There is no doubt that Xero is a very handy way to keep on top of your books for any small business or modern entrepreneur. Simple to use and full of powerful Cloud accountancy features, it has helped many organisations to streamline the way their accounts are handled. As with any kind of software though, you must be careful to enter data correctly in order to avoid issues further down the line.
The reconciliation of bank transactions is one area some companies can fall down on here. To avoid future problems here, it is much better to get it right from the start. To help with this, the below are some of the most common bank transaction reconciliation mistakes Xero users make.
Payment of bills and invoices
The first tip is to be extra careful when marking invoices as paid in either the purchase or sales modules. Many Xero users mark the payment as from or to the wrong account by mistake. This means the invoice in question will not then be showing to assign payment against which will cause reconciliation issues later. Avoiding this is simple – double-check the bank account you select when paying any invoice.
Reconciliation against bills that need paying
When working in the Purchases section with bills to be paid, some people can forget to mark them as such in the ‘Match’ screen. Very often, the data is input into the bank reconciliation section as an expense. This then sees a new transaction created which throws up a reconciliation error further down the line.
Using the ‘Unreconcile’ function incorrectly
If you have entered any reconciled bank transactions and then need to adjust them, you may think the ‘Unreconcile’ button is appropriate. However, this is not the best option. If you do this, the already completed transaction will just remain in the account as an item that is unreconciled. When you come to do a final bank reconciliation, you will find this doubles up the transaction in question. It is best to use the ‘Remove and Redo’ button instead.
Get some professional Xero help
Although Xero is undoubtedly a fabulous Cloud-based package to use for your accounts, you may not have the time or inclination to address issues like this. This is where calling professional help comes into play. Here at Cornel Accountants, we have lots of experience using Xero and helping all types of business manage their accounts in the Cloud. Call today for more details on how we can help.