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
