1:  Not setting up your chart of accounts properly

Using the default chart of accounts will drive you batty, in the long run. Print out the chart of accounts, and customise it to your business, and the level of detail that you want to see. If you have no idea what a chart of accounts is, chances are, you have not customised it.

2: Not setting up bank rules

Yes, Xero does have the smart function, but it doesn’t always work properly and for all transactions. Setting up bank rules will save your sanity and more importantly, it will save you T-I-M-E.

3: Not allowing for online payment methods 

The whole point of having cloud integration software is to make life as easy as possible for all involved, including for your customers, right? Well, make sure that it is also easy for them to pay you, by allowing for credit card payments. You would be crazy not to. The easier you make it, the more likely you will be paid. 

4: Not setting up for Paypal payments properly

Yes, you heard it – it is often overlooked when there is multi-currencies involved. We have seen instances where other accountants and bookkeepers have manually journalled the transactions in. Yes, you heard it - journals - Debits & Credits!

5: Not setting up automatic reminders for outstanding invoices

Setting this up will allow for Xero to send out automatic reminders, at different stages and timing, so that you get paid in a timely manner. There is also the option to turn it off for certain clients, so it is not a blanket option. You have a Rolls Royce accounting software - use it and use it well!

6: Not locking up the transactions for certain periods

This is a nightmare for accountants when prior year transactions are “accidentally” changed, or even worse, deleted. Once the end of year tax returns and financials are completed, it is good practise to lock it, to prevent any issues in the future. It can always be unlocked to make any changes of course, but the security measure is there.

7: Not setting up as cash or accrual

What is this you say – best to check with your accountant what system you should be using. This not only affects your BAS lodgements but also your end of year reporting as well, so please take the time to ASK!

8:  Not checking the bank balances are correct

During the set up process, there is a bit of a timing delay between when the bank connects and allows for the downloads of bank transactions into Xero. We have seen instances where a few transactions were missed, and no one even knew about it until it came time to prepare the end of year financials. Once the bank to Xero connection has been confirmed, check that the bank balance is right, before you put your feet up and let Xero take over.  

As a final piece of advice, if all the above is making you faint and/or dizzy, then it is a good idea to outsource the setup to an accountant or bookkeeper. It is a small price to pay, with peace of mind that everything has been set up and tailored to your business.