Xero Essentials Attendee Notes

XERO ESSENTIALS USA

Course Topics

INTRODUCING THE XERO SYSTEM ............................................................................................................................1

GETTING STARTED ....................................................................................................................................................2

LOGGING IN ..............................................................................................................................................................3

PARTNER EDITION AND BUSINESS EDITION ..............................................................................................................5

OVERVIEW ...............................................................................................................................................................5 PARTNER EDITION ......................................................................................................................................................6 DEMONSTRATION COMPANY ........................................................................................................................................8

HELP ..........................................................................................................................................................................9

USER ROLES.............................................................................................................................................................10

DASHBOARD ...........................................................................................................................................................11

BANK RECONCILIATIONS .........................................................................................................................................13

BANK ACCOUNTS .....................................................................................................................................................13 BANK FEEDS ...........................................................................................................................................................14 RECONCILING IN XERO ...............................................................................................................................................16 INTRODUCTION TO BANK RULES ..................................................................................................................................19 INTRODUCTION TO CASH CODING ................................................................................................................................20

CHART OF ACCOUNTS .............................................................................................................................................23

SALES TAX REPORT..................................................................................................................................................25

REPORTS .................................................................................................................................................................27

Xero Essentials Course USA V3.2 20140428 Page | 1 of 28

Introducing the Xero System

Xero isnt software you need to install. Instead, it runs on the browser you normally use to access web pages on the Internet. Xero also runs on mobile devices using the mobile version.

To be able to use Xero, do these things before you start:

1. Check you are using a Xero supported browser:

Internet Explorer (IE) 8 or newer (PC) Mozilla Firefox (FF) 8 or newer (PC and Mac) Safari 5 or newer (Mac) Google Chrome (PC and Mac)

If youre using m.xero.com on your mobile device: iOS or Android (your default browser) Opera Mini (all other devices)

2. Activate JavaScript before your log on.

3. Let your browser accept cookies.

To get the best from Xero, you should also:

1. Install or update Adobe Flash player so you can see all of Xeros interactive graphs. This is especially true if you use an older computer.

2. Clear your cache (temporary internet files) and cookies regularly.

3. Use Microsoft Office with DOCX to customize your sales invoices.

4. Install Skype if you want to call contacts directly from Xero using Skype.

5. Turn off Firebug (if using Firefox) as it causes slower page loads.

Xero will prompt you to download or set up some of these things (if you haven't already) when you first use it. You can still use Xero without doing some of these things, but you won't be able to take advantage of all the graphic and interactive features.

Go to the Help Center for more details: Xero system requirements

Some tips to help you get around Xero:

1. Use tabbed browsing to view multiple pages at the same time. This stops Xero from closing a page. It also means you can easily go back to that page later. To open a link in a new tab, hold down Ctrl + left-click on the link, or right-click on a link and select Open a New Tab.

2. To enter todays date, type t in the Date field and then press the Tab key.

3. Go to the Help Center for more tips: Xero Tips

4. Use Xero TV to learn more about Xero from helpful how-to videos: Xero TV

Xeros hosting and service delivery infrastructure ensures the highest level of security. This is supported by a world-class network, data and physical security environment. Go to the Xero website for more about Security Precautions and our Privacy Policy.


Getting Started

If youre new to Xero, youll first need to create a free Xero account. Once thats done, you can add your organization by entering its name. Select either Start trial to begin using your organization on a trial basis, or select Purchase now to choose a pricing plan.

To sign up for a free Xero account:

1. Go to the Xero website: www.xero.com

2. Click on Try Xero for Free.

3. Enter your name, email address and phone number.

4. Read the terms of use, accept them and then click Get Started.

Xero will now send you an email with a link. Use this link to verify your account.

5. Go to your email inbox and open the activation email from Xero.

NOTE: Check your spam folder if you dont receive the email within a minute or so.

6. Click on the activation link and then create a password.

NOTE: Your password must 8 characters or longer and include at least one number.

7. Click Activate your account.

8. Xero takes you to the My Xero page. Youre ready to add an organization to Xero.

Self Test

How do you open multiple browser tabs? What are the advantages of tabbed browsing when using Xero?

How do you sign up for a free Xero account?

After activating your free Xero account, what two steps will need to be completed?


Logging in

To login to Xero, go to login.xero.com, complete the email and password field and then click Login.

To automatically populate your email address into the Email field:

1. Enter the URL below into the address field of your web browser.

https://login.xero.com/?username=YOURNAME

2. Edit the URL by removing YOURNAME and replacing it with your email address. For example, if [email protected] is your email address, then you would edit the URL as follows:

https://login.xero.com/[email protected]

3. Press the Enter key. Xero inserts the email address into the Email field.

4. Bookmark this page or create a shortcut (save it to your desktop). When you next login to Xero, select the bookmark (or double-click on the shortcut) to open the login page. The Email field automatically displays your email address if you bookmarked the page (or saved the shortcut) correctly.


Case Study 1: Using Multiple Tabs

From the Dashboard:

1. Scroll down to the Money Coming In section.

2. Note the dollar value for the Draft invoices; write it here: ...............................................................

3. Hold the Ctrl key (Command for Mac) and then click on the Draft invoices link. What happened?

4. Click on the newly created browser tab. Which Xero status tab is showing?

5. Click New Invoice and then create a draft sales invoice:

To Enter your name

Date Today

Due Date 15 days from today (enter +15 in the Due Date field and then press the Tab key)

Amounts are Tax Inclusive

Item PM-BR

Qty 4 (total invoice $1,000)

6. Click Save.

WARNING: Make sure you click Save, not Approve. This case study wont show you everything its designed for if you approve the invoice.

Which screen are you now in? What happened to the sales invoice?

7. Click on the previous browser tab; the one showing the Dashboard. What is the dollar value for the Draft invoices? As this web page has sat idle, the total has not changed. Refresh the page to update the Draft invoices total.

Did you notice you could move easily between Xero screens by using multiple browser tabs? The technique means you can work more efficiently.


Partner Edition and Business Edition

Overview

There is one version of Xero. When using Xero youll never need to run or install updates. You get full access to all Xero features each time you log in; however, it is your pricing plan that affects your access to those features.

While there is one version of Xero, there are two editions of Xero: Business Edition and Partner Edition. Business Edition is available to anyone. It comes with three pricing plans:

STARTER STANDARD PREMIUM

Users Unlimited Unlimited Unlimited

File storage 1 GB 5 GB 10 GB

Bank feeds

Bank transactions reconciled 20 / month

Sales Invoices 5 / month

Bills 5 / month

Multi-currency

Partner Edition is only available to approved Xero Partners. It comes with two extra pricing plans:

Cashbook: for managed clients who do not need invoicing

Clients can have limited access to bank accounts and reporting

Practice staff have additional access to help set up and manage their clients

Ledger: annual accounts preparation for fully managed clients

Client have read only access

Cant set up bank feeds

Practice staff have additional access to help set up and manage their clients

Because there is only one version of Xero, it is the selected pricing plan that allows access to Xeros various features. Go to the Help Center to find out how to change your pricing plan.

Self Test

Your client wants to use Xero. They dont need invoicing functionality but they like the idea of using bank feeds. Which pricing plan is best for them?

Your client is an exporter and will need to use the multicurrency option in Xero. Which pricing plan is best for them?

Your client is not registered for Sales Tax. They will not be reconciling their bank account, nor will they be entering expenses, but they do want to view published reports. Which pricing plan is best for them?

Your client wants to use bank feeds, reconcile their bank accounts and do their own invoicing. They wont need the multicurrency option in Xero. Which pricing plan is best for them?


Partner Edition

Also known as My Green Xero, Partner Edition gives extra functionality to help manage staff and organizations when using Xero. Partner Edition also gives access to Ledgers and Cashbook editions.

If you do not see any tabs across the screen on your Xero home page, check the Practice Administrator has set you up as a User.

Xero gives a Practice one free Premium Organization to manage their accounts.

Partner Edition has a My Xero link and five tabs:

Clicking My Xero displays the last five organizations you accessed. Youll also see other applications you have access to; for example, My Xero, Practice Manager, Workpapers.

Go to the Help Center for more about Xeros Partner Edition.

Staff Tab

The Staff tab lists every staff member in your practice. It is much quicker and easier to add and manage practice staff from here as you can bulk-invite several staff members for each client. You can also give staff members permission to add clients to your practice billing plans. Go to the Help Center for more about adding and managing practice staff in Xero.

All staff members receive updates from Xero about each new release and features.

Xero limits access to reporting codes and year-end differential reporting to practice staff members.


Training Tab

Three menu items are available from this tab:

Training Overview: Records how many staff have completed various training courses. Also records courses in progress and any training requests that are awaiting approval.

My Training: Lists recommended courses and provides links to online learning resources including the online Learning Center.

Partner Help Center: Takes you directly to the Xero resources for practice staff page in the Help Center. Here you will find information and downloadable resources to help you manage your practice. For example: marketing material, setup and conversion guides and bank feed information. You can also find the links to the Xero Certification and Recertification tests here.

Settings Tab

Four menu items are available from this tab:

Profile Settings: As a Xero user you have the opportunity to promote your work or expertise to new and existing customers through the Xero Community. Select this menu item to begin entering or to update your profile details. Refer to the Help Center for more about your Xero user profile.

Account Settings: Select this menu item to manage your account settings such as login email address, password and time zone. You can also choose the screen to open when you log in. Choose the My Xero area or the last organization you were in.

Practice Settings: Select this menu item to add or edit the practice name, description and contact details. Xero will then display these details in client organizations.

Report Publishing Styles: Select this menu item to add your practice logo, decide the border color and add a report footer (such as your disclaimer) for published reports.


Demonstration Company

If youve signed up for a Xero account, youll have access to the Xero Demonstration Company. This company uses fictitious data, is separate from your other organizations, is private and is available for both Partner and Business Editions. Use the Demonstration Company to get familiar with Xero and to try out new features. You can use it for testing purposes too.

When you access the Demonstration Company, Xero creates a copy of it just for you. You can import data and enter transactions into it. Nobody will see this; only you.

NOTE: Dont use the Demonstration Company for your own organizations data. Use a free Xero trial subscription instead. Then create and set up your own organization using that subscription.

Xero expires the data entered into the Demonstration Company after 28 days. If you want to remove the data before then, reset the Demonstration Company using the Reset link. Resetting means youll clear all entered data. That is, youll get a fresh copy for further experimentation.

To reset the Demonstration Company, click on the list icon (top-left) and then select My Xero (found under the last five organizations accessed). In the screen that opens, scroll down to the bottom of the screen and then click on the Reset link.

You can also change the country in the Demonstration Company by clicking on the Change Country link.

Choose the region you want: United States. Click Save to begin the reset.

NOTE: Use the Partner Edition (Cashbook) edition to show a client what it will be like for them if they have the Cashbook Client user role.

Know how the Demonstration Company behaves so you know what to expect. In the Demonstration Company:

Youll have the Advisor user role. This means youll get to see the full range of Xero features available (except for bank feeds).

You wont be able to view the Demonstration Company from another user role perspective.

You wont be able to set up bank feeds.

Xero wont save the banks name when setting up new bank accounts.

Self Test

What are the advantages of using Xeros Demonstration Company?

How would you reset the Demonstration Company? What happens when you reset it?

Your client wants to use the Demonstration Company for their organizations data. Why is this not a good idea?


Help

You can access the Xero Help Center from the help.xero.com/us/#home page, or by selecting the Help Center link shown below.

The Help menu (shown to the left) is handy for:

Quick access to searching for help topics

Quick access to the Help Center

Quick access for getting help about the page youre currently on.

Quick access to the Practice contact details for your help.

To display your Practice details in your client organization (within their Help menu), be sure to update your profile to include your contact details. The Practice Administrator must also have ticked provide support. Your client can then view your details within their Help menu. (This is also a great opportunity to lift your profile too, by offering bundled phone and email support.)

Other forms of help include:

Xero TV, a one-stop shop for all video content on xero.com

Xero TV How-to, an area featuring simple how-to video tutorials.

The Xero Video How-tos web page, a listing of video-tutorials sorted by topic.

The Xero Tips web page, a listing of tips and tricks to help you get around Xero quickly.

The Frequently Asked Questions web page.

The Release Notes web page.

For a quick reference to all Xero support avenues, go to xero.com/support

You can find further help at the Xero Community site. This site helps you get in touch with the Xero Community. Its another place to go when you need to ask a question. You can also share your own expertise about Xero by answering questions other people are asking.

Xero partners should always use Partner Edition when needing help. Xero partners receive priority support when creating support tickets from Partner Edition. Xeros Customer Support cannot provide priority support if you did not create the support ticket from Xeros Partner Edition.

To create a support ticket from Partner Edition:

1. Open Partner Edition.

2. Click on the Help icon to view the menu items.

3. Select Contact Xero Support.

4. From the drop-down, select the help you need.

5. Enter a subject heading and then describe your issue.

The more detail you provide, the better we can help.

6. Click Send Support Request.


User Roles

With Xero, multiple users can access the same set of data at the same time. The person inviting a user into the Xero organization sets up the appropriate level of access. To find out how, view the Adding New Users in Xero video clip.

Partner Edition user roles:

Managed Client: User can check, view and add comments but cant access bank-related functionality, process sales/purchases or adjust settings. Basically read-only access.

Cashbook Client: User has access to bank accounts and expense claims but they cant access Sales or Purchases. User also has access (with some restrictions) to contacts, reports and settings, and they have optional access to the cash coding function. A little more open than a Managed Client, but this user still has restrictions.

Advisor: User has full access but excludes the ability to approve sales invoices or bills as well as processing overpayments and prepayments. Xero Partners have this role for each client organization they manage. The additional Provide Support option allows clients to email Partners directly from within Xero.

Practice Admin: Only one person in the organization can have this role. Give this role to the person responsible for adding and billing clients using Xero. The person with this role also has the Advisor role for all organizations they set up.

Business Edition user roles:

Read Only: User can view most areas of Xero but cannot edit or add information. Good for Board Members and people who want access to look, but cant touch.

Invoice Only: This role is suitable for someone who needs to raise invoices or enter bills, but doesnt need access to bank accounts or reports. There are four Invoice Only roles: Draft Only, Approve & Pay, Sales Only and Purchases Only. Further, users with Sales Only or Purchase Only roles can add and edit contacts but they wont be able to view a contacts payment history or Xero Network Key. Also, they cannot see sales or purchase figures from contact Dashboards. Note too that Xero will not allow anyone with the Invoice Only role to export contacts.

Standard: This is the default user role. Standard users have almost full access to Xero, with optional access to cash coding and an optional restriction, No Reports. By default, Standard users have Standard + All Reports rights. This gives them access to the Reports menu, Budget Manager and Manual Journals. They do not have access to the Management Reports and they cannot publish reports except for the Bank Reconciliation Summary and the Sales Tax Report. Standard users with Standard + No Reports rights wont have access to any reports except the Bank Reconciliation Summary report (without the ability to publish) and contact reports in Contacts. They also wont have access to Budget Manager or Manual Journals.

Advisor: User has full system access; that is, they have the same access to Xero as Standard users, but with extra permissions. These include access to lock dates and the ability to publish reports.

You can also give Standard or Advisor users Manage Users and/or Payroll Admin rights. Manage Users: Ability to add, edit and delete users. Payroll Admin: Ability to add, edit and delete employee contacts and run/manage pay runs.

Check out the user role comparison tables in the Xero Help Center.


Dashboard

Xeros Dashboard is the main screen for each organization in Xero. It displays a snapshot of your organization's financial position based on transactions entered into Xero.

Use the Dashboard to directly drill down into a transaction, or do common tasks quickly like bank reconciliation or adding sales invoices or bills.

If you would like to keep an eye on the balance of key accounts in your Chart of Accounts (excluding bank accounts), you can display them on the Account Watchlist. The table summarizes the current month and year-to-date figures of your chosen accounts.

You can add an unlimited number of bank accounts to the Dashboard. You can also set the display order and change this when necessary.

Each bank account has a Reconcile button and the number on this button identifies the number of unreconciled bank statement lines for the account.

Go to Xero TV to view a video clip that explains how the Dashboard can give you the overall business performance at a glance.


Case Study 2: Exploring the Dashboard

When using Xero youll soon start to notice its interactive linking capabilities. Each page takes you to more information and even more links. Lets take some time to explore this.

1. Navigate your way to the Dashboard and then view the Account Watchlist.

2. Look for the Sales line. See the links?

3. Click on the current months balance. Xero automatically runs the Account Transactions report for the Sales account, for the current period.

4. Change the starting date to one month earlier and then click Update. Now you can compare the activity for a two month period.

5. Using the last transaction line, click on its description. This action takes you to the source document; in this case, the sales invoice that created the revenue. From here you can:

Email or print the sales invoice.

Attach supporting documentation. Click on the file icon.

Void, copy or edit the sales invoice. Click Invoice Options and then select Void, Copy or Edit.

Create a Credit Note. Click Invoice Options and then select Add Credit Note. When creating a Credit Note this way, Xero will automatically allocate the Credit Note to the sales invoice.

Add or edit the contact address details. Click on the Edit address link.

Record the payment for the sales invoice.

Review the History & Notes section. Xero records all system actions in this section. This acts like an audit trail for all changes made to the sales invoice by any user as they cannot be edited or deleted.

Leave a note or record an expected payment date. Click Add Note / Expected Payment date.

All of this, just a click away from the Dashboard!

Self Test

You need some help from Xeros Customer Support. How can you ensure youll receive priority support from them?

What is the default user role in Business Edition? How is this role different from the Advisor role?

A new employee will only be entering sales invoices into Xero. What user role will they need?

What are the advantages of including an account on the Account Watchlist, on your Dashboard?


Bank Reconciliations

Bank Accounts

When using Xero you can create as many bank accounts as you need, for no extra cost.

Use the Add Bank Account button to set up bank accounts, credit cards, petty cash accounts and Paypal accounts. Go to the Chart of Accounts screen or use the Accounts > Bank Accounts path to access this button.

Go to the Help Center for more about adding and setting up PayPal Accounts.

NOTE: Xero treats credit cards as a bank account so you can make use of bank feeds and other tools when reconciling your Credit Card account. Xero is also smart enough to consider Credit Card accounts as current liabilities on the Balance Sheet. You wont need to prompt Xero to do this.

Case Study 3: Create a new Bank Account

Your client has opened a new bank account with the City National Bank. Create this account in Xero.

1. From the Accounts tab, select Bank Accounts.

2. Click Add Bank Account and then select Bank Account.

3. To list all US banks, enter US in the Your Bank field.

4. Select the City National Bank. Are bank feeds available? Xero displays a message giving you the answer.

Message if bank feeds are available: Message if bank feeds are not available:

5. Use the details below to finish creating the bank account:

Account Name Online Account Currency USD United States Dollar Bank Account Number 132435466

6. Click Save. Xero will now take you back to the Bank Accounts screen.

7. Scroll down to find the Online Account and then use the up arrow button to move it so it displays first on the Dashboard.

8. Scroll down to find the Savings Account and then clear the Show account on Dashboard checkbox to remove this account from the Dashboard.

9. Go to the Dashboard. Which account shows first? Is the Savings Account displayed?


Bank Feeds

Once set up, bank feeds let you automatically import bank statements into your Xero organization from banks and other financial institutions. This saves you having to manually import them yourself.

Set up a bank feed

You can set up a bank feed after youve added a bank account. View a video clip to show you how.

There are two types of automated bank feeds available with Xero:

Partner bank feeds are feeds through banks Xero partners with. If you have a bank account in Xero supported by a partner bank, you can set up a partner bank feed.

Yodlee feeds are feeds from banks that are part of Yodlee's online banking solution service. If you have a bank account in Xero that belongs to a bank that's part of the Yodlee service, you can activate a Yodlee feed while you're logged in to Xero.

NOTE: If your bank account is with a partner bank, it won't be part of the Yodlee service.

The process of setting up a Yodlee feed is different from setting up a partner bank feed. If bank feeds are available, Xero will guide you through the right process based on your bank and account type.

After adding a bank account, Xero will display a prompt (shown to the right) from either the Dashboard or Accounts > Bank Accounts.

If your clients bank account is with a partner bank, your client will need to complete the necessary bank authority forms authorizing the bank to send data into Xero. Your client will also need to enter their internet banking details and agree to terms and conditions.

We recommend you set up bank feeds as soon as you can. Some bank feeds are not retrospective and it could take some time to action your request. For Yodlee feeds there is the ability to ask for historical bank statement lines. If you select this option, Yodlee will attempt to retrieve up to 90 days of available data.

Once you have set up the bank feeds, click Get Bank Feeds to download the bank statement lines.


Importing Bank Statements

If a bank feed is not available, you can manually import bank statement lines into Xero. You can do this until bank feeds take over the task. Download the bank statement lines through the internet banking facility and then import them into Xero.

Xero accepts data in three formats OFX, QIF or CSV.

Most banks support OFX (Open Financial Exchange) or QIF (Quicken Interchange Format) format.

If your bank offers OFX, choose this format over any other. This is because OFX recognizes duplicate bank statement lines, and if you use OFX files, Xero will ignore any bank statement lines that are the same as those already imported.

If you choose QIF, take care to only download bank statement lines not previously downloaded. When using QIF files, Xero cannot identify duplicate bank statement lines.

Go to the Help Center for more about manually importing OFX or QIF bank files.

If your bank does not support OFX or QIF format, enter the bank statement lines into an Excel spreadsheet. Save the spreadsheet file as a CSV (comma delimited) file.

A CSV file is formatted with comma separated values. Because there are many formatting possibilities when creating the CSV file, youll need to double-check it before using it to import the bank statement lines Xero. Some formatting issues youll need to keep in mind are:

Use only one header row (the first row).

Use at least two headings: Date and Amount. Each bank statement line must have a date and transaction amount so these headings will remind you to enter this information.

If you want to, you can use other headings too. Xero will recognize headings such as Payee, Description, Reference, Account Code and Tax Type.

Choose a date format that represents the year as four characters: MM/DD/YYYY

Enter bank deposits (usually income amounts) as positive amounts.

Enter bank withdrawals (usually expense amounts) as negative amounts.

When using a CSV file to import bank statement lines into Xero, you will need to map (assign) the columns in the CSV file to a similar field that Xero recognizes.

NOTE: Xero will automatically map any Date, Amount, Payee and Description fields.

Double-check the mapping before completing the import. Assign the column headings in the CSV file (left side) to a similar field in Xero (right side). Use the drop-down to change the mapping.

Other information you might find useful:

Checking your CSV file before importing it Manually importing CSV bank statements Manually importing OFX or QIF bank statement lines Importing coded bank statement lines


Reconciling in Xero

In Xero, reconciling a bank account involves matching bank statement lines from your bank account to the transactions you create in Xero. Xero automatically matches transactions in Xero against a bank statement line where it can. If Xero cannot find a match, you can add the necessary information as you go. You can reconcile the bank statement line when Xero displays the OK button.

Xero splits the reconciliation screen into two.

Left-hand side = bank statement lines Right-hand side = Xero transactions, comments, bank rule information (if applicable) and auto suggestions (if applicable).

NOTE: Ledger Account transactions include transactions created in Xero, such as Spend Money, Receive Money, Sales Invoices, Bills and Expense Claims.

In the bank reconciliation screen, where possible, Xero links a bank statement line to an existing transaction in Xero (known as matching), or it suggests coding information using bank rules or auto suggestion. Xero does this in the following order: amount, bank rules, auto suggestion.

If Xero cannot find a match, or if it cannot suggest coding information, you will need to manually code the bank statement line. Use the Create tab is code transactions.

Statement Balance and Balance in Xero

In Xero the balance of the imported statement (a calculated balance called the Statement Balance in Xero)

should match the Balance in Xero amount once the bank statement lines have been reconciled.

Because the Statement Balance is a calculated balance, you should compare the Statement Balance to the

online or paper bank statement balance as at the same date. The two balances should match. If they dont, you

can use the Reconciliation Reports to help identify any errors.

You can also go to the Help Center for more about identifying and fixing errors and the reasons your

Statement Balance and Balance in Xero amounts differ.


Match Tab

Xero displays the Match tab when it finds a match for the bank statement line.

You can use the Find & Match link to find your own match. Use the search function to find the transaction you want. Once youve found it, select it (tick the checkbox) to make a match.

NOTE: If you need to review the sales invoice or bill before selecting it, click on the contact name to open the transaction screen.

Create Tab

If Xero cannot find a match for a bank statement line, it will automatically display the Create tab.

The Create tab allows you to manually code the transaction. Complete the Name, Account and Description fields to create a Spend Money or Receive Money transaction. (Xero creates a Spend Money transaction if the bank statement line shows an amount spent; it creates a Receive Money transaction if the bank statement line shows an amount received.)

NOTE: If a contact record does not exist for the name entered, Xero will automatically create one when clicking OK to reconcile the transaction.

You should only use the Create tab when you know a sales invoice or a bill does not exist in Xero for the bank statement line amount. In other words, only use the Create tab for cash transactions.

Transfer Tab

Use the Transfer tab to record the transfer of an amount from one bank account to another.

Xero will not perform the actual bank transaction; it will just record it. When using the Transfer tab, Xero will update both bank accounts with the transfer details.

Using the Transfer tab is also useful for credit card payments when the credit card has been set-up as a bank account in Xero.


Discuss Tab

You can use the Discuss tab to leave a comment when reconciling the bank statement line. After saving the comment, Xero will always display the Discuss tab. This ensures that other people reconciling the bank statement line will be able to read it.

Use this tab if you dont know which account code to post the bank statement line to, or if there is something unusual about the bank statement line. Just leave a comment.

Case Study 4: Reconcile Bank Statement Lines

Your client has asked you to reconcile their bank account.

1. Go to the Dashboard.

2. For the Checking Account, click the Reconcile Items button to open the Reconcile screen.

3. Find the $6,187.50 deposit from Ridgeway University. Xero has matched the bank statement line to the open Accounts Receivable sales invoice held in Xero.

Click OK to post the deposit, update the Accounts Receivable Ledger and reconcile the bank account.

Where did the transaction go? Xero lists all transactions posted to this bank account on the Account Transactions tab. Click on this tab and then click on Search to find it.

4. Click on the Reconcile tab. Find and reconcile the $4,500 payment to Smart Agency. Click on Find & Match and then use the Search field to find the two bills this payment is for. Once found, select them (tick the checkbox). Xero will now match the bills to the $4,500 payment. Reconcile.

NOTE: When selecting the second bill, did you notice the Match tab turned green? That shows you are reconciling the bank statement line against transactions already in Xero. If the Match tab was still blue, this would show youd be posting a new transaction when reconciling it.

5. Scroll down to the $59.55 amount paid to Swanston Security.

Using the Create tab, start typing the contacts name (Swanston) in the Name field. Xero recognizes any contact already created. When only Swanston Security is showing, press the Tab key to accept it.

Click the Acct arrow to select the General Expenses account.

Click OK to reconcile. As you click OK, watch the Match tab turn green. This shows a General Ledger posting. Once reconciled, it will disappear altogether.


Introduction to Bank Rules

Users can access any existing bank rules using the Accounts > Bank Accounts > Bank Rules path. You can also use the Manage Account button to access the bank rules screen.

Bank rules are for cash coding only. If a bank statement line meets the bank rule criteria, Xero uses the bank rule information to create a Spent Money or Receive Money transaction. You must then verify what Xero has done before Xero can post the transaction.

You cannot use bank rules for sales invoices or bills.

There are two types of Bank rules:

Spend Money Rule (for cash payments) Receive Money Rule (for cash deposits)

View a video clip on Xero TV or go to the Help Center for more on how to create Bank Rules.

Creating a bank rules means creating conditions. You can set as many conditions as you need. Set conditions about the Payee, Description, Amount, Reference or Analysis Code (checks). When a bank statement line meets the conditions, Xero will apply the bank rule.

You can also set fixed line items and/or allocate amounts based on a percentage figure.

Apply a bank rule to a specific bank account or to all bank accounts.

Always give your rule a meaningful title. Do this by including the coding treatment in the title. Xero applies the bank rule to incoming bank statement lines. Because other people reconcile these lines, a meaningful title helps them when checking the coding before reconciling the bank statement line.

Bank rules work best if advisors set them up for the client in the first month or so.

NOTE: Xero applies all bank rules in the order in which they sit in the list. To change the order, click anywhere on the bank rule row and then drag and drop the rule into position.


Introduction to Cash Coding

With the help of auto suggestion, matching and bank rules, Xero speeds up the bank reconciliation process. To speed things up even more, you can also use the cash coding tool. This tool enables the bulk-processing of an entire bank statement.

When reconciling bank statements, Xero takes you to the Reconcile tab. But if you have the Advisor user role, or the Standard + Cash Coding user role, you can switch over to the Cash Coding tab.

Cashbook Client users also have access to the Cash Coding tab.

Use the cash coding tool when you want to quickly reconcile bank statement lines representing transactions not yet in Xero. Cash coding lets you select accounts and tax rates for multiple bank statement lines, which means it's much quicker than using the Reconcile tab.

WARNING: Do not use the cash coding tool for amounts received for sales invoices, or amounts paid for bills. Instead, use the Find & Match link (on the Reconcile screen). Because the amount is a payment for a non-cash transaction, you will need to match it to the sales invoice or bill, otherwise the sales invoice or bill remains unpaid in Xero.

Once you have saved and reconciled the bank statement lines using the Cash Coding tab, Xero will automatically create a matching Spend Money or Receive Money transaction. (This is why you cannot use the cash coding tool for amounts received for sales invoices, or amounts paid for bills. It would lead to posting amounts to the same account twice.)

To bulk-code multiple transactions:

1. Click on the Cash Coding tab and then click on the Payee heading to group similar bank statement lines together.

2. Find the bank statement lines you want to bulk-code and then bulk-select them, as follows:

Select the top one (tick the checkbox)

Hold down the Shift key

Select the last one (tick the checkbox)

3. After bulk-selecting the group of bank statement lines (highlighted in green), complete the details for the top line. When you tab out of the field, the entered details are copied down.

4. Click Save & Reconcile Selected to create the Spend Money (or Receive Money) transactions. Youve now completed several lines of transactions in a few seconds!

5. Repeat for any other repetitive transactions.

For a bulk-coding demonstration, view the video clip on Xero TV. You can also find more about using the Cash Coding screen in the Help Center.


Case Study 5: Bank Rules and Cash Coding

The Cash Coding screen is a great way to audit the effect of your bank rules. Lets explore this idea.

1. Go to the Dashboard and then, for the Checking Account, click Reconcile Items.

2. Click on the Cash Coding tab. Xero lists all unreconciled bank statement lines on this tab.

3. Click on the Payee heading to group similar bank statement lines together.

4. Notice the two 7-Eleven rows and then view the Account column. There is a bank rule in the Demonstration Company that has coded these two amounts to the Office Expenses account.

Bank rules only suggest coding. This means you will need to check the coding when reconciling.

TIP: Use the Cash Coding screen to help you check the coding coming from bank rules.

In this case, the coding is not correct. You could manually change the coding in the Cash Coding screen. However, because of the 7-Eleven bank rule, this is a short-term solution. This is because next time you spend money at 7-Eleven, the bank rule will code the amount to the wrong account again. It makes more sense to edit the bank rule instead. Then the bank rule will code amounts to the correct account.

Lets edit the bank rule:

1. Click Manage Accounts and then select Bank Rules.

2. Click on the name of the 7-Eleven bank rule to view its settings.

3. Review the condition. What does this mean?

4. Edit the coding. Under step 4, change the coding from Office Expenses to General Expenses.

5. Click Save.

6. Find your way back to the Cash Coding tab for the Checking Account.

7. Click on the Payee heading to group similar bank statement lines together.

8. Find the two 7-Eleven rows and then view the Account column. Did the bank rule change the account code?

9. Click Save & Reconcile All. Xero will now reconcile the bank statement lines, create the Spend Money transactions and then post the amounts to the General Ledger.

NOTE: If the coding in the 7-Eleven bank rule changes again after reconciling, these transactions will not change. Xero does not change the coding after posting transactions.


Self Test

How many bank accounts can be created in Xero?

True or false? Xero has two bank account types one for bank accounts and one for credit cards.

Your client closed their Savings Account. How would you remove this from the Dashboard?

Your client wants to set up bank feeds for their bank account. How would you go about this?

Xero supports three formats when importing bank statement lines into Xero. What are they?

What minimum data does Xero need when importing bank statement using a CSV file?

What shows on the left-hand side of the Reconcile screen? What shows on the right-hand side?

True or false? The Statement Balance in Xero is a calculated balance.

If possible, Xero suggests the coding for bank statement lines. What two methods are used?

Name the two types of bank rules you can create in Xero?

True or false? You can create bank rules to code sales invoices and bills.

Explain the benefits of using the Cash Coding tab. Can anyone use it?

True or false? Your client entered several bills from MIC Business Services. Your client paid each bill separately and those payments are now showing as bank statement lines in the Reconcile screen. Use the Cash Coding screen to bulk-code these payments.


Chart of Accounts

The Chart of Accounts is a list of accounts used for sending transaction amounts to.

Go to Settings > Chart of Accounts to view your organizations Chart of Accounts.

NOTE: Only people with the Advisor or Standard user roles can access the Chart of Accounts.

When setting up your organization in Xero, you can start with the default Chart of Accounts, or you can import your own Chart of Accounts. Either way, you can amend the Chart of Accounts any time.

As with any Chart of Accounts, Xero classifies each account into one of five categories: assets, liabilities, equity, expenses and revenue. Xero shows the five categories as tabs.

The category defines which report each account balance is displayed in; however, it is the account type that determines where Xero will display the account in the report.

Account Category Account Types (in reporting order)

Assets Current Asset, Prepayment, Fixed Asset, Non-current Asset.

Liabilities Current Liability, Liability, Non-current Liability.

Equity Equity

Expenses Direct Costs, Expense, Depreciation, Overhead.

Revenue Revenue, Sales, Other Income.

Use the Add Account button to add a new asset, liability, equity, expense or revenue account. Use the Add Bank Account button to add a new Bank Account, Credit Card or PayPal Account.

When creating a new account, each account will need:

A unique code. Xero supports codes up to 10 alphanumeric characters.

A name. Xero limits account names to 150 characters.

A default tax setting.

Reporting in Xero uses the Chart of Accounts hierarchy, Tracking and Report Grouping features. No need for sub accounts! The ability to customize your reports means that they will keep their flexibility in the long run. View the video clip on Xero TV for more about the improvements made possible because of the way Xero has reinvented the reporting function.

After creating the Chart of Accounts, youll need to enter the conversion balances. You can do this one account at a time (using the Conversion Balances screen), or you can export the Chart of Accounts to Excel and then enter the conversion balances in the Balance column.

NOTE: Xero imports a positive balance as a debit, and a negative balance as a credit.

Before importing the conversion balances, save your work in CSV format and be sure to select the Yes option during the import process.


You can also use the export and import function to edit accounts in bulk. This is useful if you want to modify Xeros Chart of Accounts to create a Chart of Account template.

NOTE: You cannot delete an account with a transaction amount. Archive them instead.

Case Study 6: Editing an account

Your client has asked you to change the name of the Advertising account. They also want this account removed from the list of accounts that can be chosen when entering expense claims.

1. Go to Settings > Chart of Accounts

2. Use the Search field to find the Advertising account.

3. Click on the name of the account to open the Edit Account screen.

4. View the Account Type field. What type of account is the Advertising account? Unless youre using custom report layouts, account types affect your reports. Use the diagram on the right to learn how. Which report will the Advertising account go to? Which group will Xero place it?

NOTE: You cannot select Bank Accounts from the Account Type drop-down. This means Bank Accounts is not an account type even though the diagram suggests it might be. Xero adds bank accounts to the Chart of Accounts in another way.

5. Change the account name to Online Advertising.

6. Clear the Show in Expense Claims checkbox (remove the tick).

7. Click Save. Editing accounts is easy!

Self Test

How does the Account Type, selected when creating a new account, affect Xeros reports?

How many alphanumeric characters can be used when creating a new account code?

Your client has been using Xero for some time. When reviewing the Chart of Accounts, you decide several accounts need editing. What two methods can you use to achieve this?


Sales Tax Report

With bank statements flowing into Xero on daily basis, you can keep your reporting accurate and up-to-date as you go. So, when it comes to filing your Sales Tax with the IRS, you only need to run Xeros Sales Tax Report and then double-check the transactions.

To view the Sales Tax Report, go to Reports > Sales Tax Report

Xeros Sales Tax Report is a summary of the transactions for the selected period.

Choose to view the Sales Tax Summary or the Sales Tax Audit Report.

The Sales Tax Summary tab shows the transaction totals for the selected period.

The Sales Tax Audit Report tab reviews the transactions that make up the amounts showing in the Sales Tax Summary tab. You can also make any necessary corrections from the Sales Tax Audit Report tab. Click on the listed transaction to open the transaction screen and then select an editing option.

WARNING: When posting a manual journal, Xero will not include any amounts coded directly to the SALES TAX account in the Sales Tax Report calculations. If you enter transactions through the normal channels, Xero will always pull through SALES TAX amounts to the Sales Tax Report.

At the bottom of each report tab youll find Export and Save buttons.

Use this button if you want to export the report. You can export the report to PDF, Google Docs or Excel.

Use this button if you want to come back to the report. Click Save as Draft and then return to it when youre ready.

When youre ready to finalize the Sales Tax period you must publish it. Publishing the Sales Tax Report is good practice, so you should get into the habit of doing it. Publishing also updates the Sales Tax reporting period.

To publish Xeros Sales Tax Report:

1. Go to Reports > Sales Tax Report

2. Scroll down to the bottom of the screen and then click Publish.

3. If you want to, edit the options provided for formatting and customizing the report.

4. Click Publish. Xero will transfer the report to Reports > All Reports > Published (tab)

5. Click on the PDF icon to view the published report. Xero publishes both the Sales Tax Summary and the Sales Tax Audit Report.

6. Go to Reports > Sales Tax Report to view the new sales tax period dates.

Go to the Help Center for more about Xeros Sales Tax Report and Sales Tax Audit Report.

You might also like to know where Xero gets the sales tax figures from.


Self Test

Xeros Sales Tax Report shows two tabs. What are the names of these tabs? When would you use them?

How would you edit a transaction showing in the Sales Tax Audit Report tab?

Which formats can you export one the Sales Tax reports to?

When youre ready to finalize the Sales Tax Report, what step must you do?

How would you publish Xeros Sales Tax Report?

True or false? Xero will include all amounts coded directly to the Sales Tax account in the Sales Tax Report.


Reports

Xero offers a range of reports. These reports include detailed, audit, reconciliation, management and annual reports. To view the reports available for client organizations, go to Reports > All Reports.

The Summary tab sorts the reports by category. For example, the reports listed in the Performance Reports category are based on revenue and expenses so they will show you how the business is performing.

Some reports on the Summary tab have a blue star beside them. A blue star marks the report as a favorite. Favorite reports appear in the Reports menu which means these reports are quicker and easier to access. To make a report a favorite, click on the white star to the left of the report name.

You can customize Xeros reports. If youre customizing a report, but havent finished yet, you can save the customized report as a draft report. Xero shows draft reports on the Draft tab. Your user role controls whether you can view, edit, publish or delete draft reports.

If you publish a report, Xero will save the published report to the Published tab. From there you can export the published report to PDF, Excel or Google Docs.

If you want to, you can archive a published report. Xero lists archived reports on the Archived tab. Your user role controls whether you can view, export or delete archived reports.

Use the table below to find a listing of popular reports. When viewing several reports, it's a good idea to open each new report on a new tab. You can then easily compare each open report.

Report Name Report Description

Account Summary Displays monthly balances for the selected period, for the selected account.

Account Transactions

Displays a summary of all transactions for the selected period, for the selected account.

Detailed Account Transactions

Displays a detailed list of all transactions posted to all accounts for the selected period. This report shows a lot of information, so click Wide view (top right) to show everything on one screen. When youve finished, click Standard view to return to the main screen.

Journal Report Lists the General Ledger journals for the selected period. To remove the system journals (those journals automatically created by Xero), select Show Posted Manual Journals Only (tick the checkbox). Use Ctrl + F to search for a specific journal.


If you need to, you can narrow your selection to cash basis transactions when running reports. This means they will only show actual amounts paid or received. Xero wont include any unpaid items in these reports. To run a cash basis report, select the Cash Basis checkbox.

Xero also helps you prepare and file your 1099s by organizing your data for you. Refer to the Help Center for more about setting up and running your 1099 Report. A video clip is also available.

Another very useful report is the History & Notes Activity report. This report allows you to search for specific transactions, changes or types of activity. Its a great tool as it gives you the ability to find out whats happening and whos doing it. (The History & Notes Activity report is only available for users with Advisor permissions.)

Go to Advisor > History & Notes Activity to view the report. Use the control bar to narrow your search. Choose the Period, Item and User you want to see history and notes for. You can also use the Filter Results field to narrow your search even further. Filter by date, item, action, user or notes. Just enter key letters, numbers or words into the field.

The Income Statement, Balance Sheet, Budget Variance and Tracking Summary reports can be customized to suit business requirements. This is done by creating a report layout for each report you want to customize.

NOTE: The default report layout in Xeros US Demo Company is GAAP compliant and can be used to create other GAAP compliant reports.

For more about the reports found in Xero, view the video clip on Xero TV, or search the Help Center.

Case Study 7: Exporting and Publishing a Report

1. Go to Reports > All Reports and then, from the Detail Reports section, click on Account Transactions.

2. Click the Account arrow and then select the General Expenses account. Click Update and then view the report. See the 7-Eleven and Swanston Security transactions you posted earlier?

3. Export the report.

Click the Export arrow and then select Excel.

Select the Open with Microsoft Excel option and then click OK.

View the report. See how Xero makes it easy to export data?

Select the cell holding the total amount in the Debit column and then view the sum formula. See how Xero shows the formula used to produce amounts in the report?

Close the Excel report without saving changes.

4. Save Xeros report as a draft report. Click Save as Draft. Xero saves the report to the Draft tab.

5. Publish the General Expenses Transactions report.

Find the report on the Draft tab. Click on the report name to open it.

Click Publish.

Customize the report and then click Publish. Xero saves the report to the Published tab.

6. Click on the icon to export the report in PDF format. Open with Adobe Reader. See how quickly and easily Xero produces beautiful reports once youve finished entering transactions? If you want to, you can also email the PDF report to your client. Save it to your hard drive first and then send the report as an attached file.

Documents

Xero Essentials Attendee Notes