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Xero For Dummies


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Table of Contents

Foreword xv

Introduction 1

About This Book 2

Foolish Assumptions 3

Icons Used in This Book 4

Beyond the Book 4

Where to Go from Here 5

Part 1: Getting Started With Xero 7 Chapter 1: Getting to Know Xero 9

Understanding the Advantages of Xero 10

Exploring Xero's Different Editions 11

Homepage: Checking Out the Dashboard 15

Understanding Your Team's Needs 16

Integrating Xero into Your Strategic Planning 20

Generating accurate, complete and timely data entry 20

Introducing Management Reporting and the analysis capabilities of Xero 20

Taking Advantage of Support Options 21

Using Xero in a Training Environment 22

Chapter 2: Getting Organised: Setting Up Xero from Scratch 23

Preparing for Set-Up 24

Checking your browser and system requirements 24

Collecting your business data 26

Signing Up for Xero 28

Getting started 28

Organisation Settings 32

Financial Settings 34

Understanding Bookkeeping Basics 35

Working out how account types affect your reports 36

Creating a chart of accounts that works for you 39

Developing your own chart of accounts 40

Setting Up Your Chart of Accounts 42

Using Xero's default Chart of Accounts 42

Customising your chart of accounts 43

Putting Your Accounts into Practice 47

Checking your conversion balances 47

Adding comparative balances 49

Entering historical invoices, bills and credit notes 51

Adding Ways to Get Paid 51

Setting up bank accounts 52

Including credit cards 53

Online payment options 54

Tax Rates 55

Chapter 3: Converting to Xero from Another System 61

Preparing to Import Data from a Non-Accounting Program 62

Converting paper-based records 62

Working with spreadsheets 62

Getting Ready to Convert from an Accounting Program 63

Getting ready to convert 65

Converting exported CSV files into Excel 68

Preparing data for import 71

Mapping tax rates 73

Importing Data into Xero 73

Chart of accounts 74

Contacts 76

Inventory items 77

Sales 79

Purchases 80

Bank transactions 82

Manual journals 84

Fixed assets 85

Unpresented payments or uncleared funds 86

Turning Off Your Old System 87

Accessing historical data 87

Moving to the new system 87

Confirming the switchover date 88

Chapter 4: Fine-tuning Your Set-Up 89

Tools of the Trade: Understanding the Dashboard 90

Xero balance versus bank balance 91

Account Watchlist 92

Invoices Owed to You 93

Bills You Need to Pay 93

Dealing with expense claims 94

Setting Up Users 94

Understanding user access levels 94

Inviting other users to access Xero 95

Taking Advantage of Live Bank Feeds 99

Activating live bank feeds 100

Organising bank accounts on your dashboard 103

Managing bank feeds 103

Manually Importing Statements 104

Bank Rules 105

Setting up bank rules 105

Managing bank rules 109

Using File Storage and the Xero Inbox 109

Part 2: Daily Activities 113 Chapter 5: Managing Your Contacts 115

Setting Up Customers 116

Setting Up Suppliers 124

Connecting Your Email Account to Your Contacts 124

Tweaking Your Contacts after Set-Up 125

Finding your contacts 125

Managing your contacts 126

Grouping your contacts 127

Merging your contacts 128

Unpicking accidentally merged contacts 128

Archiving your outdated contacts 129

Setting Up Employees 129

Utilising Smart Lists CRM functionality 132

Chapter 6: Managing Your Sales 135

Navigating the Sales Dashboard 136

Money Coming In 138

Customers Owing the Most - list 139

Customers Owing the Most - pie chart 139

Mastering Basic Invoice Functions 139

Creating a new sales invoice 140

Saving, approving and cancelling invoices 144

Sending an invoice to a customer 146

Mastering More Advanced Invoice Functions 151

Designing clear invoices for a positive cash flow 151

Working with repeating invoices 159

Invoicing contact groups 161

Managing credit notes 162

Creating a new quote 164

Recording Payments 164

Receipting against sales invoices 165

Sending receipts 165

Recording income for a simple cash business 166

Making use of batch payments 167

Removing allocated payments 170

Taking Advantage of Email Templates 170

Defining your user email addresses 171

Creating a new email template 172

Deleting customised templates 173

Connecting with contacts via social media 174

Following Up on Outstanding Debtors 174

Setting up invoice reminders 175

Making use of statements 176

Chapter 7: Managing Your Payables 179

Navigating the Purchases Dashboard 180

Managing Your Supplier Bills 183

Creating a new bill 183

Approving and cancelling bills 187

Generating a purchase order 189

Making Payments 191

Recording an individual payment 192

Recording batch payments 193

Removing allocated payments 196

Mastering Other Payment Considerations 196

Printing bills 197

Working with Repeating Bills 197

Scheduling payments 199

Stylising your check 200

Sending remittance advice 201

Managing credit notes 202

Entering Expense Claims 204

Adding a new expense claim 206

Making mobile expense claims 207

Submitting a claim for approval 209

Reviewing and authorising the claim 210

Paying the claim 211

Understanding Xero Expenses Functionality 212

Defining Xero Expense Settings 214

Adding a new expense claim in Xero Expenses 215

Making mobile expense claims in Xero Expenses 216

Submitting a claim for approval in Xero Expenses 218

Reviewing and authorising the claim in Xero Expenses 219

Paying the claim in Xero Expenses 220

Chapter 8: Reconciling Your Bank Accounts 221

Preparing to Reconcile 222

Automagically Reconciling Accounts 224

Understanding the hierarchy for matching 225

Accepting transactions Xero has matched correctly 225

Tweaking Transactions to Reconcile 229

Matching misfit transactions 229

Create 234

Transfer 235

Discuss 235

Reviewing other possible matches 236

Taking Advantage of Cash Coding 236

Getting familiar with Cash Coding 237

Understanding bulk coding 238

Viewing Bank Statements 240

Viewing Account Transactions 241

Using the Spend Money and Receive Money Options 242

Direct payment 244

Prepayment 244

Overpayment 244

Underpayment 245

Processing prepayments and overpayments 245

Searching for a transaction 246

Fixing Errors 247

Resolving the difference between Xero balances and bank balances 247

Undertaking detailed searches to find and recode transactions 249

Unreconciling a bank transaction 253

Removing and undoing a bank transaction 253

What Happens in Life Happens in Xero 254

Part 3: Making the Routine, Routine 257 Chapter 9: Generating Reports 259

Understanding the Reports Available in Xero 259

Accessing Xero's business reports 260

Selecting your favourite reports 265

Sorting and filtering 265

Customising Reports 266

Customising report layouts 267

Adding reporting 'bling': Summaries and footnotes 275

Changing views 276

Understanding Xero's Different Reporting Options 277

Draft 277

Published 278

Connecting reports 279

Archived 280

Exporting Reports 280

Accessing Management Reports 281

Chapter 10: Mastering Your Weekly and Monthly Tasks 283

Confirming Accounts are Complete 284

Reconciling Bank Accounts, Credit Card and Online Payment Gateway Accounts 285

Reconciling Your Clearing Accounts 286

Reconciling Your Consumer Tax Control Account 288

Reviewing Your Business Information 290

General Ledger Exceptions report 291

Invoicing 291

Aged Receivables 292

Aged Payables 294

Reporting to Your Tax Authority 295

Australian reporting 295

New Zealand reporting 299

US reporting 302

UK reporting 304

Recording payments to your tax authority 306

Taking Advantage of Xero's Budget Functions 307

Creating a budget 308

Reviewing and editing your budget 310

Setting a Period Lock Date 311

Chapter 11: End of Financial Year Reporting 313

Getting Ready for the End of the Financial Year 314

Finding out where you're at 314

Being prepared early 315

Reconciling tax payments for the year 316

Processing a bad debt 316

Preparing Accounts for Your Tax Accountant 317

Helping with Tax Accountant Tasks 321

Enabling your tax accountant to work directly in Xero 322

Exporting general ledger transactions 323

Entering manual journals 324

Special Considerations 326

Publishing end-of-year reports 326

Locking down accounts 327

Part 4: Getting the Most Out Of Xero 329 Chapter 12: Monitoring Your Business 331

Identifying Key Metrics 332

Using Xero to set realistic targets and strategies 332

Setting KPIs and rewarding success 333

Reviewing your business strategy 335

Generating Useful Information 335

Taking advantage of management reports 336

Delving deeper into the Executive Summary report 337

Assessing your performance 343

Evaluating your position 343

Unpicking the details 343

Customising the Management Report 344

Unravelling the Business Performance dashboard 346

Understanding Xero's Tracking Options 349

Using Tracking 350

Working out what your business should track 350

Setting up Tracking 351

Editing, deleting and applying Tracking options 352

Reviewing Tracking reports 353

Tracking conversion balances 354

Maintaining Budget Control: Budget Manager 357

Exploring Xero Projects 358

Defining Project Settings 359

Adding a new Project 360

Adding a Project Task 363

Adding a Project Expense 364

Recording a Time Entry 365

Raising a Deposit Invoice for a Project 366

Invoicing billable Tasks & Expenses 367

Raising a Project Invoice 368

Tracking Project time entries from your mobile device 368

Project reporting 370

Chapter 13: Managing Your Inventory Items 371

Understanding Inventory Items 372

Periodic and perpetual inventory 372

Defining inventory accounts 373

Setting Up a Xero Inventory Item 374

Creating inventory items 374

Importing and exporting item details and importing opening balances 377

Managing Inventory Items 377

Making use of inventory items reports 377

Searching for and reviewing inventory items 378

Editing and deleting inventory items 378

Adjusting Inventory Balances 380

Periodic stocktakes 380

Adjusting untracked inventory values 381

Adjusting tracked inventory quantities 382

Adjusting tracked inventory values 383

Accessing Cloud-Based App Solutions 384

Chapter 14: Working with Fixed Assets 385

Recognising Fixed Assets 385

Entering a fixed asset into the register 386

Dealing with depreciation 393

Tax reporting and asset pooling 394

Selling or removing a fixed asset from the register 395

Accessing Fixed Asset Reports 398

Chapter 15: Working with Multi-Currency Transactions 401

Setting Up Multi-Currency in Xero 402

Upgrading your Xero plan 402

Adding currencies to Xero 402

Processing Multi-Currency Transactions in Xero 404

Understanding tax rates 404

Working with foreign currency exchange rates 405

Creating a foreign currency invoice 405

Purchasing in a foreign currency 410

Conversion Balances and Multi-Currency Bank Accounts 412

Viewing Reports in Foreign Currency 412

Chapter 16: Exploring the Xero Marketplace 415

Working with Xero to Xero Networks 416

Understanding the Benefits and Risks of Cloud App Solutions 417

Ascertaining implementation costs 418

Working out if the solution is right for you 418

Looking at longevity 418

Checking response times 419

Understanding intellectual property security 419

Making Use of Online Cloud Integration Specialists 419

Getting a Feel for Available Solutions 420

Connectors 421

CRMs 422

Debtor tracking 422

e-commerce 423

Bills and expenses 423

Inventory 423

Job tracking 424

Payments 425

Documents 425

Payroll 426

Point of sale 426

Financial services 426

Time tracking 427

Reporting 427

Looking at Custom Integration 428

Part 5: The Part of Tens 429 Chapter 17: Ten (Plus One!) Tips for Long-Term Success with Xero 431

Embrace the Cloud 432

Make Use of Networking Technology 432

Export Data to Create Graphs 432

Set up Bank Feeds and Reconcile Regularly 433

Use the Batch Payments Feature 433

Keep Bank Accounts for Business Use 434

Embrace Change 434

Use Tracking to Sharpen Reporting 434

Take Advantage of Repeating Bills and Invoices 435

Collaborate with Your Xero Advisory Team 435

Effectively Tap into Online Storage Features 435

Chapter 18: Ten Common Mistakes Made in Xero and How to Avoid Them 437

Not Making Use of Expert Help 437

Not Understanding Terminology Differences 438

Messing Up Bank Reconciliation Autosuggestions 439

Using a Communal User Account 439

Not Deleting Old User Accounts 439

Thinking Your Xero Emails Are Stored 440

Not Realising the Subscriber Owns and Controls the Data 440

Trying to Make Xero Do What Your Old System Did 441

Watching Your Bank Feeds Refresh 441

Paying Full Price If You're a NFP 441

Index 443

About the Author

Heather Smith is focused on helping cloud advisors embrace the add on market place ecosystem. Using her super power of 'explanation' she's educated over 1 million via her YouTube channel, her Cloud Stories podcast, an online MasterMind group, a curated ecosystem newsletter, all about Apps Advisory, and all available for free! Plus, she's written 9 business books including the Xero for Dummies series.

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