If you’re just getting started with Xero, it’s normal to make some mistakes while learning. We see mistakes that are quite common, and unfortunately costly, so you need to be aware of them if you want to get the most out of Xero’s powerful cloud accounting system.
Failed to link all bank and credit card accounts dedicated to your business
Be sure to keep all of your company’s bank and credit card accounts in sync with Xero to ensure that no sales or expenses are missed on your reports.
Also, be sure to separate your business and personal accounts to avoid problems during tax season. Trust us… Your accountant and bookkeeper will thank you! Doing so also helps you make accurate trading decisions.
Bank account not matching in Xero with bank details
Run a reconciliation report in Xero regularly and then compare it with your bank statement to make sure there are no errors or duplication.
Many business owners skip this important step, which means they are seeing incorrect or incomplete data when reviewing their reports.
Not checking user access and permission levels
Many business owners only give key team members full access to their company’s Xero system and don’t review user permissions at all.
However, best practice is to provide access on an “as needed” basis and review who has access to the system and what level of permissions they have on a quarterly basis.
Also, when your staff members leave, you should immediately revoke their access to Xero.
Not setting financial SOPs (Standard Operating Procedures)
Create a proper financial SOP that outlines who is responsible for what and when, as well as a step-by-step process on how to get things done.
For example, you can assign your operations manager to run accounts receivable past due reports in the system so they know who owes your company money. Then, create a clear action plan of what happens in specific scenarios, such as a payment that is 2 weeks late. You can also have standard responses that the team can send as needed.
Incorrect transaction when you paid with your personal funds
We have found that many business owners do not know how to handle transactions when they pay business expenses from their personal account. In fact Xero has ways to capture such expenses paid on the wrong card so that you can still claim the tax deduction.
You may need to contact your advisors to make adjustments accordingly.
Avoid Xero Mistakes by Working with an Expert Advisor
The best way to ensure that you make the most of all of Xero’s features and avoid costly financial mistakes, is to work with an experienced advisor who knows the ins and outs of this cloud accounting system.
We are the award winning Xero Certified Accountants and will be happy to take a look at your file to give you some pointers.
Contact us today and let us help you save time and make smart, data-driven decisions.
