xero, meaning you can view the details at anytime. The ATO also allows you to keep all records electronically, so a hard copy of the invoices no longer need to be stored for 7 years.

For those businesses that have a large volume of payable invoices, the time saving that can be achieved by using Dext is immense.

And finally if you want help implementing any of the above recommendations or just have questions, please feel free to reach out to us, we promise we don't bite (much, haha JK). Our goal is to make small business easy and we love helping out wherever we can!

Disclaimer: The information provided is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice

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