10 Expert Xero Tips for Efficient Bookkeeping

Bookkeeping is the backbone of any successful business. Without accurate records, you can’t make informed decisions, monitor your cash flow effectively, or stay compliant with tax requirements. 

To manage bookkeeping more effectively, many businesses are turning to cloud accounting tools such as Xero, with 76% of small businesses in the UK already using cloud accounting software. From automating processes to leveraging its advanced features, these 10 expert Xero bookkeeping tips can help you get the most out of this powerful platform

Expert Xero Bookkeeping Tips

If you’re ready to take your Xero usage to the next level, here are our top tips that will help you streamline your processes:

1. Automate Bank Feeds

One of Xero’s most powerful features is its ability to connect directly to your business bank accounts, automatically importing transactions into the platform.

• Example: Set up bank rules to categorise recurring transactions automatically. For example, a monthly payment to your utility provider can be assigned directly to "Utilities" without manual input. 
• Expert Tip: Review transactions regularly (at least weekly) to prevent a backlog. This keeps your accounts up to date and ready for reporting.

2. Master Reconciliation

Reconciliation is the process of matching your bank transactions with those recorded in Xero. It ensures your books are accurate and complete.

• Example: If a customer pays £500 to cover three invoices, Xero lets you match this single payment to all three, ensuring no discrepancies.
• Expert Tip: Use Xero’s "Find and Match" tool to reconcile complex transactions, like splitting one payment across multiple invoices or linking several payments to a single invoice.This can also apply handy rules that always apply to these types of transactions, such as applying certain VAT rules for expenses or assigning a particular nominal code.

3. Use Repeating Invoices for Regular Clients

If you have clients or customers who are billed regularly, Xero’s recurring invoice feature is invaluable.

• Example: A marketing agency can schedule monthly retainer invoices to auto-send on the first of every month, eliminating manual effort.
• Expert Tip: Set up repeating invoices with personalised templates that include your business branding. Automating this process ensures invoices go out on time, improving cash flow.

4. Utilise Xero’s Built-in Calculator

Xero's fields support basic mathematical equations, allowing for on-the-spot calculations (no more reaching for the calculator every 2 seconds!)..

• Example: When splitting expenses among departments, enter "500/2" in the amount field to allocate £250 to each.
• Expert Tip: Instead of calculating figures externally, input expressions directly into Xero's amount fields (e.g., typing "100+50" will automatically compute to "150")

5. Sync Xero with Google Sheets for Enhanced Reporting

Xero integrates with Google Sheets, facilitating seamless data import or export for customised analysis. 

• Example: Generate a cash flow forecast by exporting data to Google Sheets and applying specific business assumptions.
• Expert Tip: Export financial reports to Google Sheets to create tailored dashboards, perform advanced calculations, or share insights with stakeholders.

6. Track Performance with Categories

Xero’s tracking categories feature allows you to monitor performance by department, project, or region without needing separate accounts for each.

• Example: A property management company could use categories like "Commercial Properties" and "Residential Properties" to track income and expenses separately.
• Expert Tip: Keep your categories simple and consistent to avoid confusion during reporting.

7. Implement Date Locking to Prevent Errors

Xero allows you to lock accounting periods to prevent inadvertent changes after finalising reports.

• Example: Once the March accounts are finalised, lock transactions up to 31st March to maintain data integrity.
• Expert Tip: After completing and approving financial statements for a period, set a lock date to ensure no further entries can be made for that timeframe.

8. Leverage Hubdoc or Dext for Receipt Management

‍Hubdoc, included with most Xero subscriptions, makes it easy for small businesses to capture and organise receipts and bills - larger businesses may require Dext, a more comprehensive expensing software.

• Example: Upload a receipt from a business lunch, and the expense software will automatically categorise it as "Meals and Entertainment" while attaching a digital copy to the transaction in Xero.
• Expert Tip: Upload receipts in real-time by taking photos on your phone. The expensing software extracts key data like supplier names, amounts, and dates, saving you hours of data entry.

9. Utilise the Find and Recode Feature

Xero's "Find and Recode" tool enables bulk editing of transactions, streamlining the correction process.

• Example: If several travel expenses were mistakenly categorized under "Office Supplies," use "Find and Recode" to reassign them to "Travel Expenses" in one action.
• Expert Tip: Use this feature to efficiently correct misclassified transactions or update account codes across multiple entries simultaneously.

10. Create Custom Reports for Financial Oversight

‍Xero’s reporting tools provide insights into your business’s financial health, but you can take them further by customising reports to meet your needs.

• Example: Tailor a report to track specific metrics, like expenses by department, and use it to identify areas where you can cut costs.
• Expert Tip: Use the "Cash Summary" report to monitor liquidity or schedule monthly P&L statements to be emailed to key stakeholders automatically. These reports will show both gross and net profit based on transactions.

Not Sure How to Improve your Xero Bookkeeping? We can help!

Xero is a game-changer for managing your accounting. It helps you save time by automating tasks, makes use of advanced features, and ensures your records are spot-on, giving you better control over your finances.

At Linggard & Thomas, we’re specialist Xero accountants that can help businesses manage their bookkeeping more effectively. Whether you’re new to Xero or looking to fine-tune your processes, we can provide tailored support and advice to your business so you can fully understand your finances.

Ready to take accounting to the next level? Contact us today to learn how we can help.