Here at Hive we absolutely love using Xero for all our client’s bookkeeping needs.

For those of you that personally use Xero for your bookkeeping requirements, you may not realise that there are many features that help to automate and cut down the time you spend bookkeeping, allowing you to use your time more efficiently and as we all know ‘time is money’ so this can only be a good thing.

Here are my top tips on how to do just that:

1. Set Up Bank Feeds

A Bank Feed lets you automatically import account transactions into Xero from your bank.

There are 3 types of feed – Direct, Yodlee and Paypal.  The one you are able to set up is dependant on where you bank.

Direct Feeds – These feeds require a PDF application. Once set up, Xero downloads your bank transactions on a regular basis (normally daily) without you having to do anything more. This means it’s one less task for you to stress about, perfect! If your bank is listed, click on the name of your bank in the list to follow the step by step guide to setting up your feed.

Please note:  There is a monthly fee of about £3 – £4 with most Direct Feeds.

Yodlee Feeds – If your bank does not provide Direct Feeds then you may be able to set up a Yodlee Feed.  Dependant on your bank, this feed will either automatically download transactions regularly (like a direct feed would) or it will require a manual refresh by the user when required to update.

If a manual refresh is required, please ensure you do this on a regular basis to keep Xero up to date, I would advise a least once a month. Click here for more information on how to setup a Yodlee Feed.

It is worth noting there is no monthly fee when setting up a Yodlee Feed.

PayPal Feed –This feed is for, you guessed it, PayPal accounts. Click here for details on how to setup a PayPal Feed.

2. Set Up Bank Rules

Once Xero has your bank transactions downloaded from your Bank Feed, you need to go through and tell Xero where you want each of these transactions coded.  I.e. a payment to Maurice Hood for lab fees would be coded to lab fees, a payment to BT for a telephone bill would be coded to telephone etc.

Bank Rules allow you to define a set of conditions, which if your bank transactions match to, will apply said rule.

Let me give an example:

You regularly make payments to Maurice Hood for Lab fees and you are fed up of having to manually enter this information each month when reconciling your bank account in Xero.  You can use a bank rule to tell Xero that every time it sees a payment to Maurice Hood you want it to recognise that this is for Lab fees and so Xero will automatically code this to lab fees for you.

Once this rule is set up, every time Xero sees Maurice Hood on a bank statement line – it will automatically apply the rule.  All you have to do is go through your bank account and click ok to confirm you are happy to apply this rule.

You will also be pleased to know that there is no limit to the number of rules you can set in Xero, so you can create bank rules to your heart’s content.

If you want to know more about how Bank Rules work and how to set them up, click here.

3. Cash Coding

Now you have set up your Bank Rules for your regular occurring transactions, but what about the transactions that maybe do not appear as often or don’t necessarily relate to the same purchase each month.  An example could be a payment to Tesco, maybe this is for fuel one day or for coffee for the staff room the next.  You may not want to apply a rule to these types of transactions if they are forever changing but at the same time, you don’t want to have to go through each month and manually type this information out. Have no fear, Cash Coding is here!

Cash Coding allows you to see all your transactions in a list format.  You can sort these transactions in a number of ways including by date, amount and payee.  By sorting your transactions by payee you can see all your Tesco items grouped together.  Each item has a check box beside it so you can select a number of items at once.  You can then type the detail into just one of these transactions telling Xero where you would like to reconcile the item and it will automatically populate the same info into all of the other checked items. This means you’re able to reconcile multiple items at once. To learn more about Cash Coding and how you could implement it, click here.

4. Bank Rules & Cash Coding

I have already explained how both of these features work and I hope you can see the benefit to using both. However, what I haven’t mentioned is how you can use both together. Bank Rules and Cash Coding are a match made in heaven.

As I mentioned before with Bank Rules, these tell Xero where to automatically code items.  However, there is still the step of you having to go through and click the ‘OK’ button for each transaction to actually reconcile them.  Even just this small step can be time-consuming.

However there is a solution, use Cash Coding instead of reconciling each item individually.  What you will find is that all the transactions with Bank Rules have already had all the details fully populated from the Bank Rules information.  All you simply need to do is scroll to the bottom of the screen and click the green ‘save and reconcile all’ button.  This will reconcile all of your items with Bank Rules in one go. What’s more, you can also set up rules from within the Cash Coding screen.

5. Receipt Bank

Receipt Bank will not be relevant to everyone. However, should you wish to use the purchase ledger within Xero, Receipt Bank is a fantastic App that can help. Contact us if you would like to know more.

If you have any questions about using Xero or would like to talk to us about our dental accountancy services, call 01872 300232 or email us at hello@hivebusiness.co.uk.