Xero can give you a really useful picture of what is happening in your business.
But there is a catch.
The information you get out of Xero is only as useful as the information going into it. If transactions are left unreconciled, old invoices are still showing as outstanding or your records have not been reviewed for a while, the figures on your screen may not tell the full story.
A little regular housekeeping can make a big difference.
Here are some simple areas worth checking.
Keep Your Bank Reconciliation Up To Date
One of the most important habits is regularly reconciling your bank transactions.
The longer you leave it, the bigger the job becomes and the harder it can be to remember what individual payments were for.
Keeping on top of your reconciliation also means your Xero figures are more likely to reflect what is actually happening in the business.
Rather than saving everything for the end of the month, consider spending a few minutes on it regularly.
Check Your Outstanding Invoices
Take a look at your aged receivables report.
Are there invoices showing as unpaid that you know have been settled? Are there credit notes that need allocating? More importantly, are there customers who genuinely owe you money and need chasing?
An accurate list of outstanding invoices can help you manage cash flow and spot potential problems sooner.
After all, making a sale is great, but getting paid matters too!
Review Who You Owe
The same principle applies to your bills.
Your aged payables report should give you a clear picture of what the business owes and when payments are due.
If the information is accurate, it can help you plan ahead and avoid unexpected pressure on your bank balance.
Deal With Unusual Transactions
Do you have transactions sitting in Xero that you are not quite sure what to do with?
It can be tempting to leave them for another day.
Unfortunately, another day can quickly become another month.
If you are unsure how something should be treated, ask us. Dealing with queries as they arise is usually much easier than trying to work through a long list several months later.
Check For Duplicates
Duplicate bills and invoices can creep into Xero, particularly where more than one person is involved in the bookkeeping process.
Coding money received or spent straight from the bank rather than reconciling to a bill or invoice is a big red flag here. It can create double counted income or spend if you also load a bill or raise an invoice, leaving the bill or invoice showing as unpaid.
A quick review can help identify anything that has accidentally been entered twice before it affects your reports or, worse, results in a supplier being paid twice.
Make Sure Your Information Is Useful
Good bookkeeping is not just about keeping HM Revenue & Customs happy.
Accurate, up to date information can help you understand:
- How much cash you have available
- Who owes you money
- What bills are coming up
- How the business is performing
- Whether there are any areas that need your attention
If your Xero records are several months behind, you could be making decisions based on information that no longer reflects the reality of your business.
Little And Often
Xero housekeeping does not need to mean losing an afternoon to bookkeeping.
Spending a small amount of time regularly reviewing your records can help keep things under control and give you much better visibility over your business.
The key is not to let it build up. A few minutes spent keeping Xero tidy each week can save you time, reduce the stress of trying to remember what happened months ago and, most importantly, give you numbers you can actually use to make better business decisions.