1
1. Overview.................................................................................................................................. 1
2. Settings and Security ............................................................................................................... 7
3. Contacts ................................................................................................................................ 20
4. Initial Set Up - Importing invoices and bank statements ....................................................... 28
5. Inventory ............................................................................................................................... 34
6. Sales ...................................................................................................................................... 40
7. Purchases............................................................................................................................... 50
8. Bank ...................................................................................................................................... 61
9. VAT and Reporting ................................................................................................................ 71
10. Expense claims ...................................................................................................................... 75
11. Fixed Assets........................................................................................................................... 80
12. Journals ................................................................................................................................. 88
13. Payroll ................................................................................................................................... 94
14. Projects................................................................................................................................ 125
15. Construction Industry Scheme (CIS) .................................................................................... 138
16. Receipt Bank........................................................................................................................ 149
17. The Ecosystem..................................................................................................................... 157
The aim of this section is to provide a basic understanding of the key navigation areas inside Xero.
Xero has been designed to be simple to navigate. The bar across the top is the main navigation pane and enables access to all features, as shown below. Hovering over each tab opens up a sub- selection pane with more detail.
1. The “Dashboard” is a good place to get a general feel for the performance and position of the business. This area is customisable and will be covered later in this section. 2. The “Business” section holds the summary pages for; Invoices, Quotes, Bills to Pay, Expense Claims and Products and Services, as shown below. It is the area that the user will process most of their information in and is therefore the most used tab on the page. These sections are covered in our separate guides.
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3. The “Accounting” section holds a vast array of reporting schedules that can be edited to provide the information that is needed on the business. This tab can be expanded to reveal the reports you have selected as “favourites” for ease of access. You will also find “Advanced” setting such as “Chart of Accounts”, “Find and Recode”, “Fixed Assets” and “Manual Journals”. Please see the relevant sections on how to use these.
4. The “Contacts” section holds details for all your customers and suppliers. It also allows ease of access to “groups” of contacts, if these have been set up. How to make the most use of contact information is shown in our Contacts guide. 5. The “Quick Access” cross allows instant access to any “creation” pages such as new invoices, bills and bank transactions, preventing the need to navigate through each page via the “Accounts” section.
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6. The “Search” function in Xero is very powerful for both contacts and transactions. Using this saves time hunting for something when you only have part of the information. Please note that it does not currently work on Fixed Assets, Expenses, Projects and Payroll. 7. The “Bell” icon displays the user’s notifications. It is worth checking this as it displays user access changes so would highlight any potential unapproved access of the software. 8. The “help” function grants access to a lookup function as well as the main Xero help area, Xero Central. We advise that for efficiency purposes you use this feature, as well as this guide, first when you have queries. 9. The “Files” section enables quick access to any files that have been loaded into Xero ready for processing and to upload files manually. If you use an OCR system (such as Receipt Bank) this area would not be as useful. 10. The “Settings” section is most useful when initially setting up the business in Xero or for changes in access and customisation. This is dealt with in the Settings and Security guide.
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The dashboard is a useful tool as an overview of the business. It should be used to govern what is left to do (i.e. bank reconciliations) as well as what the business needs to focus on from a finance perspective (e.g. chase in certain invoices).
In certain circumstances it is also an easier method of accessing transactions by either clicking the three dots (as shown below) or by selecting “New Sales Invoice” etc.
The dashboard can be customised by each individual user to display what they need to see, although the options are restricted based on the individual’s access rights. To do this scroll to the bottom and select “Edit dashboard”.
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In this mode you can show or “hide” boxes as well as shift the layout by selecting the 6 dots. Once happy with the layout select “Save changes”.
A useful tool is the “Account watchlist”. This can be used to monitor key expenses, income or balance sheet items. To edit what appears here you need to access the Chart of Accounts which is covered in the Settings and Security Guide.
As well as company information, there is an area for user preferences and security. This is located by your initials in the top right of the desktop screen and contains the following options:
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1. Edit Profile – This displays information about yourself and can help if you want to utilise Xero’s in built marketing functionality
2. Account – This includes information on your login and security settings (see Settings and Security section)
3. Logout – This requires no explanation
- Xero allows you to work on multiple areas at once by opening multiple browser tabs or windows. To do this, right click on any clickable link in Xero (such as Sales) and select “Open link in new tab”. This prevents the need to flick back and forth between sections. - Most areas in Xero are drillable (i.e. clickable to uncover more information). Once you are in an area, to return to last page simple click the back button on your browser, or alternatively select a main section from the Navigation bar at the top.
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The aim of this section is to provide a guide in making your Xero system secure and how to adjust the settings.
In order to reduce the risk of being hacked it is important that you maximise the security for your personal login to Xero. To do this you need to access the “Account” area in user preferences and security. This is located in the top right of the desktop screen at number 2.
In this section you can edit your email address and password and enable two step authentication for login. It is important that you enable two-step authentication as this prevents your account from being remotely hacked.
The company settings can be accessed via the main toolbar at the top and, as with other areas inside Xero, allows you to mark “Favourites” for ease of access. We advise at least selecting “Users” for this area. This can be done by opening the “General Settings” page and clicking the star.
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The Organisation settings page has a number of areas that may only need to be accessed upon setup or when your business changes, and others that may need accessing regularly.
1. The “Organisation details” contains the business name, address and contact details, as well as the invoice logo. 2. The “Users” screen is covered in section C below. 3. The “Currencies” page is listed if you have the Premium Xero license and allows you to invoice and run bank accounts in foreign currencies. Xero automatically links to XE.com and the exchange rates for the currencies you operate are listed in this screen for that day. It is simple to add a currency by selecting “Add currency” and selecting from the drop down list.
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4. “Connected Apps” lists all the integrations you have with other cloud software via the Xero API, as well as recommending other software your business may benefit from using. This is covered in greater detail in the “Ecosystem” section. 5. “Invoice Settings” are covered in section F. 6. “Payment Services” operates similarly to “Connected Apps” in that it displays direct payment services you have linked to your system and how they are displayed on your invoices. You can assign different payment services to different Invoice templates (see section F). 7. In “Email settings” you can tailor the email from address, which is defaulted to come from your login email unless this is changed. In this section you can also edit the wording of the email templates that accompany any document sent to your customers and suppliers. 8. “Payroll Settings” is displayed if you run payroll through Xero. This is covered in our Payroll section. 9. Expenses. 10. “Xero to Xero” is a great way to improve efficiencies in sending sales invoices and receiving purchase invoices if your contacts also use Xero. https://central.xero.com/s/article/Send-a-sales-invoice-from-Xero-to-Xero details how to use this effectively. 11. “Custom Contact Links” enables you to link directly from Xero to other cloud based systems if you use these to manage your customer and supplier databases. As this is a bespoke area it has not been covered here, please use https://central.xero.com/s/article/Link-Xero-contacts-to-your-CRM-or-other-systems if you need to set this up.
To access the following setting you’ll need to click on ‘Looking for advanced settings’ which is at the bottom of the screen:-
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12. In “Find and recode” you can find and select an entire group of transactions lines and recode them. 13. “Manual journals” are only visible for users with the Adviser or Standard + role. It allows them to post journals to the general ledger. 14. See section G below for details on “Fixed Assets”. 15. “Assurance dashboard” is only visible for Advisers. It enables them to monitor user activity, view manually reconciled transactions and deleted statement lines and backdated invoices and bills. 16. The “Export accounting data” screen is also visible only by Advisers. It is used to export data and reports from individual areas in Xero to keep as external backup or to import into another product. 17. “History and notes” enables Advisers to view and filter a summary of the actions made by all users to your transactions and an audit trial of the notes recorded against them. 18. The “Financial settings” is where you set your reporting period for accounts and VAT as well as state the VAT and CIS schemes your business operates. It also contains the lock dates that prevent backpostings into a period that has been completed. If we compile your annual statutory accounts then we will use these as part of our process. 19. See section D for information on “Chart of Accounts”.
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20. “Tax rates” lists all the VAT rates available for use in Xero. This is pre-populated on setup with standard rates and only needs editing if you have complicated VAT processing. I advise contacting your accountant if you believe this needs tailoring. 21. See section G below for details on “Fixed Assets”. 22. “Tracking categories” are covered in section E. 23. “Report Codes” are only visible if you hold a Xero practice license and are not applicable for the general operation of Xero. 24. “Report Fields” are only visible if you hold a Xero practice license and are not applicable for the general operation of Xero. 25. The “Conversion Balances” section is used upon initial setup if you are converting from another software or manual records. It is not needed after this. Please visit https://central.xero.com/s/article/Enter-conversion-balances if you are converting yourself, alternatively this is something that we can assist with.
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Access to your business information is managed in the user screen. All current users are displayed, along with information on their access level (1), history (2), and security setting (3).
This screen should be used to ensure that access is limited to what is needed and that everyone has two step authentication enabled. In addition, this screen also displays who is the subscriber for the account and is receiving the billing information.
To remove or edit access for a user click the three dots on the right and select one of the options.
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Option 1 allows you to add Xero support. When you log a query with them on help, they cannot access your information until you allow them, which is done via this button.
Option 2 invites a user into your data, via an email message, as shown in the screen below.
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The main area is “Business and accounting” which has further options as shown below. Each option provides access to different areas as shown here https://central.xero.com/s/article/User- roles-and-permissions-in-Xero-Business-edition.
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This area allows you to tailor your income, expense and balance sheet accounts to match how your business operates and what you want to report on.
1. Xero has default codes to identify and differentiate between account types. Both this and the account name can be searched when entering an expense. 2. The type of account dictates where it will appear in your reports. Revenue, Direct costs and overheads appear in your profit and loss, whilst other account types appear in your balance sheet. 3. The tax rate is the default VAT code that will appear when allocating a transaction to that account. This should be edited to make entering transactions faster. These can be changed in bulk by ticking the account codes and selecting “Change Tax Rate”. 4. The YTD balance is the value in this account based on the reporting date you have selected in your financial settings. 5. Accounts that are not used can be archived to tidy up the chart of accounts. Archived accounts can be found here. Accounts that have never been used can be deleted permanently and not recovered.
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6. Add a non-bank nominal account here. 7. Add a bank account here. This process starts by selecting the name of your bank and then adding the account number and sort code. Doing so makes adding bank fees later easier. 8. If you already have a preferred format for your chart of accounts, you can import them. Please note that only 699 codes can be imported at once.
To edit an account, simply click on the name and the above box appears. 1. To monitor an important account, tick this box and it will appear on your dashboard. 2. The Show in Expense Claims option allows this code to be selected when staff members are entering their expenses. If an option isn’t appearing for them, it is best to first check whether this box has been ticked. 3. Enable payments to this account allows this nominal to act as a ghost bank account, paying off bills and receiving income. This is particularly useful for owner’s loan accounts.
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Tracking is a good way to monitor income and expenses for departments, cost centres or just as a way to keep track of a job. It is a further way of subdividing your business reporting, especially as reports can be broken down into tracking categories. There is a limit of 2 tracking categories, but each category can have up to 100 options to select from.
It is simple to add a tracking category, to rename it or remove/archive it with the x.
Your documentation is the first way for you to get your brand and image across to your contacts. The Invoice settings allow you to tailor your documents to match your brand.
1. Your themes are listed in the main screen, named by yourself for you to identify them. Each customer can be assigned a theme (see “Contacts Guide”) allowing you to tweak your brand to fit the service you are providing. 2. Each theme can be edited, previewed or copied from the Options window, allowing you to perfect your template before it goes live or duplicate it as a basis for further templates. 3. You can import a .docx form into Xero via the New Branding Theme if you require detailed customisation.
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4. The default settings allow you to set your invoice numbering style and starting number as well as your default due dates. Please note that due dates can also be customised per customer. 5. Payments services are also shown as a main setting and allow your customers to pay you directly (once enabled). 6. Invoice reminders are a basic way to remind your customers to pay their debt. These are automatic based on the aged of the debt, and the wording of the reminder can be customised here.
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Xero allows you to track your Fixed Assets and depreciate them over their useful life. The Fixed Asset settings allow you to create asset groups based on their related nature and depreciation rate.
1. The fixed asset groups are listed here, displaying their cost and depreciation accounts that will be posted to if an asset group is selected or depreciation run. 2. Asset groups can be added here and allow you to select the accounts and the depreciation rate for that group. The rate and method chosen should be matched to your accounting policy and we advise checking with your accountant if you are unsure what this. 3. The accounts section is related to asset disposals and allows you to select which account the profit/loss on disposal would be posted to.
It is advisable to maintain and limit who has access to your data. If you have outsourced this to your accountant or business advisor then the user list should be regularly, at least annually, checked as they may add or remove users throughout the year. Most of the settings need to be set up when Xero is first being used and can then be ignored most of the time. The Invoice and Email settings may take a little time to get used to but are worth it to ensure your brand is being portrayed as you desire. There are over 700 apps and payment services that can be integrated with your Xero account via the app marketplace. If the right ones are selected these can greatly enhance your business operations. Please see the section on the App Ecosystem for further information.
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The aim of this section is to provide guidance on how to track and manage your transactions with your customers and suppliers.
Xero merges customers, suppliers and employees into contacts. A contact is only defined as a customer, supplier (or both) or an employee based on the nature of transactions that pass through that contact. Contacts can be grouped in order to report on them and access them quickly. For example, Customers with bad credit terms could be grouped together as “high risk”. Groups appear in the main criteria, similar to a saved search or favourite.
The contacts screen returns information on all your contacts, up to the item count. The easiest way to find a contact is to search ( 8 ) for them using their name or email.
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1. Basic information on the contact is displayed here, including their name, address, phone number and email. 2. Outstanding bills and sales invoices are displayed here, with anything past its due date shown in red. Where a contact is both a customer and supplier both balances are shown. 3. Contacts can be imported or exported from Xero. This can be particularly helpful on initial setup or if you need to reconcile with an external (unintegrated) CRM system. 4. See details on statements below. 5. Contacts can be filtered by selecting the options on the left. 6. Groups are custom filters that contacts can be assigned to manually. 7. Smart lists are automated filtering based on rules around transactions, tracking and groups. 8. The search box is the easiest way to locate a contact quickly. 9. Lists can be ordered by different attributes by selecting this option. 10. See below for adding contacts and fields that can be applied.
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Xero allows a lot of information to be maintained in the contact field that is automatically drawn into transactions
1. The contact name is what will appear on documentation with that client 2. There is an option to add a contact account number. This is particularly useful if you have contacts with similar names or integrate with a system that works based on numbers 3. Key individuals at the business can be recorded for documents to be addressed to
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4. Contact information can be added for the client, allowing you to use Xero as a general database tool 5. If the contact uses skype this can be input here and will open skype for a call directly from Xero 6. Both postal and business addresses can be added. This allows for invoicing to be directed to a different address to the trading address, which is helpful where the contact has multiple sites
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7. VAT information, nominal accounts and tracking categories can be entered per contact to speed up processing of invoices and bills. 8. VAT information can be entered which is required for non UK businesses 9. Discounts and currencies can be added allowing for pre-population of invoices and reporting 10. Payment information can be entered to allow processing of payments for suppliers. This can be locked down per user settings for security purposes. 11. This allows you to allocate invoice templates to the customer and put due dates for purchases and sales. 12. It enables invoices or bills to be send straight to another Xero organisation.
Please note that if CIS has been enabled in the system CIS numbers would also appear as an option.
To edit a contact either click into the contact and select Edit or tick the contact in the main contact screen and push edit. Contacts can be added to a group or archived by the same method.
Contacts can be merged. This is required where two customer or supplier accounts have been set up by mistake. Merging will select a primary contact and bring any additional information in from the additional one.
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To access contact transactional information click the contact name.
1. Contact information is shown on the right side of the screen 2. Any outstanding invoices are listed here, listing what is due and the total amount of the invoice 3. Any outstanding bills are also listed. 4. Historical transactions are displayed here under activity, with money in and out shown in graph form. Notes can also be added to specific contact accounts which are shown in this section. 5. Transactions (invoices, bills etc) can be created directly from the contact screen.
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Statements to customers can be created and sent directly from the contact screen.
1. There are two statement types, outstanding and activity, depending on what needs to be sent. The activity shows invoices and receipts for a specific period whilst outstanding displays what is still owed. 2. Statements can be created for all customers or can be sent to specific customers selected here. 3. PDF and then print or email statements digitally 4. This displays the outstanding balance allowing you to see which clients owe money.
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The contact page can be a powerful tool if used to its full. It can be used to store all information on a contact and act as a phone and address book.
The contact transaction screen can be difficult to track when part payments and receipts are applied to bills and invoices. The activity statement can be useful here.
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The aim of this guide is to provide a basic understanding of importing sales/purchases invoices and bank statements in the Xero software.
In order to import sale invoices to Xero, go through Business, Sales overview, and click “Import”.
Download the template file.
•
• Enter the information from the sales invoices into the relevant columns. • Leave any blank columns and do not change or add headings. The columns you must complete are Contact name and Invoice number. The others are optional but more information will help you to match the bank transaction.
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1. ContactName* - Enter your customer’s name exactly as it appears in Xero. If the contact isn’t in Xero, a new contact is created when you import this file. 2. InvoiceNumber* - Enter the invoice number. Numbers must be different for each invoice in this file, and different from any invoices already entered in Xero. If you want to import multiple line items on a single invoice, use the same invoice number for each line item. To keep the same numbering sequence, enter the number in the same format as it is in Xero, for example, INV-0001. 3. InvoiceDate* and DueDate* - Enter the date and the due date of the invoice. Use the format DD/MM/YYYY. 4. Description* - Enter a description of the invoice. Description can be left empty but it must be completed before the invoice can be approved. 5. Quantity – Enter the quantity of the items you’ve sold. 6. UnitAmount - Enter the price of the item. Enter all prices in this file as either tax inclusive or tax exclusive, but not a mixture of both. You'll select whether the file contains inclusive or exclusive prices when you import this file. 7. AccountCode – Enter the code, as it displays in Xero, to code the item to. 8. TaxType - Enter the tax rate display name as it appears in Xero. If the tax rate name contains words and a percentage, enter it in full as it appears in Xero, for example, 20% (VAT on Income). • The Total and Tax Amount columns will be calculated automatically based on the data in the Quantity, Unit amount and Tax type fields. • If you are importing more than 500 invoices you will need to split the file as this is the maximum you can import in one file. • Save the file as a CSV (.csv) format file. • Click browse and select your saved CSV file. If you’ve already created contacts with emails and addresses that you want to change when you import the file then select ‘Yes, update contacts with imported address details’. If you don’t want to change anything then select no. Choose whether the prices in the Unit Amount column are tax exclusive or tax inclusive.
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• Click import. Review the import message in Xero – if there are any errors in the file you can go back to the file, fix them, and then import again. Otherwise click import complete. You can enter individual invoices which aren’t successfully imported afterwards. • Once imported, you will find these invoices in your draft invoices tab ready for you to approve. • If the invoices are dated before 1 January 2018 then use 1 January 2018.
In order to import purchase invoices to Xero, go through Business, Purchases overview, and click “Import”.
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• Enter the information from the purchase invoices into the attached Xero template. • If you are importing more than 500 invoices you will need to split the file as this is the maximum you can import in one file. • Leave any blank columns and do not change or add headings. Required columns are marked with an asterisk (*) in the template. 1. Contact Name - Enter your supplier’s name exactly as it appears in Xero. If the contact isn’t in Xero, a new contact is created when you import this file. 2. Invoice Number - Enter a reference to help you identify and search for the bill or credit note. References must be different for each bill and credit note in this file, otherwise they will be combined together even if the contact's name is different. Only use the same reference in this file when you're importing multiple line items on a single bill. 3. Invoice Date and Due Date - Enter the date and the due date of the bill or credit note. Use the format DD/MM/YYYY. 4. Quantity - Enter the quantity of the items you’ve purchased or have been credited. 5. Unit Amount - Enter the purchase price of the item. If your item is a credit note, add the price as a negative amount. Enter all prices in this file as either tax inclusive or tax exclusive, but not a mixture of both. You'll select whether the file contains inclusive or exclusive prices when you import this file. 6. Account Code - Enter the code, as it displays in Xero, to code the item to. 7. Tax Type - Enter the purchases tax rate display name as it appears in Xero. If the tax rate name contains words and a percentage, enter it in full as it appears in Xero, for example, 20% (VAT on Expenses). • The Total and Tax Amount columns will be calculated automatically based on the data in the Quantity, Unit amount and Tax type fields. If an account code or tax type isn’t entered, the import will set itself to No VAT and the invoice will be the VAT exclusive amount. • Save the file as a CSV (.csv) format file. • Click browse and select your CSV file. If you’ve already created contacts with emails and addresses that you want to change when you import the file then select ‘Yes, update contacts with imported address details’. If you don’t want to change anything then select no. As with Sales import, choose whether the prices in the Unit Amount column are tax exclusive or tax inclusive. Click import. • Review the import message in Xero – if there are any errors in the file you can go back to the file, fix them, and then import again. Otherwise click import complete. You can enter individual invoices which aren’t successfully imported afterwards. • If the invoices are dated before 1 January 2018 then use 1 January 2018. • The purchase invoice will be sitting in the draft bills tab ready for you to approve.
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To import a bank statement, you need to go through Dashboard, Bank account, click on Manage Account and select “Import a Statement”.
• Enter the information from the bank statement into the attached Xero CSV template. • You can import a maximum of 1000 bank statement lines at a time, as this is the maximum you can import in one file. • Leave any blank columns and do not change or add headings. Required columns are marked with an asterisk (*) in the template.
1. Date – Enter the date of the transaction. Use the format DD/MM/YYYY. 2. Amount – Enter the amount. For money spent use a minus sign. 3. Payee, Description, Reference and Cheque Number columns are optional. More details you enter, the easier it will be to match the transaction with the invoice.
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• Once you have filled in and saved your CSV template, click on Browse and select you file. • The file is now ready to import, Xero will notify you if any errors have incurred, so you can go back to the file and fix them.
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The aim of this section is to provide guidance on how to track and manage inventory items within Xero.
There are two types of inventory on Xero; tracked and untracked.
Untracked items are those that you do not need to keep a count of. This type of inventory would frequently be used for services, such as delivery costs. By setting this up as an untracked item, it helps to speed up data entry when raising sales invoices to customers. Tracked inventory is used for those products that you are buying and selling and by using Xero, this will enable you to run valuation reports at the end of the financial year to assist with your stock- take.
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1. This is the unique product code given to all inventory items. 2. This is the product name. Within the search box, you can search by Item Code or Item Name. 3. This should be the purchase cost of the item. 4. This is the value that you would sell this item to your customers. 5. At a glance, you can see from the Dashboard the number of items currently in stock.
If you are transitioning to Xero from another software system, you can use the import functionality to set up all of your inventory items. Please see Section 4 for more details.
Xero will automate as much of the purchasing as possible and by completing the default settings below, when entering a new bill / customer invoice a lot of the information will be pre-populated.
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1. All inventory items are required to have a unique item code. This will appear on sales invoices sent to customers. 2. As with the item code, the product description will also appear on sales invoices. 3. This box should be selected if you are setting up a new tracked item. Please refer to above notes, since this cannot be changed once you have recorded transactions against this item. 4. This should be the expected purchase price of the item. This can be changed on an invoice-by-invoice basis, if required. 5. Please select the nominal code for the purchase of these items. Stock items should ordinarily be posted to a Cost of Sales code. Please refer to Section 2 for more details. 6. Add a Tax Rate for these purchases from the drop down list provided. 7. Enter a brief description of the item. 8. Add the expected unit price for the sale of this item. Again, this can be changed on an invoice-by-invoice basis. 9. Please select a nominal code for the sale of these items. Please refer to Section 2 for more details. 10. Add a Tax Rate for sales of this item from the drop down list provided. 11. Enter a description of the item. This will appear on the sales invoices to customers.
When you have completed a physical stock-take, it is inevitable that you will need to adjust the balances shown within the software. This can happen for a number of reasons, including obsolescence and damaged goods.
To do this, click into the item you would like to adjust and follow the steps below: -
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1. This is the number of items currently held within stock. 2. Xero has calculated the average cost of the goods, based on the history of recent transactions. 3. This is the average stock value held for this item, calculated as 1 x 2. (See below for notes on how to revalue this.) 4. This is the number of items that are included on live quotations to your customers. 5. This is the number of items currently included on purchase orders to suppliers. 6. This is the history of all transactions recorded for this stock item. 7. This is where the adjustments for obsolete or damaged goods can be made as shown below:-
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1. Select either decrease quantity, increase quantity or Revaluation. 2. Select the date you would like to alter the stock item.
3. To edit the number held in stock, enter the adjustment here. 4. Xero will automatically calculate the new quantity held in stock. 5. Please select the nominal code for this adjustment. Ordinary any adjustments would be made through Cost of Sales, however please refer to Section 2 for more details. 6. Enter a brief description as to why you are making the adjustment.
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To adjust the calculated average cost of an item select Revaluation under Adjustment Type and enter the new Average Cost.
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The aim of this section is to provide a basic understanding of the key points regarding Sales Invoicing within Xero.
Sales overview screen gives you a summary of all approved and outstanding invoices.
Once an invoice has been sent to a customer, this will need to be entered manually into Xero.
To do this, select “Invoices” from the “Business” tab.
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This will then open a blank Sale Invoice within the system for you to populate.
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1. This is the customer you have sent an invoice to. As long as you have created this customer within Contacts then this information will autofill into the Sales invoice. 2. This is the date that is shown on the invoice. 3. This is the date that the invoice is due from the customer. This can be completed by manually typing the date into the box. Alternatively, for example 30 days, you can enter +30 into the box and tab across, this will automatically populate the due date. 4. Enter an invoice number and reference, which can be used to reference specific jobs or instructions. 5. You can attach a copy of the invoice to the Xero system by clicking this button. The Xero wizard will guide you through the process of attaching the electronic file from your computer. 6. Xero is able to process invoices in different currencies. Click the drop down arrow and select the currency which the invoice has been raised in. 7. If you are using the inventory function, you can use the drop down box to select the inventory type. This will then auto fill boxes 8-14. You should be careful to ensure the correct quantity is entered. If you are not using the inventory function then leave this blank. 8. This is the description of the item you have sold. 9. Ensure you enter the quantity sold, even if the quantity is only 1 this box must always have a figure in it for the invoice table to populate. 10. The unit price is the price per item that you have sold to a customer at. 11. The Account is the cost code against which the sale will be posted. If you use tracked inventory this will always be the inventory code. If not then this should be the income code such as sales. 12. The tax rate is automatically populated based on the cost code which is entered. You should not need to edit this. 13. The region box will only appear if you are using the tracking categories. If so you should select the relevant tracked category for the invoice. 14. Xero will automatically calculate the line by line cost based on the quantity and unit price that has been entered. 15. This is the total Sales Invoice cost which will include all items and VAT. 16. If you require additional items on the invoice, you can order more lines in multiples of 1, 5, 10 or 20. 17. Once you are happy that the Sales Invoice on the screen matches the physical invoice you have sent you can “Approve” the invoice. This will then move to the awaiting payment tab until this is reconciled through the bank. This is covered in more detail in Section 4.
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When a credit note is sent to a customer, it needs to be entered manually into the Xero software.
To do this, you need to go through “Business”, “Invoices”, and select “New Credit Note”.
This will then create a blank Credit Note within the system for you to populate. This should be completed in the same way as raising a Sales Invoice as detailed in “Part A”.
When the Credit Note has been approved, it will need to be allocated against the relevant invoice within the system; Xero will automatically prompt this.
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Once you have allocated the credit note against the relevant invoice select “Allocate Credit” and this will be cleared on the system.
You can create a template for the invoices you send regularly.
In order to do this, click on “Business” tab, go to “Invoices”, then from the drop down menu select “New Repeating Invoice”.
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1. Enter the time interval the invoice should be repeating in. 2. Set the date of the first invoice. 3. This is the date that the invoice is due from the customer. 4. In this box, enter the date of the final invoice, this is optional.
The rest of the template should be populated as detailed in “Part A”.
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You can create a New Quote within the Xero software.
To do this, go through “Business” tab, “Sales overview” and from the drop down box select “Quote”.
This will then open a blank Quote within the system for you to populate.
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1. Enter the customer name that the quote should be sent to. 2. In these boxes enter date and the expiry date of the quote. 3. Enter terms of the quote, these can be saved and reused in the future by editing Branding Theme in “Invoice Settings”.
The rest of the template should be populated as detailed in “Part A”.
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It is possible to import multiple invoices at once, without having to enter them manually.
To do this, go through “Business”, “Invoices” and select “Import”.
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You will need to download a template file, which is used to import invoices.
Note that you should not change column headings provided in the template in order for import to work correctly.
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The aim of this section is to provide a basic understanding of the key points regarding Purchase Orders and Purchase Invoicing within Xero.
Purchases overview screen gives you a summary of all approved and outstanding bills and purchase orders.
Xero has the ability to produce Purchase Order documentation which can be sent directly to suppliers in order to smooth the purchasing process.
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You will be able to monitor purchase order progress through the purchase order dashboard.
1. This is the supplier with whom you are placing the purchase order. As long as you have created this supplier within Contacts then this information will autofill into the purchase order
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2. This is the date that the purchase order was raised. Xero will default it to the current date, however, this can be changed if required. 3. This is the date that delivery is required. This can be manually entered. Alternatively if you know you require delivery in a certain number of days, for example 28, then enter +28 and hit the tab key. This will then autofill the date for you 4. This is the order number. Xero automatically populates this to ensure Orders are raised sequentially. This can be manually changed if required 5. This is the reference field. This can be used to reference specific jobs or instructions 6. You should select your branding theme here from those you created within “Invoice Settings” 7. If you are using the inventory function, you can use the drop down box to select the inventory type. This will then auto fill boxes 8-14. You should be careful to ensure the correct quantity is entered. If you are not using the inventory function then leave this blank. 8. This is the description of the item you are ordering. 9. Ensure you enter the quantity required, even if the quantity is only 1 this box must always have a figure in it for the order form to populate 10. The unit price is the price per item that you are purchasing from the supplier at 11. The Account is the cost code against which the purchase will be posted. If you use tracked inventory this will always be the inventory code. If not then this should be the expense code such as purchases, advertising etc. 12. The tax rate is automatically populated based on the cost code which is entered. You should not need to edit this. 13. The region box will only appear if you are using the tracking categories. 14. Xero will automatically calculate the line by line cost based on the quantity and unit price that has been entered 15. This is the total purchase order cost which will include all items and VAT 16. If you require additional items on the purchase order you can order more lines in multiples of 1, 5, 10 or 20.
At the foot of the purchase order you can ensure the delivery address and any special delivery instructions are entered.
Once happy with the purchase order this can be approved and Xero will give you the option to either electronically send the order or to print a copy to post to the supplier
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You will be able to enter notes as well as expected delivery dates at the foot of the purchase order once it has been marked as sent.
Once the Purchase Invoice has been received from the supplier you can then transfer the Purchase Order within Xero directly into a Purchase Invoice posting without the need to spend time re- entering the information.
To do this you need to mark the Purchase Order as “Billed”.
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This should only be marked as billed when the invoice has been received from the supplier.
You will be asked to confirm that the purchase order has been billed. You should tick the box and select “OK”.
This will transfer the Purchase Order into the Purchase Bills screen as shown below. You should review this to ensure it matches against the invoice provided by the supplier.
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Ensure you have entered the correct “Due Date” as shown on the supplier invoice. This can be completed by manually typing the date into the box. Alternatively, if the invoice states terms, for example 30 days, you can enter +30 into the box and tab across, this will automatically populate the due date.
Once you are happy that the Xero screen matches the physical invoice you can select the “Approve” button. The invoice will then move to the Awaiting Payments tab.
Invoices will be cleared as they are reconciled from the Bank screen. This is covered in more detail in Section 4.
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If you do not utilise the Purchase Orders function you will only need to focus on the Purchase Invoice section of the software in order to deal with suppliers and bills.
Once an invoice has been received from a supplier this will need to be manually entered into the Xero software. To do this you need to go through Business, Bills to pay and select New bill.
This will then create a blank Purchase Invoice within the system for you to populate.
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1. This is the supplier from whom you have received an invoice. As long as you have created this supplier within Contacts then this information will autofill into the Purchase invoice. 2. This is the date that is shown on the Purchase Invoice from the supplier. 3. This is the due date for payment. This can be completed by manually typing the date into the box. Alternatively if the invoice states terms, for example 30 days, you can enter +30 into the box and tab across, this will automatically populate the due date. 4. This is the reference field. This can be used to reference specific jobs or instructions. 5. You can attach a copy of the invoice to the Xero system by clicking this button. The Xero wizard will guide you through the process of attaching the electronic file from your computer. 6. Xero is able to process invoices in different currencies. Click the drop down arrow and select the currency which the invoice has been raised in. 7. If you are using the inventory function, you can use the drop down box to select the inventory type. This will then auto fill boxes 8-14. You should be careful to ensure the correct quantity is entered. If you are not using the inventory function then leave this blank. 8. This is the description of the item you have purchased. 9. Ensure you enter the quantity purchased, even if the quantity is only 1 this box must always have a figure in it for the invoice table to populate. 10. The unit price is the price per item that you have purchased from the supplier at. 11. The Account is the cost code against which the purchase will be posted. If you use tracked inventory this will always be the inventory code. If not then this should be the expense code such as purchases, advertising etc.
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12. The tax rate is automatically populated based on the cost code which is entered. You should not need to edit this. 13. The region box will only appear if you are using the tracking categories. If so you should select the relevant tracked category for the invoice received. 14. Xero will automatically calculate the line by line cost based on the quantity and unit price that has been entered. 15. This is the total Purchase Invoice cost which will include all items and VAT. 16. If you require additional items on the purchase order you can order more lines in multiples of 1, 5, 10 or 20. 17. Xero allows you to assign expenses to a customer if these are incurred on their behalf. Select this function and Xero will ask you to match these to a customer. When you raise the customer sales invoice at a later date it will prompt you to include these. This is covered in Section 6. 18. Once you are happy that the Purchase Invoice on the screen matches the physical invoice you have received you can “Approve” the invoice. This will then move to the awaiting payment tab until this is reconciled through the bank. This is covered in more detail in Section 4.
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When a credit note is received from a supplier this will need to be manually entered into the Xero software. To do this you need to go through Business, Bills to pay and Select “New Credit Note”.
This will then create a blank Credit Note within the system for you to populate. This should be completed in the same way as raising a Purchase Invoice as detailed in “Part C”.
When the Credit Note has been approved, it will need to be allocated against the relevant invoice within the system; Xero will automatically prompt this.
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Once you have allocated the credit note against the relevant invoice select “Allocate Credit” and this will be cleared on the system.
It is possible to automate the input of Purchase Invoices by use of an OCR system, which can be directly linked to Xero.
More information regarding such a system is detailed in Section 16.
Prior to preparing a self-billing invoice you will need to ensure you have set up a “Self-Billing” branding theme. Details of how to do this can be found in Section 2.
You then need to create a new Purchase Order as detailed in “Part A”. Ensure that you select the “Self-Billing Invoice” as the theme.
You should then either print or send electronically the Purchase Order document, remembering to select the “Mark As Sent” box.
The Purchase Order then needs to be transferred to a Purchase Invoice as detailed in “Part B”. This will then sit on the system until such a time it is paid in the same way as a regular Purchase Invoice.
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