Heather Smith FCA, FCCA, FICB, is obsessed with how effective automation and integration can unlock and produce timely, clean data, to generate information for fast, informed analysis and decision making. She sits at the intersection of accounting, education and content creation; running a virtual management accounting practice, producing the Accounting Apps newsletter, and hosting the Cloud Stories podcast. Connect with HeatherSmithAU on your favourite platforms.

Introduction 1

Part 1: Getting Started with Xero 7

Chapter 1: Getting to Know Xero 9

Chapter 2: Getting Organised: Setting Up Xero from Scratch 25

Chapter 3: Converting to Xero from Another System 63

Chapter 4: Fine-tuning Your Set-Up 91

Part 2: Daily Activities 115

Chapter 5: Managing Your Contacts 117

Chapter 6: Managing Your Sales 137

Chapter 7: Managing Your Payables 183

Chapter 8: Reconciling Your Bank Accounts 221

Part 3: Making the Routine, Routine 257

Chapter 9: Generating Reports 259

Chapter 10: Mastering Your Weekly and Monthly Tasks 279

Chapter 11: End of Financial Year Reporting 315

Part 4: Getting the Most Out of Xero 331

Chapter 12: Monitoring Your Business 333

Chapter 13: Managing Your Inventory Items 379

Chapter 14: Working with Fixed Assets 393

Chapter 15: Working with Multi-Currency Transactions 409

Chapter 16: Exploring the Xero Marketplace 423

Part 5: The Part of Tens 439

Chapter 17: Ten (Plus One!) Tips for Long-Term Success with Xero 441

Chapter 18: Ten Common Mistakes Made in Xero and How to Avoid Them 447

Index 453

Introduction 1

About This Book 2

Foolish Assumptions 3

Icons Used in This Book 4

Where to Go from Here 4

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 13

Homepage: Checking Out the Dashboard 16

Understanding Your Team's Needs 17

Integrating Xero into Your Strategic Planning 21

Generating accurate, complete and timely data entry 21

Introducing Management Reporting and the analysis capabilities of Xero 22

Taking Advantage of Support Options 22

Using Xero in a Training Environment 23

Chapter 2: Getting Organised: Setting Up Xerofrom Scratch 25

Preparing for Set-Up 26

Checking your browser and system requirements 26

Collecting your business data 28

Signing Up for Xero 29

Getting started 30

Organisation Settings 34

Financial Settings 36

Understanding Bookkeeping Basics 38

Working out how account types affect your reports 39

Creating a chart of accounts that works for you 42

Developing your own chart of accounts 43

Setting Up Your Chart of Accounts 45

Using Xero's default Chart of Accounts 45

Customising your chart of accounts 46

Putting Your Accounts into Practice 50

Checking your conversion balances 50

Adding comparative balances 52

Entering historical invoices, bills and credit notes 54

Adding Ways to Get Paid 55

Setting up bank accounts 55

Including credit cards 57

Online payment options 57

Tax Rates 58

Chapter 3: Converting to Xero from Another System 63

Preparing to Import Data from a Non-Accounting Program 64

Converting paper-based records 64

Working with spreadsheets 65

Getting Ready to Convert from an Accounting Program 65

Getting ready to convert 67

Converting exported CSV files into Excel 70

Preparing data for import 73

Mapping tax rates 75

Importing Data into Xero 75

Chart of accounts 76

Contacts 78

Inventory items 79

Sales 81

Purchases 82

Bank transactions 84

Manual journals 86

Fixed assets 87

Unpresented payments or uncleared funds 88

Turning Off Your Old System 89

Accessing historical data 89

Moving to the new system 89

Confirming the switchover date 90

Chapter 4: Fine-tuning Your Set-Up 91

Tools of the Trade: Understanding the Dashboard 92

Xero balance versus bank balance 93

Total Cash In and Out 94

Account Watchlist 94

Invoices Owed to You 95

Bills You Need to Pay 96

Dealing with expense claims 96

Setting Up Users 96

Understanding user access levels 96

Inviting other users to access Xero 98

Taking Advantage of Live Bank Feeds 102

Activating live bank feeds 102

Organising bank accounts on your dashboard 105

Managing bank feeds 106

Manually Importing Statements 107

Bank Rules 107

Setting up bank rules 108

Managing bank rules 111

Using File Storage and the Xero Inbox 112

Part 2: Daily Activities 115

Chapter 5: Managing Your Contacts 117

Setting Up Customers 118

Setting Up Suppliers 126

Connecting Your Contacts to Workspace or Office 365 126

Sync Xero contacts with Google contacts and Microsoft Outlook 126

Connecting your email account to your contacts 127

Tweaking Your Contacts after Set-Up 128

Finding your contacts 128

Managing your contacts 129

Grouping your contacts 130

Merging your contacts 130

Unpicking accidentally merged contacts 131

Archiving your outdated contacts 132

Setting Up Employees 132

Utilising Smart Lists CRM Functionality 134

Chapter 6: Managing Your Sales 137

Navigating the Sales Dashboard 138

Money Coming In 141

Customers Owing the Most - list 141

Customers Owing the Most - pie chart 141

Mastering Basic Invoice Functions 141

Creating a new sales invoice 142

Accessing additional functionality in New invoice style 146

Saving, approving and cancelling invoices 147

Sending an invoice to a customer 149

Mastering More Advanced Invoice Functions 153

Designing clear invoices for a positive cash flow 154

Working with repeating invoices 162

Invoicing contact groups 164

Managing credit notes 165

Creating a new quote 167

Recording Payments 169

Receipting against sales invoices 169

Sending receipts 170

Recording income for a simple cash business 170

Making use of batch payments 172

Removing allocated payments 174

Taking Advantage of Email Templates 174

Defining your user email addresses 175

Creating a new email template 176

Deleting customised templates 178

Connecting with contacts via social media 178

Following Up on Outstanding Debtors 179

Setting up invoice reminders 180

Making use of statements 181

Chapter 7: Managing Your Payables 183

Navigating the Purchases Dashboard 184

Managing Your Supplier Bills 187

Creating a new bill 187

Approving and cancelling bills 191

Generating a purchase order 193

Making Payments 196

Recording an individual payment 196

Recording batch payments 198

Removing allocated payments 201

Mastering Other Payment Considerations 202

Printing bills 202

Working with Repeating Bills 202

Scheduling payments 204

Stylising your check 205

Sending remittance advice 207

Managing credit notes 208

Taking advantage of Hubdoc 209

Entering Expense Claims 209

Understanding Xero Expenses functionality 210

Defining Expense Settings 212

Adding a new expense claim 213

Making mobile expense claims 215

Submitting a claim for approval 217

Reviewing and authorising the claim 217

Paying the claim 218

Adding a new mileage claim 219

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 243

Prepayment 244

Overpayment 244

Underpayment 244

Processing prepayments and overpayments 245

Searching for a transaction 245

Fixing Errors 246

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 254

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 266

Customising Reports 267

Customising report layouts 267

Adding reporting 'bling': Text Blocks and Footnotes 272

Changing views 274

Understanding Xero's Different Reporting Options 274

Draft 274

Published 275

Archived 276

Exporting Reports 276

Accessing Management Reports 277

Chapter 10: Mastering Your Weekly and Monthly Tasks 279

Confirming Accounts are Complete 280

Reconciling Bank Accounts, Credit Card and Online Payment Gateway Accounts 281

Checking Off the Transactions in Your Clearing Accounts 283

Reconciling Your Consumer Tax Control Account 284

Reviewing Your Business Information 287

General Ledger Exceptions report 287

Invoicing 287

Aged Receivables 288

Aged Payables 290

Reporting...