Document management / document capture software is game-changing software for bookkeepers, accountants and finance teams. I suspect it’s also been very helpful, in a good way, for VAT inspectors.
It’s been around for well over a decade and when hooked up to the cloud accounting software products, document capture software makes the processing of suppliers’ bills quicker, cleaner and much more accurate than doing the same work manually.
Back in 2017, I literally tossed a coin to choose between the leading products of the time, ReceiptBank and AutoEntry, for our business and our clients to use. AutoEntry was the winner and we’ve been using it ever since.
Since then, ReceiptBank became Dext, and we’ve seen AutoEntry acquired by Sage and Dext acquired by Iris. We also saw Xero acquire Hubdoc, QuickBooks introduce an in-product version called ReceiptSnap and lately the new kids on the document capture block have been Apron and Briefcase.
I have to say we’ve been very happy for nigh-on a decade with AutoEntry but I also see the market moving.
I’ve known this was coming for a while but I’d heard it was being rolled out for bank payments first of all, to be followed by the functionality to deal with suppliers’ bills at a later date.
Call us old-fashioned, but we account for suppliers’ bills when they arise and as they’re paid the bank feed in the accounting software will generally match the payment to the unpaid bill and save bookkeeping time at that stage.
So I was both surprised and gratified when I opened up Xero Files, which is where the document capture function sits, and found that suppliers’ bills was ready for action.
💡- The first great benefit is realised – you stay in the software. You don’t have to leave Xero and load up another app to use document capture.
Every Xero business has a unique email address in the top-right corner of Xero Files which you and your clients can use to forward emails from suppliers that contain their bills.
You can also give the email address to suppliers so they can email their bills directly to your Xero Files inbox.
If you prefer, there’s an alternative to upload the bills from file explorer if you prefer.
The first step is to produce an image of the bill that will be transferred into the transaction when you do the bookkeeping.
The quality of PDFs is very clear and the quality of till receipts is also pretty good.
⚠️ – A word of warning – it doesn’t deal so well with Word files and if there are images in the email footer it’s inclined to think they are documents to be accounted for!
To the right of the image is the data entry grid in which you can choose what type of document you are dealing with.
First in the list is “Bill” which suggests that Xero know what this app will mostly be used for (or that they like a list to be in alphabetical order!).
Xero extracts the data from the bill that you’ll need for your bookkeeping:
The AI kicks in to produce a narrative file summary that explains the document.
💡- This feature impressive but I doubt many would miss it if it wasn’t there which begs the question – is it valuable information?
Moving on, we ignore the “payment method” box and go straight to the VAT box where you can choose whether the invoice values are exclusive or inclusive of VAT or that there is no VAT.
The final data entry section contains a description of what the invoice is for and it’s where you choose the account category and VAT code to use.
💡- the AI kicks in again to produce the description which it does very well and which is free of charge!
If the contact is new then you have to complete the fields for account category and VAT code but if a contact has been seen before then an intelligent suggestion is made.
👎 – At the moment there’s no field for Tracking Categories. I’m sure that will come and, read on, there is an easy solution for dealing with Tracking Categories if you use them.
Click on Create transaction to send the bill and it’s PDF or image to the main Xero ledger.
But, the bill is sent as a draft which needs to be approved for payment.
👎 – I think this is a pain but there are two redeeming features:
So, not the end of the world but I’d prefer to select a Tracking Category before I create the transaction and I’d like the option to create transactions as bills that are ready for payment.
I like Xero Document Capture, they’ve done a good job which I think will get better.
We tested it with a client who is new to Xero. She loved it and made light of the fact it doesn’t deal very well when the supplier’s bill is a Word file.
👍👍👍
We help many businesses each year to get the most out of Xero.
We run very practical training sessions and we’re always happy to discuss a change of accountant with you if you’re not getting on famously at the moment!
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
How quickly does Xero document capture process a supplier’s bill?
It’s very quick but I think speed doesn’t matter. Suppliers’ bills don’t get paid any sooner however quickly they make it into your accounting ledger.
How do I clear draft bills and have them accounted for and ready to pay?
Go to the Bills section of the Purchases menu. You can select and review each bill, adding a Tracking Category if rquired, and then send to 2Awaiting payment” or you can tick a selection of bills and approve them in bulk.
Is Xero document capture any good for high volumes of transactions?
At the moment it’s too early for me to tell. I think that depends on how well it memorises the account category and VAT code for any given contact. My sense is that it will be OK for high volumes.
Is there a link?
Our work with clients across Central, West and South-West London gives us a close-up view of how businesses in areas like Fulham, Hammersmith, Richmond, Putney, Wandsworth, Kensington and Chelsea are adapting and growing. If you’d like to explore how these insights could apply to your business, we’d love to hear from you.
We don’t believe in forms, we believe in talking to people, finding out your needs and tailor-making a solution just for you.
Give us a ring on 020 7125 0270 or email us at info@bluedotconsulting.co.uk
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