Tag: workflows

Xero – five simple tweaks that can save you hours each month

You don’t use Xero for the love of bookkeeping, you use it to produce financial information that you can use to measure and improve the performance of your business.

Xero is great software – provided you know how to use it properly.

Here are five simple tweaks you could make to the way you use Xero which will make a big difference to the time it takes to do your bookkeeping and to the financial information you can generate from Xero.

1. Workflows

The bank feed is one of the most useful tools in Xero but it works best and takes the least amount of time if it’s matching incoming and outgoing transactions against sales invoices and suppliers’ bills that are already accounted for.

In any event, sales invoices should be sent as soon as possible and suppliers’ invoices should be accounted for when you get them so you know your costs and how much you need to pay out.

Your bookkeeping is only useful if it’s up to date so make sure all your sales and purchases are accounted for as soon as they can be.

And speed up that bank feed work.

2. Set up bank rules

Not for the faint-hearted in case you get one of your rules wrong but if you have regular, repeating receipts and payments going through your bank account then set up some rules so Xero does the heavy lifting for you and gets it right every time.

Start with transactions without VAT (easy enough if you’re not registered for VAT) such as:

  • bank charges and interest
  • train fares
  • transfers between accounts or to / from the business owner
  • PAYE and net pay payments

Bank rules run automatically and if you’re reclaiming VAT on a payment you need to ensure you have the VAT invoice and the best action you can take is always to attach the VAT invoice to the payment in Xero.

Which slightly defeats the point of automatic, time-saving rules

Here’s the Xero guide to setting up bank rules

Give it a go – but check your work!

3. Customise reports so they tell you more

You don’t use Xero for the love of bookkeeping, you use it to produce financial information that you can use to measure and improve the performance of your business.

Get to know the basic reports in Xero and if you click on the star next to a report then it appears in the Accounts drop-down menu.

You can also customise reports to make them more helpful and so they better reflect YOUR business. Here are a couple of examples:

4. Setting up repeating invoices and transactions

If you repeatedly send invoices of the same value, for the same product or service to the same customer then automate the process using a repeating invoice template.

Xero won’t forget the task and when the customer pays, the bank feed should match the money to the invoice.

Here’s the Xero guide to setting up repeating sales invoices

You can also set up repeating transactions for other items that will save you time such as:

  • monthly insurance or business rates charges through your P&L
  • a monthly estimate of your corporation tax charge so tax doesn’t come as a surprise

5. Use expense apps

Expense apps or document management apps, such as Dext, AutoEntry or Xero’s own – HubDoc – all save time and improve the accuracy of your bookkeeping.

You forward suppliers’ invoices and out of pocket receipts to the app and select the correct accounting classification for the cost and then publish the transaction to Xero, along with the PDF of the invoice.

These apps learn and can also be programmed to do the correct accounting whenever they recognise an invoice from a particular supplier.

I hope you find these five Xero tweaks useful and you get more out of Xero as a result.

If you’d like to learn a lot more and make sure Xero is functioning as your business needs it to then our bespoke Xero training might be just what you need.

We work with you and your finance team on YOUR Xero file using YOUR business transactions.

Follow the Xero Training link to find out more and then give Michael Austin a call on 020 7125 0270 or email info@bluedotconsulting.co.uk

Michael

Related links:

Find out more about our bespoke Xero training

Xero accountants in London

Accounting and tax services for your business

Blue Dot Consulting provides accounting and business advisory services to clients across Central London, West London and South West London, with particular focus on Fulham, Hammersmith, Richmond, Wandsworth, Kensington and Chelsea. We help local business owners make better financial decisions and plan confidently for the future.

© Blue Dot Consulting Limited, Chartered Accountants, Bedford House, Fulham Green, London, SW6 3JW

E-commerce bookkeeping

Start the bookkeeping manually and make sure your accounting software is configured to produce reports that accurately measure your business activities.

E-commerce is a great enabler for businesses of all shapes and sizes the world over, a real and successful engine for economic growth. Of course all of the e-commerce transactions need to be accounted for, which means e-commerce bookkeeping is a necessary skill in the 21st century.

E-commerce is a broad church

Here are some examples of e-commerce that we see every day:

  • selling products on Amazon, being paid by Amazon
  • setting up an e-commerce website on Shopify and being paid by Shopify
  • marketing an event on Eventbrite and being paid via a combination of Eventbrite, Stripe, PayPal or directly by attendees
  • selling digital downloads or subscriptions to watch videos on your website and being paid via Stripe or PayPal
  • selling your own products on your own website and being paid via a merchant service such as Sagepay or Adyen

These are just some examples of e-commerce activities and transactions. Not only are there many more but new channels and platforms are appearing all the time.

And all these businesses have to get their heads around e-commerce bookkeeping.

E-commerce bookkeeping – map your transactions

This is the same for all businesses and organisations, whether they’re online or offline – you start by mapping your transactions.

Let’s say that Blue Dot Consulting (BDC) has an e-commerce bookkeeping webinar and let’s map what happens.

  1. BDC creates an Eventbrite account
  2. We promote our e-commerce bookkeeping webinar and point attendees to Eventbrite to sign up and pay
  3. Attendees sign up and pay by card
  4. We run the event (and receive many five-star reviews)
  5. BDC receives a sum of money from Eventbrite

Points to note / questions to ask:

  • The sum of money received will be less than the total paid by the attendees – because Eventbrite will deduct their fees before paying BDC
  • BDC is VAT registered – it has made sales which attract VAT in the UK but what if some of the attendees were from outside the UK?
  • Did some people attend because it was part of their work and did some attend in a personal capacity?
  • Does BDC have to create and send invoices to the attendees?
  • Is there VAT to reclaim on the Eventbrite fee?
  • How long does BDC have to wait to receive its money?
  • The receipt of one sum of money is not sufficient information for the bookkeeping. So, what reports are available in Eventbrite that show the transactions related to the event?

These are just the points that arise from my simple example – in your business you may have several more issues to think about, such as categorising the different products or services you’re selling.

Map your transactions – go to where the data is

The place to go is where the transactional data is being captured.

This could be your website, Shopify, Stripe, PayPal or somewhere else entirely depending on your e-commerce set-up.

But the data is available somewhere, often in a “Reports” section, and you need to download it.

Then you need to understand it and figure out how to use the data for your bookkeeping.

Do the bookkeeping manually to start with

Once you understand the transactional data it’s pretty simple to figure out the correct bookkeeping, making sure you get the VAT / sales tax element correct for the different customer groups, locations, products and services you’re selling.

Start the bookkeeping manually and make sure your accounting software is configured to produce reports that accurately measure your business activities.

You can use the reports to check your bookkeeping and to share across your business so everyone who needs to can track sales performance.

Apps and apprehension

There are many apps that connect e-commerce platforms to accounting software. And when they’re working successfully they will save a huge amount of time and improve the accuracy of your bookkeeping.

They’re also essential for when your business scales up. As your business grows you can’t afford for the e-commerce bookkeeping to be left behind.

But for every app there is an error waiting to happen if you’re not careful. And most cloud accounting software doesn’t allow you to take and restore a back-up so be very careful when you start to import large volumes of transactions.

That said, get the apps to do the heavy lifting once you know they will do it correctly.

How can Blue Dot Consulting help you navigate e-commerce bookkeeping?

E-commerce is here to stay, it’s constantly evolving and e-commerce bookkeeping needs to keep pace.

It’s not as simple as it can be made to look in the swish and fancy videos the software people point you towards. But once you get the building blocks in place and have a thorough understanding of your transaction data then you can progress to a joined-up world in which data flows from one app to another, morphing into useful financial information along the way.

We have a great deal of experience working with e-commerce businesses like yours, making sense of the sales transactions, accounting for them and generating useful financial information.

We can help you!

Let’s have a free-of-charge chat about your business – call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk

Michael

Related links:

This is bookkeeping in the 21st century

Bookkeeping for your business

Spreadsheets in accounting – use fewer of them but learn how to build them better

© Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

We can’t send you your invoice because our accountants are so behind with processing direct debits

Normally I’m delighted to hear that a business is getting paid by direct debit because DD is the silver bullet of credit control.

But when I heard a senior manager in XYZ Limited say this about their invoicing and their accountants, you could have knocked me down with a feather!

So, let’s see how they could have avoided getting into this mess in the first place.

Raise your sales invoices as soon as you can

Every business needs to raise its sales invoices as soon as it can. Make sure they are:

  • correctly describing the goods / services sold and are correctly priced
  • addressed to the correct person and contain a PO number if required
  • sent by email – ideally as a PDF not as a link. Why make it difficult for your customer?
  • accounted for as soon as possible if they’re not raised in your accounting software

Do this and you know how your business is performing from a sales perspective and you know how much money you are owed.

Get cracking with credit control straight away

Credit control differs for every business but however you go about credit control get started straight away so your invoices have the best chance of being paid on time.

This blog isn’t about credit control but there are a couple of links at the end which you might find helpful if you’re a bit rusty.

This blog doesn’t need to be about credit control because XYZ Limited gets paid by direct debit!

What could have been done differently?

It so happens that we use the same direct debit provider as XYZ Limited and this is how we would have gone about things.

The first step is to link the direct debit service to your accounting software.

As new clients come on board you send them a direct debit mandate to complete, stating your payment terms clearly so the client knows when their payments to you will leave their account.

Pro tip: If a client won’t sign up to direct debit you should seriously consider not working with them as they could well turn out to be a bad credit risk. And who needs that?

Raise your invoice, using the agreed payment terms, and send it to your client.

Sit back, relax and you’ll be paid on time. And if you use the combination of DD provider and accounting software that we use, the accounting for the payment will be done automatically.

Bookkeeping in the 21st century

There’s a link below to a blog about this.

Essentially we live in an age in which all sorts of online platforms exist for making sales and receiving customer payments.

This is generally a good thing but it does require businesses, bookkeepers and accountants to know what they’re doing and walk through every step of the sales process, from order to payment, making sure everything happens in the right order and is working correctly.

You establish workflows that work and scale from there.

It seems that XYZ Limited and their accountants have somehow tied themselves up in knots with a very visible outcome – XYZ’s clients aren’t getting their invoices even though they have made their payments.

Not a good look for XYZ Limited!

Workflows, accounting, getting paid – can we help?

Let’s have a free-of-charge chat about your business – call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk

Michael

Related links:

This is bookkeeping in the 21st century

Five tips to improve your sales invoicing

Getting paid on time – your company is NOT a source of alternative finance!

© Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW