5 Xero Mistakes Business Owners Make and How To Avoid Them
If you’ve just started working with Xero, it is normal to make a few mistakes while you’re learning. We see mistakes that are quite common – and unfortunately costly – so you should be aware of them if you want to get the most out of Xero’s powerful cloud accounting system.
1. Not connecting all the bank and credit card accounts dedicated for your business
Make sure that you keep all your business bank and credit card accounts synced to Xero to ensure that you don’t miss any sales or expenses in your reports.
Also, make sure that you separate your business accounts with your personal ones to avoid hassles during tax season. Trust us…your accountant and bookkeeper will thank you! Doing this also helps you make accurate business decisions.
2. Not reconciling the bank account in Xero to bank statements
Run a reconciliation report in Xero on a regular basis and then compare it to your bank statements to ensure there aren’t any errors or duplications.
Many business owners miss this critical step, which means that they are looking at inaccurate or incomplete data when they check their reports.
3. Not checking user access and permission levels
Many business owners simply give key team members full access to their business’ Xero system and don’t review the user permissions at all.
However, the best practice is to provide access on an “as needed” basis and review who has access to the system and what permission level they have on a quarterly basis.
Also, when your staff members leave, remember to revoke their Xero access immediately.
4. Not setting financial SOPs (standard operating procedures)
Create a proper financial SOP which describes who is responsible for what and by when, as well as the step-by-step process on how to get things done.
For instance, you can assign your operations manager to run the aged receivables report in the system so you’ll know who owes your business money. Then, map out a clear action plan of what happens in specific scenarios such as a payment that’s 2 weeks late. You can also have standard replies that the team can send as needed.
5. Mishandling transactions when you’ve paid with your personal money
We find that many business owners don’t know how to handle transactions when they’ve paid for a business expense using their personal account. There are actually ways to capture such expenses paid on the wrong card in Xero so you can still claim the tax deduction.
You may need to get in touch with your advisors to make the adjustments accordingly.
Avoid Xero Mistakes by Working with a Specialist Advisor
The best way to ensure that you’re taking full advantage of all the features in Xero and avoiding costly financial mistakes is to work with an experienced advisor who knows the ins and outs of this cloud accounting system.
We’re Xero Certified and would be happy to take a look at your file to give you some suggestions.
Get in touch with us today and let us help you save time and make smarter decisions that are supported by data.
Quantum Advisory is a business accounting and advisory firm that empowers family businesses to step up, scale-up and sell up. Visit qagroup.com.au or call 1300 700 711 and start the journey.