5 Xero Mistakes Business Owners Make and How To Avoid Them

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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 dedicated business and bank and credit card accounts

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 extra work with coding. Trust us…your accountant and bookkeeper will thank you! Doing this also gives you accurate data to help you make the best 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 could be looking at inaccurate or incomplete data when they check their reports (software is not infallible, always have checks in place for your financial data).

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 as part of your exit plan.

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 set up 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 relevant 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 are Xero Certified and are happy to take a look at your Xero file and provide suggestions or improvements as required.

Get in touch with us today to discuss ways to help you save time and make smarter decisions!

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