By Sheelagh Jenkins, Accountant at Hive Business

We’re often telling you the reasons you should choose Xero for your bookkeeping and how to perform tasks more efficiently once you are using Xero. However, the advantages to be gained from using Xero do not end with making bookkeeping simple and more time efficient. The Xero dashboard can be set up to display easy to understand graphs and other information that can be used in monitoring how your business is performing, such as cash flow, invoices owed to you, bills you need to pay and any accounts you really want to keep an eye on. In addition, it is easy to produce a profit and loss account and balance sheet to give you an idea of how the year is going so far. It can also help produce some of the data required for Hive’s KPIs.

These graphs and reports will only become really useful if the information is being entered onto Xero correctly and analysed accurately. We recently spoke about how CRM systems can only be used fully if the data is put in properly.

Think of it as being like that ‘junk drawer’ in your kitchen where you put all the things that you don’t have time to find a proper home for. In reality, it does not take much longer to put them away properly and it makes life so much easier when you next need to find something.

Here are some ways to ensure that what you put into Xero results in the most useful output:

1. When entering a sales or purchase invoice or a bank payment or receipt, consider whether it really is a ‘direct expense’ or a ‘general expense’, or whether it would be more appropriate and informative to put it under a different expense heading. Xero has a pretty extensive choice of expense headings to use or can easily be tailored to your own requirements.
2. As well as entering who you are paying, try and add a brief description of the expense (e.g. what dental supplies, what plumbing work, which stationery) so that when you look at the Xero records at a later date, the detail of the expense is immediately obvious, saving you the bother of going back to the paperwork to remind yourself.

This all has the added advantage of making it easier for us to produce your year end accounts – the more information you put into Xero, the fewer the questions we will need to ask you to clarify what items of income or expenditure were… a win-win situation!

If you have any questions about getting more out of Xero or would like more help learning how to use it, please give us a call on 01872 300232 or email hello@hivebusiness.co.uk.