If you are new to Xero, it’s completely normal to make a few mistakes while you’re learning. We see mistakes that are quite common and can be costly. Taking  that little extra time will make a huge difference in the end.

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.

While you are at it, 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. Whilst bank feeds are great, sometimes glitches occur, and lines get omitted or duplicated.

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. It’s surprising how many times we view a new client file an old team member still have access to your sensitive business information.

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, you should revoke their Xero access immediately.

4.Not setting procedures or 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 Xero 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.Not knowing how to enter 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. We often see them posted to incorrect bank accounts or various account codes. 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 are Xero Certified and would be happy to take a look at your file and complete a complimentary file health check. To take advantage of this or just have a chat about how we help you save time and make smarter decisions click here to set an appointment