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XERO CERTIFICATION COURSE USA

Course Topics
INTRODUCTION........................................................................................................................................................ 1
SETTINGS (PART 1) ................................................................................................................................................... 2
ORGANIZATION SETTINGS ........................................................................................................................................... 2
FINANCIAL SETTINGS .................................................................................................................................................. 3
CHART OF ACCOUNTS ................................................................................................................................................ 4
TAX RATES .............................................................................................................................................................. 5
TRACKING ............................................................................................................................................................... 6
CONVERSION BALANCES ............................................................................................................................................. 7
USERS .................................................................................................................................................................... 8
CUSTOM CONTACT LINKS ............................................................................................................................................ 8
BANK RECONCILIATIONS (PART 1) ......................................................................................................................... 10
SETTINGS (PART 2) ................................................................................................................................................. 15
INVOICE SETTINGS ................................................................................................................................................... 15
PAYMENT SERVICES ................................................................................................................................................. 16
INVENTORY ITEMS ................................................................................................................................................... 17
CURRENCIES .......................................................................................................................................................... 18
CHECK STYLES ........................................................................................................................................................ 18
EMAIL SETTINGS ..................................................................................................................................................... 18
FILES .................................................................................................................................................................... 19
XERO TO XERO ....................................................................................................................................................... 21
ADD-ONS .............................................................................................................................................................. 21
SALES AND INVOICES ............................................................................................................................................. 22
PURCHASES AND BILLS........................................................................................................................................... 29
CONTACTS .............................................................................................................................................................. 37
BANK RECONCILIATIONS (PART 2) ......................................................................................................................... 41
RECONCILIATION ISSUES ........................................................................................................................................... 41
CREATING BANK RULES ............................................................................................................................................ 44
CASH CODING ........................................................................................................................................................ 46
FIXING CODING AND RECONCILING ERRORS ................................................................................................................... 48
DELETING DUPLICATE BANK STATEMENT TRANSACTIONS.................................................................................................. 53
MARK OR UNMARK AS RECONCILED ............................................................................................................................ 55
BANK RECONCILIATION REPORTS ................................................................................................................................ 57
REPORTING OVERVIEW .......................................................................................................................................... 59
CERTIFICATION TEST AND KEEPING UP-TO-DATE .................................................................................................. 63

Case Studies
Practice makes perfect! Weve written the case studies listed below to help you learn how to use Xero.
To do these case studies, you will need the USA CSV file. When doing Case Study 5, you will use this file to
import bank statement lines into Xero. The import provides the data needed to complete the remaining
case studies. If you dont have the USA CSV file, ask for a copy by sending an email to training@xero.com.
CASE STUDY 1: EDITING THE ORGANIZATION NAME S ............................................................................................................ 3
CASE STUDY 2: EDITING YOUR CHART OF ACCOUNTS S ........................................................................................................... 4
CASE STUDY 3: TRACKING AND DEPARTMENTAL REPORTING S ................................................................................................. 6
CASE STUDY 4: CONVERSION BALANCES S ........................................................................................................................... 8
CASE STUDY 5: REORDERING BANK ACCOUNTS AND IMPORTING A BANK STATEMENT D............................................................... 12
CASE STUDY 6: RECONCILE SCREEN AND REFRESH OF ESSENTIALS S ......................................................................................... 13
CASE STUDY 7: ADDING A CREDIT CARD BANK ACCOUNT O ................................................................................................... 14
CASE STUDY 8: DEFAULT PAYMENT TERMS AND LOGO O ...................................................................................................... 15
CASE STUDY 9: ADDING INVENTORY ITEMS S...................................................................................................................... 17
CASE STUDY 10: EMAIL TEMPLATES O .............................................................................................................................. 18
CASE STUDY 11: CREATING A SALES INVOICE S ................................................................................................................... 24
CASE STUDY 12: CREATING AND ALLOCATING A CREDIT NOTE S ............................................................................................. 24
CASE STUDY 13: CREATING AND VIEWING AN ONLINE INVOICE D ........................................................................................... 25
CASE STUDY 14: CREATING A REPEATING BILL S ................................................................................................................. 29
CASE STUDY 15: ENTERING A FOREIGN CURRENCY BILL O ..................................................................................................... 30
CASE STUDY 16: CREATING A DRAFT PURCHASE ORDER S ..................................................................................................... 34
CASE STUDY 17: APPROVING AND BILLING A PURCHASE ORDER S ........................................................................................... 34
CASE STUDY 18: PRINTING CHECKS D ............................................................................................................................... 35
CASE STUDY 19: MERGING CONTACTS S ........................................................................................................................... 37
CASE STUDY 20: USING THE ENABLE PAYMENTS FUNCTION S ................................................................................................ 38
CASE STUDY 21: DEALING WITH A MINOR UNDERPAYMENT D ............................................................................................... 41
CASE STUDY 22: DEALING WITH A PART PAYMENT D ........................................................................................................... 41
CASE STUDY 23: DEALING WITH A PREPAYMENT S............................................................................................................... 42
CASE STUDY 24: RECONCILING AN OVERPAYMENT AND PROCESSING A REFUND S ...................................................................... 43
CASE STUDY 25: CREATING BANK RULES D ........................................................................................................................ 44
CASE STUDY 26: CREATING BANK RULES S ........................................................................................................................ 45
CASE STUDY 27: USING CASH CODING S ........................................................................................................................... 46
CASE STUDY 28: FIXING CODING ERRORS IN RECONCILED TRANSACTIONS D .............................................................................. 50
CASE STUDY 29: FIXING CODING ERRORS IN RECONCILED TRANSACTIONS O .............................................................................. 51
CASE STUDY 30: USING UNRECONCILE TO FIX RECONCILED TRANSACTIONS O ............................................................................ 51
CASE STUDY 31: DELETING DUPLICATE BANK STATEMENT TRANSACTIONS O ............................................................................. 54
CASE STUDY 32: MANUALLY CREATING MISSING BANK TRANSACTIONS D ................................................................................ 55
CASE STUDY 33: COMMON REPORTS O ............................................................................................................................ 60

KEY
S
D
O

Self Teaching Exercise


Demonstration Exercise
Optional Exercise

Introduction
Lets begin
Connect to the internet and login to Xero.
You can access the last five organizations you accessed by clicking on the organization name at the top left of
the screen. Youll also see the other applications you have access to; for example, My Xero.
To reset the demo company, click on the organization name and
then select My Xero.
In the My Xero screen, click on Reset.

Managing your Xero account settings


Use the Account Settings screen to manage your Xero account
settings. To go to this screen, click on your name located at the
top right of the screen and then click Account. Change your login
email address or password by clicking on the matching Edit link.
In the Settings section, choose what you want Xero to open each
time you log in: My Xero or the last Organization you were in.

Helpful Tips Reminders from Essentials


Hold Ctrl and Left Click (PC)
Hold Command and Click (Mac)
Left-click > Drag Link
Right-click > select New Tab/Window

There is no limit to the amount of tabs or windows you can


have open at one time, however you can only have one client
open at a time.
1. Refer to the Xero Help Center on the Xero Website.
2. View a video. To select one of the many video clips that are
available, refer to the Business Essentials Guide web page
or the Xero How-to web page. Alternatively, visit Xero TV, a
one stop shop for all video content on xero.com
3. Refer to the Xero Tips web page to find out how to get
around Xero as quickly and as easily as possible.
4. Refer to the Help menu in Xero: Help > Help Center
or Help > Get help for this page (shown to the left).
5. Xero partners should use Partner Edition when requiring
assistance. Xero partners receive priority support when
using help links from Partner Edition.

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Settings (Part 1)
This is a quick overview only. We recommend you attend the Set Up and Conversion
training course for more information.
If you use a specific setting on a regular basis, consider adding it as a favorite to the
Settings menu. For example, the screenshot to the right shows the addition of two
favorites Chart of Accounts and Inventory Items. To add a favorite, click on the
icon to the left of the setting name.

Organization Settings
The information held in the Organization Settings screen shows the name to display in Xero and on reports and
sales invoices. It also records the organizations contact details and the TIN/EIN/SSN number (required for payroll).
If you want your organization promoted to the online world, turn your public profile on.

Xeros public profile is an opportunity for you to promote your work or expertise to new and existing customers
through the Xero Community.
Xero sets your profile to private by default; however, you can choose to make your Xero user profile public
or private. If you choose to make your user profile public, you can select the details you want to share, from a
simple online business card to a more extensive profile. Refer to the Help Center for more about managing
your Xero user profile.
To turn your public profile on and edit your profile details:
1. At the top right of the screen, click on the down arrow
(to the right of your name) and then click Profile.
2. At the top right of the screen, click on the Login link.
Once logged in, click on the Edit profile link.
3. If you havent already done so, turn your public profile on.
4. Edit profile details (name, location, bio, contact details, public profile settings) and then read and agree
to Xeros terms and conditions and then click Save.
5. If you want to, and if you have editing permissions, you can embed your Xero profile on an organizations
website, blog or CRM (customer relationship management) system. Embedding means inserting a snippet
of code in a web page so that information from an external site displays on it. To embed your Xero profile,
click on the down arrow (to the right of your name), click Profile, click Embed your profile on another site
and then follow the instructions in the Help Center.
NOTE: You will have the option to include your user profile provided it is a public profile and you added the
organization to your user profile.

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CASE STUDY 1: EDITING THE ORGANIZATION NAME S


If you havent done so already, open the Demo Company (US). The case studies in this course deals with
transactions for Snappy Freight, a local courier company.
To customize the Demo Company, enter Snappy Freight in the Display name field and then scroll down to the
bottom of the screen. Click on the Add contact field link to enter a Facebook or Twitter address. Save changes
and then refresh your screen. Xero will now display Snappy Freight in the header; shown below.

Extra for Experts


You can add social media links such as Facebook, Twitter and LinkedIn to your online invoices. When your
customer receives the online invoice, they can use the link to connect with you. You will need to give your profile
public access before Xero can display social media links on your online invoices.

Financial Settings
Settings > General Settings > Organization (heading) > Financial Settings (link)
The information held in the Financial Settings screen is used when creating reports.
Financial Year End the date used for calculating year-to-date (YTD) balances and reports.
Sales Tax options available are Invoice Basis, Payments Basis, None. Default is Payments Basis.
Lock Dates set a lock date to prevent users from making changes to data. Only people with the Advisor role can
set and amend lock dates. There are two lock dates:
Period Lock Date

Locks out users other than the Advisor. Can be used before starting a
period or year-end job.

End of Year (EOY) Lock Date

Locks out all users including the Advisor. Can be used after completing
an end of period or end of year job.

Only Advisors can change transactions prior to the Period Lock Date.
Nobody can change transactions prior to the EOY Lock Date.
If you have Advisor permissions, you can change the EOY Lock Date whenever you need to.
This means you can use the EOY Lock Date to stop yourself from accidentally making changes.
NOTE: Xero is a perpetual accounting system. The EOY Lock Date does not create any roll journals, nor does it
create any other adjustments to your accounts and reports.

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Chart of Accounts
Settings > General Settings > Organization (heading) > Chart of Accounts (link)
Chart of Accounts codes can be up to 10 characters (alphanumeric), and Account Type selection (such as
Revenue, Expenses, Current Asset, Current Liability) determines which report the Account Code is sent to.
To change account display and behavior, tick check boxes as required:
Tick the Dashboard Watchlist option to display the account on the Dashboard,
in the Account Watchlist section.
Tick the Expense Claims option to display the account in the list of accounts
that can be chosen when entering receipts into an expense claim.
Tick the Enable Payments option to enable payments to be directly made or
received against the account.
Use the links below for more about the Chart of Accounts:
Importing a Chart of Accounts CSV File
Choosing a Chart of Accounts (includes a video)

CASE STUDY 2: EDITING YOUR CHART OF ACCOUNTS S


There are a few modifications that need to be made to Snappys Chart of Accounts.
NOTE: If your user environment does not allow you to export Snappys COA (such as if you are doing this course
on an iPad), you still need to make these changes as other Case Studies rely on them being made. Simply make
the changes directly in the Chart of Accounts screen instead of exporting.)
1. Export Snappys Chart of Accounts. Open with MS Excel.
2. Add a new Current Asset account code for Unpresented Funds (125). This is an account that you will want
to show on the Dashboard Watchlist so add a Yes to the Dashboard column.

3. Change the name and description of the Sales account (400) to Storage Income.
4. Add a new Revenue code for Freight Income (430) with Tax on Sales (9.25%).
5. Change the Janitorial Expenses code to 610.
6. Add a new Expense code for Storage Fees (665) with Tax on Purchases (0%).
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7. Note the Balance column, used to import balances (optional). Positive balances are imported as debits;
negative balances as credits. Any balances saved in Xero will be replaced during import. (Dont remove the
Balance column heading as the import will fail if you do.)

8. Save the file to your desktop using the Save As command. Keep the file in CSV format. Once saved, import
the modified Chart of Accounts and review changes.
NOTE: When importing, Xero sometimes deletes or archives accounts. You are notified when this occurs.
Extra for Experts
Accounts are deleted during the import process if they have not had any transactions coded to them. System or
locked accounts cannot be deleted. Deleted accounts are completely removed from Xero. You will not be able to
view or access deleted accounts again, and they will not show up in reports.
Accounts are archived during the import process if they have a balance in them. The balance
needs to be available for any reports you run. Archived accounts are moved to the Archive tab.
If necessary, you can restore an archived account.

Tax Rates
When using Xero, every transaction line item entered needs a tax rate; for example, 0%, 4.25%.
Use the Tax Rates screen to edit, add or delete tax rates. You can also use this screen to view existing tax rates
already set up. To find out whats captured in the Sales Tax Report, refer to the Help Center.
You can have as many Tax Rates as you need. Create a new tax rate by clicking on New Tax Rate; for example,
when creating tax rates for special tax rate contacts. When setting up a new tax rate, you will need to set up
two tax rates; one for money coming in and the other for money going out.

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Tracking
Settings > General Settings > Organization (heading) > Tracking (link)
You can use tracking for Cost Center or Departmental (Divisional) reporting. The Tracking Summary report
(shown below), shows total sales reported by the Region tracking category. Transactions not assigned to a
tracking category will appear as Unassigned.

We do not recommend using tracking categories for job costing. A job has a start and finish date; tracking
categories do not. You use tracking categories for the life of the organization. (If you need Job Costing
functionality, we recommend you use an Add-on; discussed further on in these notes.)
Xero allows only two tracking categories. For example, you could track by Region and Employee. Click on
Add a Tracking Category to add new tracking categories.
You can rename or delete tracking categories and options. To rename, go to Settings > General Settings >
Tracking and then, for the name you want to change, click on the Rename link. To delete, click on the icon to
the right of the tracking category or option you want removed. Refer to the Help Center for more information
about deleting tracking options and categories.
You can also import tracking information when importing bank statement lines, using a CSV file.

CASE STUDY 3: TRACKING AND DEPARTMENTAL REPORTING S


Your client, Snappy Freight, uses tracking categories to monitor their regional offices; Eastside, North, South
and West Coast. Because Snappy is a freighting business, tracking income and expenses by truck would also be
useful. The owner could then see which types of truck are more profitable.
Snappy Freight has four trucks. Create a Truck tracking category and then create the tracking options. To
identify each truck, use its registration number: SNAPPY1, SNAPPY2, ABC123, DEF456.

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Conversion Balances
The Conversion Balances screen is used for updating Xero with the balances coming from your previous
accounting system. The information below is intended as an overview only. Learn more by attending one of our
online Set Up and Conversion courses, or go to the Xero Help Center.
Conversion Date: Settings > General Settings > Conversion Balances > Conversion Date (button)
Enter the month and year that you will begin processing transactions in Xero. When the conversion date has
been set, the next step is to enter the opening balances. Opening balance amounts are determined by the
conversion date. For example, if the conversion date is January 2014 then opening balances as of December 31,
2013 will need to be entered.
Opening Balances: Obtain a Trial Balance from the previous accounting system as of the date set by the
Conversion Date rules (see above). These amounts will be the opening balances in Xero and can be entered
directly into the Conversion Balances screen. These balances can also be imported when importing the Chart of
Accounts.
Prior Period Adjustments: Enter any prior period adjustments directly into the Conversion Balances screen. You
might be tempted to enter a journal to bring in any prior period adjustments; however, this is not the
recommended process when using Xero. This is because a journal will adjust the balance but it wont update the
conversion balance screen and, if at some future period in time you need to update the conversion balances
again, the journal will be reversed. To prevent any future problems from arising, its best to enter prior period
adjustments directly into the Conversion Balances screen.
Bank Balances: This must be the closing balance on the actual Bank Statement, not the balance as per the
previous accounting system as this may include unpresented funds such as uncleared checks.
Accounts Receivable and Accounts Payable: The recommended process for entering Accounts Receivable and
Accounts Payable opening balances is shown below.
1. Enter a 0.00 amount in the Conversion Balances screen for both Accounts Receivable
and Accounts Payable. (This will be adjusted later.)
2. When setup is complete, import the sales invoices and any credit notes.
Enter any credit notes as a negative sales invoice: Accounts > Sales > Import (button)
3. Go back to the Conversion Balances screen; enter the correct opening balance. Save.
4. Repeat the above two steps for bills: Accounts > Purchases > Import (button)
Sales invoices, bills and credit notes can be imported when setting up an organization. Download Xeros
template file from Accounts > Sales or Purchases > Import (button) and then enter data, as required. Enter any
credit notes as a negative amount. You can also enter inventory item codes and descriptions and any applicable
discount into the template file. Both inventory and discount are imported at a line item level only. Foreign
currency sales invoices and bills can also be entered at this stage, using the correct currency.
If a sales invoice or bill has had a part payment applied to it before the conversion date, import the outstanding
balance only so Xero can match the incoming payment.
If you have an Accounts Receivable or Accounts Payable total, you must have the sales invoices and bills to
verify the balance. If you dont have these sales invoices (or bills), enter NIL and adjust later.
Comparative Balances: You can add Comparative Balances for as many years as you like. Clicking on the Add
Comparative Balances button creates a tab for the previous fiscal year.

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Sales Tax: The Sales Tax system account must only contain the balance of the Sales Tax in the outstanding
historical transactions, being those amounts entered to support the sales invoices and bills at the time of
conversion. This is so that the Sales Tax Reconciliation Report does not include an opening balance for the life
of the organization.
Historical Adjustments: If the opening Conversion Balances (debits and credits) do not balance, the variance is
posted to a system Balance Sheet account called Historical Adjustments.
Two videos that might help you with setting your conversion date and account balances and saving your
conversion balances can be found in the Xero blog. Information on updating the Conversion Balance (video
included), and entering historical invoices and credit notes (video included) is available in the Xero Help Center.

CASE STUDY 4: CONVERSION BALANCES S


You are converting your client Snappy Freight to Xero. You have a trial balance and a set of accounts from the
previous accounting system for the prior reporting period. The trial balance records a positive balance of $2,550
for the Savings Account; however, the paper Bank Statement records a positive balance of $2,000 for the same
reporting period. The $550 difference is a payment from Rex Media Group. Your client did bank the payment
before the conversion date; however, the bank account does not yet show the deposit.
1. Click Add a new line to insert two more rows into the grid.
2. Add Savings Account and Unpresented Funds to the list of accounts.
3. Enter the conversion balances for these two accounts and then click Save.

Users
If you no longer want access to an organization, you can remove yourself, rather than asking someone else to
do it for you. This is useful if you have temporary access only and no longer wish
to see the organization listed in My Xero. For more about user roles, refer to your Essentials course notes or
the Xero Help Center.

Custom Contact Links


If you are using a customer relationship management (CRM) system, you can set up shortcuts from Xero to
access customer details in that system. Custom contact links connect your contacts in Xero and your customer
details in your CRM. Once set up, a link will appear on each Xero customers contact page. Refer to the Help
Center for more information about creating custom contact links.

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Review: Settings
True or False?
Only users with the Advisor role can change transactions prior to the Period Lock Date.
Any new account created will automatically show in the Account Watchlist on the Dashboard.
An account with transactions cannot be deleted; it can only be archived.
Xero allows two tracking categories and unlimited options for each tracking category.
Xeros tracking function can be used for job costing.
If Xeros tracking function is used, all amounts entered will require a tracking category.
When entering the opening Conversion Balances (debits and credits), any variances are posted to the
Historical Adjustments account, a Balance Sheet account.
If a new tax rate needs to be set up, you will need to create one for money coming in and one for money
going out.
Questions and Tasks
Your client has changed their postal address. Where would you go to update this in Xero?
Your client uses the Accruals Basis for accounting for Sales Tax. Where would you set this up?
Explain lock dates. What is the difference between end of period and end of year lock dates?
Give three reasons why a padlock could be displayed next to an account code.
What is the purpose of a system account? Provide examples of system accounts.
Xero wont allow you to post a manual journal to the bank account, the accounts receivable account or the
accounts payable account. Why not?
Explain how you would create a new account. When would you use a CSV file for this task?
When setting up a new account, what happens if the Show in Expense Claims check box is ticked?
If the conversion date is July 1, the opening balances at what date will need to be entered?
My year end is December 31. The conversion date is September 2013 and I need to make an adjustment to
a transaction in July 2013. Where would I do that?
When performing a conversion from another financial system, if the General Ledger balance for the Bank
account was $2000, but my Statement Balance was $2100, which amount would I enter in the Conversion
Balances screen? What does the difference represent?
Explain the process for entering Accounts Receivable and Accounts Payable opening balances.
Your client wants last year amounts to be displayed in the reports. How will you enter these?

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Bank Reconciliations (Part 1)


Manage Account Menu
The Manage Account button (found on the Dashboard) displays a menu for the selected bank account.

FIND

Account Transactions a listing of the General Ledger transactions recorded against that
bank account within Xero. Includes Spend Money, Receive Money, Receipts, Payments and
Transfers.
Bank Statements a listing of all imported Bank Statements.

NEW

Spend Money used to enter a cash purchase. For example, a check that you wrote out for
a Supplier you dont have an account with. Used when there is no intention to enter a bill
for the amount.
Receive Money used to enter a cash receipt. For example, a customer has paid for a
Training Manual which is not usually charged for. Other examples may be interest received,
donations received. Used when there is no intention to enter a sales invoice for the
amount.
Transfer Money used to move money between Bank Accounts; for example, between the
check and savings accounts. Note that you can also create multiple transfers from the
Accounts > Bank Accounts screen.

RECONCILE

Reconcile Account main reconciliation coding screen; bank transactions on the left, Xero
(GL) transactions on the right.
Bank Rules used to automatically code transactions.
Reconciliation Report shows how the Xero (GL) bank balance reconciles to the Bank
Statement closing balance for the selected bank account and date.
Import a Statement used for importing bank statement transactions.

BANK FEEDS

The Bank Feeds column may or may not be displayed. Different options and prompts will
be displayed depending on the status of your bank feeds, and whether your feeds are from
a partner bank or by using Yodlee.

EDIT

Edit Account Details used to make changes to the bank account name or number.

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Reconciling and Coding


In Xero, reconciling a bank account involves importing bank statement lines from your online bank account,
either manually through an import or through the automatic bank feeds. Once imported, the bank statement
lines are matched against transactions already entered into Xero, or they are matched by adding the necessary
transactions on the fly, until a balance is arrived at. You will need to set up the bank account before you can
begin reconciling it.
In the bank reconciliation screen, where possible, Xero links a bank statement line to an existing transaction in
Xero (known as matching), or it suggests coding information using bank rules or
auto suggestion. Xero does this in the order given below.
1. Amount. Xero will automatically match where the transaction amount equals the bank statement line
amount. If there are multiple transactions or invoices with the same amount, Xero will look at an invoices
due date and the invoice number or reference to make a match. Xero compares the invoices due date to
the bank statement date and matches by closest date. Next, Xero looks to the invoice number or reference
number and compares that to the notes field in the bank statement line. If a match is found, the right-hand
side of the screen turns green, as shown below. (For matching purposes, Xero does not look at the contact.)

2. Bank Rules. Xero identifies bank statement lines that meet the bank rule criteria. Xero then uses the coding
information in the bank rule to suggest where to code the transaction to. You know when Xero has done
this when Apply Rule shows on the Create tab. If necessary, users have the option of not applying the rule
before reconciling; by clicking on the Dont Apply Rule link.

3. Auto Suggestion. If Xero recognizes the contact name in a bank statement line, Xero will suggest the same
account code used last time for that contact. The Create tab will show the suggested coding details, as
shown below. Change these details before reconciling, if you need to.

The Create tab is used to code transactions. Tracking information and tax rates can also be entered on this tab.

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Changing Dashboard Bank Account Order and Display


Accounts > Bank Accounts
Xero displays all bank accounts on the Bank Accounts screen. If you have multiple bank accounts, you have the
ability to change the display order on the Dashboard. If you need to, you can also prevent a bank account from
displaying on the Dashboard altogether.
Click the up or down buttons to change the order of the bank accounts showing on
the Dashboard.
Only show current bank accounts on the Dashboard. If a bank account is no
longer current, clear the Show account on Dashboard check box.

Importing Bank Statements


If you need to, you can import bank statement lines into Xero. Supported formats are OFX, QIF or CSV.
Import bank statements in CSV format if your bank doesnt offer OFX or QIF formats.

CASE STUDY 5: REORDERING BANK ACCOUNTS AND IMPORTING A BANK STATEMENT D


The Savings Account has missing bank statement lines. You have entered the missing bank statement lines into
a CSV file. Import the bank statement lines into the Savings Account.
1. Open the Dashboard. Which bank account does Xero display first? Change the order of the bank accounts
as you want the Savings Account displayed first.
2. After changing the order of the bank accounts, view the Savings Account.
Where did the Statement Balance amount of $2,000 come from?
3. Import the CSV file:
Click on Manage Account and then select Import a Statement.
Browse to the CSV file, select it and then click Open. Click Import to begin the import.
Before Xero can continue, you will need to double-check the mapping that Xero will use.
When using a CSV file to import bank statement lines into Xero, you need to map (assign) the columns
in the CSV file to a similar field that Xero recognizes.
NOTE: Xero will automatically map any Date, Amount, Payee and Description fields.
Double-check the mapping. The column headings in the CSV file (left side) must be assigned to a similar
field in Xero. If you need to, use the drop-down to change the mapping.
Check the first few transactions clicking the Next link and then click Save. Xero displays the number of
bank statement lines imported. Click OK to complete the import.
4. View the Statement Balance and the Balance in Xero. Where did these amounts come from?
5. Click on the Bank Statements tab to view the imported bank statement. What is the status of todays
import? Hover over the status icon to find out.
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Extra for Experts


You can import a coded bank statement file that posts cash transactions on the import of the bank statement
file. Your import file must contain the Account Code and Tax Type data mapped to the same fields in Xero.
You also have the ability to change your saved mapping after import if an import mapping error arises. Click on
Manage Account and then on the Edit Account Details link. In the screen that opens, click on the Statement
Import Options link. Change the mapping as required.

CASE STUDY 6: RECONCILE SCREEN AND REFRESH OF ESSENTIALS S


Using the Savings Account, reconcile the imported bank statement lines for Snappy Freight.
1.

Go to the Dashboard. From the Account Watchlist, view the YTD balance in the Unpresented Funds account
balance. How did this amount arrive here?

2.

For the Savings Account, click on Manage Accounts and then select Reconcile Account.

3.

Find the Rex Media Group $550 bank statement line. This is the unpresented funds amount entered earlier
in the Conversion Balances screen. Deal with this amount as follows:
Using the Create tab, enter Rex Media Group in the Name field.
Enter Unpresented Funds in the Account field and then click OK to reconcile.
Go to the Dashboard. View the YTD balance in the Unpresented Funds account balance.
This should now show a zero YTD balance.

4.

In the Reconcile screen, reconcile the following bank statement lines.


Young Brothers Transport payment made. Amount shows in the Spent column.
7-Eleven a bank rule has coded this payment. You can click on View Details to find the account code
the amount has been posted to. Click Save Transaction and then reconcile.
Shell code the payment to the Automobile Expenses account. Use the Create tab to enter name and
coding details and then reconcile.
Shell Xero can apply the coding used in the previous transaction to the next Shell bank statement
line. All you have to do is refresh your screen. What happened? Did Xero automatically suggest the
Name and Account? Click OK to reconcile.
$1,000 transfer to the Checking Account. Use the Transfer tab. To give more context about why the
transfer was made, enter for upcoming payments in the Reference field.

5.

As you are unsure of the coding for the City Stationery bank statement line, go to the Discuss tab to enter a
comment: Is this for office supplies or the new printer? Click Save.

Extra for Experts


Open the Reconcile screen for the Checking Account. Scroll down and then use the jump to field to go to
page 2. Find the $1,000 transfer from the Savings Account. A match is ready and waiting. Click OK to reconcile
the transferred amount against the $1,000 bank statement line.

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CASE STUDY 7: ADDING A CREDIT CARD BANK ACCOUNT O


Create a new credit card bank account for your client, Snappy Freight:
Accounts > Bank Accounts > Add Bank Account (button) > Credit Card
Enter US in the Your Bank field. This action gives a listing of US banks.
Select a bank and then use the details below to create the credit card account.
Account Name
Currency
Bank Account Number

<Your Bank> Credit Card


USD United States Dollar
XXXX-XXXX-XXXX-1234

Extra for Experts


Its best to use the bank name list when entering the bank name into the Your Bank field. If you do, Xero will be
able to let you know if a bank feed is available or not. Bank feeds let you automatically import bank statements
into Xero. If a bank feed is not available, you can still use the bank account in Xero but you will need to
manually import bank statements.

Review: Bank Reconciliations


True or False?
The Dashboard can be used to view the current financial position of the business.
The order of the Bank Accounts on the Dashboard cannot be changed.
To import bank statement lines, Xero only supports the OFX, QIF or CSV import formats.
A PayPal bank account cannot be created in Xero.
Questions and Tasks
What shows on the left and right sides of the Reconcile screen?
When reconciling from the Reconcile screen, Xero will use existing information to speed the reconciliation
process up. How does Xero do this and in what order is each method applied?
Explain the functions that can be performed from the Manage Account button.
Explain the difference between the Account Transactions tab and the Bank Statements tab.
How can you tell which transactions have been reconciled and which havent been?
Explain how to remove a Bank Account from showing on the Dashboard.
Explain how you would import bank statement lines using a CSV file.
An imported bank statement was mapped incorrectly. How would I rectify this?
How do you set up a new bank account or a new credit card account in Xero?

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Settings (Part 2)
Invoice Settings
Settings > General Settings > Features (heading) > Invoice Settings (link)
The information held in the Invoice Settings screen is used to customize the appearance of
Sales Invoices, Credit Notes and Statements.
The New Branding Theme menu shows there are two kinds of branding
available: Standard theme and Custom DOCX theme.
You can have as many branding themes as you like; however,
there is a limit of 15 DOCX files uploaded per client.
Click Default Settings to view the next number that will be used when generating a Sales Invoice or a Credit Note.
To change the prefix or automatic numbering sequence, edit the appropriate field(s).
If you already send online invoices or credit notes, customers will be able to view their outstanding bills if the
Show Outstanding Bills check box is ticked. (If this function is not required, clear the check box and then save
changes.) Customers can also view online invoices on their smartphone.
NOTE: If they need to, customers can send a question or comment directly from the invoice.
Xero adds these to the history of the invoice.

CASE STUDY 8: DEFAULT PAYMENT TERMS AND LOGO O


Snappy Freight has asked you to customize the standard Xero sales invoice by adding the Snappy Freight logo.
They also want you to define the default due dates for bill payments and sales invoice payments.
Add the logo:
1. Open the Invoice Settings screen.
2. Using the Standard branding theme, click Options and then select Change Logo.
3. Browse to the snappyfreightlogo.png file, select it and then click Open. Click Upload to begin the import.
The new logo should appear on the right.
Add the default payment terms:
1. Click Default Settings to open the Payment Terms screen.
2. Add the suppliers payment terms; that is, the 20th of the following month.
3. Add the customers payment terms; that is, Snappy wants customers to pay within 30 days.
4. Snappy also prefers their purchase order numbers to begin at 1000. Enter 1000 in the
Next Number field and the click Save.

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Payment Services
Customers can now pay invoices online through the payment services that Xero supports; for example, PayPal,
DPS, eWAY, GoCardless, Stripe. The ability to pay an invoice online makes it much easier to receive and process
payments too. After setting up payment services, you will receive any online payments into your nominated
bank account and Xero will automatically update the invoices as paid. All you need to do is reconcile the
payment.
To set up a payment service:
1. Create an account with a payment service that Xero supports; for example, PayPal.
2. Add a payment service and apply it to an invoice theme:

Go to Settings > General Settings > Features (heading) > Invoice Settings (link)
Click Payment Services.
Click Add Payment Service and then select a payment service from the list.
Enter a name for the payment service that will display in Xero.
Enter your payment services account settings, as required. Click Save.

3. Apply the invoice theme to a sales invoice.


For the payment service youve just added, select Invoice themes from the Edit link.

Tick the check box next to the invoice theme that you want to apply the payment service to; for
example, Standard, and then click Save.
When your customer opens the online sales invoice (when using the link you sent them), they can click
Pay now (shown below) to pay you securely through your payment service.

When your customer pays you online, Xero automatically marks the sales invoice as paid.
NOTE: PayPal or a custom URL payment service doesnt automatically mark the invoice as paid.
In the Reconcile screen, Xero displays the transaction reference ID from the payment gateway in the Reference
field of the payment transaction. Your payment gateway provider is likely to charge a fee so reconcile the
payment by adding a bank fee.

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Inventory Items
Settings > General Settings > Features (heading) > Inventory Items (link)
Inventory Items allow you to manage items that you buy and sell. Once created, they can be used to populate
invoice or credit note fields.
Inventory items can be created one by one, or imported into Xero. They can also be exported.
Inventory Items can also be used if you need to keep track of how many items were purchased or sold. For
each Inventory Item that is set up, Xero records the quantity amounts purchased or sold in the Inventory Items
Summary Report; shown below. However, Xero will not record the quantity on hand. This is because Xero does
not keep a record of opening and closing stock.

CASE STUDY 9: ADDING INVENTORY ITEMS S


Your client, Snappy Freight, incurs standard monthly storage costs. These charges are passed onto customers
at a set rate of $1000 per month. They would like to create invoices faster; therefore you suggest setting up a
standard Inventory Item for monthly storage.
1. Create a new inventory item for monthly storage.
2. Monthly storage costs are $500 per month. Code to Storage Fees (665).
3. Code revenue to Storage Income (400).
You also note that Snappy Freight needs an Inventory Item for freight charges.
1. Create a new inventory item for the freight charge from New York to San Francisco.
This inventory item will handle freight income only.
2. The New York to San Francisco freight charge is $490. Code to Freight Income (430).
Extra for Experts
You can set up inventory items for purchases only, sales only, or both.
If amounts vary, enter the most common amount when setting up the inventory item. Using an inventory item
when entering data is always faster, even if the amount showing on the inventory item needs editing in the
data entry screen.

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Currencies
If you are on the Business Edition premium pricing plan, you can choose to use the multi-currency option.
This option allows you to create foreign bank accounts, send or receive invoices and payments in currencies
other than your own. Xero automatically pulls exchange rates into Xero using a feed from XE.com. The feed
occurs hourly and is possible because Xero is online 24/7.
To use the multi-currency option, you will need to add the currencies you want to use. To do this, click
Add Currency. You can add as many currencies as you need. After you have added a currency, you can view
historical rates by changing the date in the Exchange Rates for field. Also, if you want to use a specific rate to
override the current rate, click on the existing rate and then define the new rate in the window that opens.
Xero uses the rate given in the Currencies screen to calculate realized or unrealized gains or losses.

Check Styles
The information held in the Check Styles screen is used to format, align and control what displays on the checks
that are printed from Xero. You can set up as many check styles as you like. You can also add or edit specific
check style components such as adding a logo to your check, changing the checks font or font size or choosing
what you want displayed on the check and voucher.

Email Settings
You can specify who Xero sends the organizations emails from in email address settings. Regardless of whom
is using Xero at the time, you can specify the name to display in your customers inbox. You can also control
where replies to your emails should go. To add and set your login email address on all outgoing emails, click
Edit alongside Email address and then click Add email address.
There are three options for outgoing email address settings: the logged in user (default), your own email
address or someone elses email address. Refer to the Help Center for more information.
Email templates are messages you can set up for use when sending emails from Xero. For example, if you email
sales invoices to your customers, a previously set up email template will populate the subject and body of your
email saving you time each time you email a sales invoice. Xero has five email template types: sales invoice,
repeating invoice, credit note, remittance, statement. You can set up to five customized templates for each
template type. Xero comes with default basic email templates for each template type. You can edit the
default template or create a new template.

CASE STUDY 10: EMAIL TEMPLATES O


Snappy Freight would like to use their emails to portray elements of their business culture. They have asked
you to amend their Sales Invoice email template to sign off with Have a Snappy day!
1. Click on the Email Settings link and then, in the Templates section, click on the Edit link.
2. For the Sales Invoice template, click on the Basic link and then edit the template as follows:
Remove the [Contact Name] placeholder and replace with [Contact First Name].
Delete Thanks (located at the bottom of the message) and change to Have a Snappy day!
3. Click Save.

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Files
Xero lets you attach files to bills, purchase orders, sales invoices and contacts. You can also upload files to
expense receipts, fixed assets, accounts in your Chart of Accounts and manual journals.
You can upload and attach files directly from the transaction screen. However, best practice would be to add
the file to the file library and then attach it to the transaction screen when entering the transaction. Over time,
you are likely to upload hundreds of files. Saving each file to a suitable folder in the file library allows you to
find them more easily later on.
To manage the folders in the file library:
1. Click on the Files icon located at the top right of the screen.

2. Xero has created two folders already: Inbox and Contracts


3. To create a new folder, click on the New folder link and then
enter the name of the new folder and then click Save.
4. To upload files to the new folder, click on Upload Files and then
browse to the file you want to upload and then click on it to select it. Click Open.
NOTE: You can upload most file types into Xero except executable, audio and video files.
5. To rename an existing folder, click on the name of the folder you want to rename. Click Options and then
select Rename. Enter the new name and then click Save.
NOTE: You can rename any folder in the file library, except for the Inbox.
6. To delete an existing folder, click on the name of the folder you want to delete. Click Options and then
select Delete. Choose to move any existing files in the folder to the Inbox, or to delete them. Click Delete.
NOTE: You can delete any folder in the file library, except for the Inbox.
You can create transactions such as Bills, Sales Invoices, Spend Money and Receive Money directly from the file
library. Select the file or files you want to attach to the transaction (tick the check box) and then click Add to
new. Select the transaction type. Enter the transaction details and then save.
NOTE: When viewing any list, Xero will display a small, numbered file icon if the item has a file
attached to it. The numeral indicates the number of file attachments.
You can also attach files by uploading them directly from anywhere you see the files icon. Click the files icon
and then click on the Upload files link. Browse to the file you want to upload, select it and then click Open. You
can also drag a file directly onto a screen. Locate the file, click on it (to select it) and then drag and drop the file
onto the Xero screen.
To attach the same file to more than one transaction, youll need to upload the file for each transaction that
needs it, or youll need to create each transaction directly from the file library.
Advisor and Standard users have full access to the file library and file attachments. Other user roles have
limited access; refer to the Help Center for the files roles comparison.

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Email a file to the file library Inbox


Xero gives your organization a unique email address for your file librarys Inbox. This means you can email files
directly into the Inbox. You may also want to share your organizations unique Xero email address with your
colleagues so they can also email files to the Inbox.
To find the unique email address:
1. Click on the Files icon located at the top right of the screen.
2. Xero displays the unique email address top-right, as shown below.

To email a file to the file library Inbox:


1. Click on the Files icon located at the top right of the screen.
2. Copy the unique email address and then add it to your email program contact list.
NOTE: Clicking on the unique email address may automatically insert the unique email address in the To
field after opening your email program. If this happens, copy and paste the unique email address to your
contact list from your email program.
3. Open a new email screen, enter the contact that uses Xeros unique email address in the To field, attach
the file and then send.
4. Go back to Xero. Open the Files screen, or if its already open, refresh the screen. Xero will display the
recently received email in the file library Inbox.
NOTE: You will also receive a notification each time someone sends an email to your
organizations Inbox. Click on the Files icon to view the notification.
5. Move the emailed file from the Inbox a relevant folder. Select the file (tick the check box), click Move to
and then click the name of the folder you want to move the file to.

Take a photo and upload it to the file library


If you are using Chrome or Firefox and your computer has a webcam, you can take a photo and upload it
directly to the file library. Attach the photo to a transaction or item once uploaded.
To take a photo and upload it directly to the file library:
1. Click on the Files icon located at the top right of the screen.
2. In the Files screen, click on Take photo.
NOTE: You may need to share your webcam with Xero first.
3. Click Take and then Upload. The uploaded photo will be displayed as a file in your Inbox. Move the file to a
relevant folder.

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Xero to Xero
Settings > General Settings > Connect (heading) > Xero to Xero (link)
If your suppliers or customers use Xero, Xero to Xero functionality allows you to connect with them directly.
You can do this by entering their Xero network key on your contact record.
Click Send Xero Network Invite to send your Xero network key to a supplier or customer. When they add your
Xero network key into their Xero system, they will be able to send their invoices directly to your Xero system.
Youll receive these as draft invoices. You can then code and approve the draft invoice for payment.
The Xero network key is unique to your organization. You only send it to those organizations that you want to
send it to. Once sent, these organizations can only use your key to send you their sales invoices or bills. The key
does not give them access to your organizations data.

Add-ons
Settings > General Settings > Connect (heading) > Add-ons (link)
You can use an add-on to connect Xero with third-party software providers. Add-ons allow for the exchange of
data between their software and Xero. They integrate seamlessly with Xero which means you can add
functionality such as job costing, inventory management, CRM and payroll to Xero.
Set up is easy; just click on the View the Xero Add-on directory link and then select the application category
you want from the list on the left. Once selected, Xero displays the add-ons that integrate with Xero.

Review: Settings
Xero allows you to customize the appearance of Sales Invoices, Credit Notes and Statements.
Explain how you would go about doing this? How many DOCX files can be uploaded per client?
What are the advantages of setting up inventory items? What will inventory items not do?
Explain how to create an inventory item that will track purchases and sales.
Explain how to add a foreign currency and how Xero manages any unrealized gains or losses.
How would you go about setting up a new check style?
What are the advantages of setting up an email template? Where can this be done?
In Xero, what transaction types can files be attached to? How are these uploaded?
Explain how you would email a file to the file library Inbox.
Explain what is meant by the term Xero to Xero.
True or false? Add-ons connect Xero with third-party software providers for the purpose of
exchanging data.

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Sales and Invoices


Accounts > Sales > New (button)
Used to create a new standard sales invoice.
Used to create a new repeating sales invoice. Repeating criteria need to be
defined. You also need to decide what you want Xero to do with the invoice that
is created on the appointed date. Choices are:
1. Save as Draft (Xero sends the invoice to the Draft tab); or
2. Approve (Xero sends the invoice to the Awaiting Payment tab); or
3. Approve and Send (Xero sends the invoice to the Awaiting Payment tab and
it emails the link to the customers online invoice).
Used to create a new standard credit note.
This is a section heading. All Contact Groups that have been set up will
be listed below this heading. Upon selecting a Contact Group, you can create a
new sales invoice and then, upon saving the details, Xero will automatically
create a draft sales invoice for each contact in the group.
Quick link that can be used to add another Contact Group, if required.
When creating or editing sales invoices or credit notes, you can click on the
icon to attach single or
multiple files. This is useful if you need to refer to supporting documentation later on.
You can also use Xeros inbuilt calculator when creating a sales invoice. Enter a formula directly into the Qty,
Unit Price or Disc % columns and then press the Tab key to view the answer.

Invoice Only User Role


The Invoice Only user role is suitable for someone who needs to enter customer and supplier invoices and
credit notes; that is, they dont need access to bank accounts or reports. If necessary, you can limit someone
with Invoice Only access even further by giving them Sales Only access. An Invoice Only user with Sales Only
access can only create and approve sales invoices and customer credit notes. They wont be able to create or
view bills or supplier credit notes.

Invoice Options
From the Awaiting Payment tab, click on Bayside Club to open the sales invoice. Note the Email, Print PDF and
Invoice Options buttons. Click the Invoice Options arrow to display available options.
Repeat: Use this option if you want to create a repeating sales invoice
that uses the data in the selected sales invoice.
Void, Copy or Edit: Use one of these options if you want to void, copy or
edit the selected sales invoice.
Add Credit Note: Use this option to copy the data in the selected sales
invoice to create a Credit Note.

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Awaiting Payment
Accounts > Sales > Awaiting Payment (tab)
The Awaiting Payment tab makes it easy to stay on top of the amounts your customers owe. Xero colors the
tab name blue, but if it is red, some amounts are overdue.
Used for bulk printing sales invoices. To select multiple sales invoices, tick the check box to
the left for each sales invoice you want to print. Alternatively, tick the check box for the first
sales invoice to print, hold the Shift key down and then tick the check box for the last sales
invoice to print. Click Print to begin printing the selected sales invoices.
Used for bulk emailing online invoices. Select Customers and then click Email. Enter any
missing email addresses. Choose whether to include a PDF attachment and whether to send
yourself a copy or not. Click Send. Once sent, Xero marks all selected sales invoices as sent.
Used to search for an existing sales invoice. Click Search to define search criteria. Click the
button to close the search window.

Description Only Lines


Enter description only lines into an invoice or credit note by entering text into the Description field; no need
to enter anything into the Qty, Unit Price, Disc % or Account fields.

The description only line shows up in the invoice as follows:

History and Notes


This is located at the bottom of the sales invoice screen.

Click Show History to view an audit trail of any changes made for the selected sales invoice. Xero displays who
created it, who approved it and whether it has been sent or not. Xero also records any other changes made to
the sales invoice and who made them.
Click Add Note / Expected Payment Date to add a note or an expected payment date.

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CASE STUDY 11: CREATING A SALES INVOICE S


Gavin Rutherford phoned Snappy Freight (your client) to ask for a price for a freight delivery from New York
to San Francisco. Snappy gave Gavin a price of $510.
Delivery from New York to San Francisco
Administration Fee

$490 (tax inclusive)


$20 (tax inclusive)

Snappy also offered a 20% discount on the Administration Fee. With the discount included, the total tax
inclusive price is $506.
Snappy has now completed the job. Using todays date, create and approve the sales invoice.
1. Terms are seven days from job completion. The Due Date field automatically shows the default payment
terms (30 days). You can override the default when necessary.
2. Use the Freight inventory item. The North Region made the delivery using the SNAPPY1 truck.
3. It is not necessary to create an inventory item for the Administration Fee; rather, enter a description line
and then create a new Administration Fees (210) revenue account directly from the sales invoice screen.
4. Attach the thankyou.jpg file to the invoice and then click Approve.

CASE STUDY 12: CREATING AND ALLOCATING A CREDIT NOTE S


Gavin Rutherford received the $506 sales invoice sent for the freight delivery. However, Gavin expected the
delivery charge to be $430, not $490. Snappy have asked you to credit the difference.
1. If the $506 sales invoice is not already open, open it now.
2. Click Invoice Options and then select Add Credit Note.
3. Click into the Date field and then press the Tab key. This action enters todays date.
4. Delete the Administration Fee line.
5. Enter $60 the Unit Price field (in the Freight line item).
6. Enter a description only line: To reduce our invoice to the quoted amount.
7. Click Approve. Xero will now automatically apply the Credit Note to the sales invoice.
8. In the History & Notes section, add a note explaining why the Credit Note was created.
9. View the History & Notes section. Which line is the Credit Note entry?
Extra for Experts
You can also create credit notes from this path: Accounts > Sales > New (button) > Credit Note
If you create credit notes this way, you will need to manually allocate them. However, if you create credit notes
directly from the sales invoice screen, Xero will automatically allocate the credit note to the selected sales
invoice. This latter method also significantly speeds up data entry work. This is because Xero copies the sales
invoice information through to the credit note.

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Online Invoices
When using Xero you can send a real-time online sales invoice, credit note or prepayment to your customer.
Xero sends the customer a link. Customers use the link to view the electronic document in their web browser.
The electronic document also gives customers up-to-date information, including their payment status, their
payment history and their outstanding bills (if youve allowed this in your invoice settings). If youve set up a
payment service, customers will also have the ability to pay their sales invoice directly from the electronic
document.
You can also attach files to online invoices. When emailing the sales invoice, optionally flag which files to attach
when viewing the invoice online.
Marking the sales invoice, credit note or prepayment as sent (when emailing it), triggers Xero to put a faded
green tick in Sent column on the Awaiting Payment screen. When the customer views the electronic document,
Xero will update the Sent column on the Awaiting Payment screen by replacing the faded green tick with a
vibrant green tick. Because Xero is online 24/7, it knows when someone views the electronic document. Xero
leaves a comment in the History & Notes section each time the customer views the electronic document.
Customers can also choose to send a question or comment directly from the sales invoice, credit note or
prepayment. Xero adds these to the History & Notes section.
Refer to the Help Center for more about viewing information that displays on an online invoice,
an online credit note or an online prepayment.

CASE STUDY 13: CREATING AND VIEWING AN ONLINE INVOICE D


There is some preparatory work to do before beginning this case study.
As it is likely Gavin Rutherfords sales invoice is still open on your screen, click on the contact name link to open
his contact record directly from the sales invoice screen. Now click on
and then complete the Primary
Person section (shown below). Save the changes made to the contact record.

NOTE: If you closed Gavin Rutherfords sale invoice, you will still need to enter the Primary Person details.
Go to Contacts > Customers and then search for Gavin Rutherfords contact record. When found, open the
contact record and then click on
. Enter and save the Primary Person details.
You are now ready to begin the case study.
1. Go to Accounts > Sales > Awaiting Payment (tab)
2. Search for Gavin Rutherfords sales invoice and then view the Sent column.

Nothing shows in the Sent column. This means Xero has not yet emailed (sent) the invoice.

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3. Open Gavin Rutherfords sales invoice and then click on the


file icon. You want to email the previously
uploaded JPG file with the online invoice, so click on the down arrow (shown below) and then select
Include with invoice.

4. Click Email to begin the process of emailing the online invoice.


5. Use your personal email address to send this online invoice to.
6. View the Email template field; it should show the Basic email template. If you have more email templates
set up, you can select another one from the drop-down.
7. Check the message:
Is the greeting Hi Gavin? If not, check the email template shows the correct placeholder.
Is Have a Snappy day! displayed at the end of the message? If not, edit the email template.
8. Check the other options available:
Is the thankyou.jpg file attached to the email?
Choose whether to attach a PDF copy of the online invoice or not (tick the check box).
Make sure you have selected Mark as sent (tick the check box).
Choose whether to send a copy of the online invoice to yourself (tick the check box).
9. Click Send.
10. Go back to the sales Awaiting Payment screen. Search for Gavin Rutherfords invoice and then view the
Sent column; it should show a faded green tick as shown below.

A faded green tick means Xero has emailed (sent) the sales invoice but the recipient has not yet opened it.
Open the sales invoice to view the status change in the History & Notes section.
11. Go to your email client and check your inbox. Find and open the email from the Demo Company. Click on
the link in the email message and then view the online invoice.
continued over

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12. To explain the buttons and links showing on the online invoice:
Customers can use this link to view any unpaid bills. Before Xero can display
this link, you will need to go to Settings > General Settings > Invoice Settings
> Default Settings (button) and then tick the check box in the Show
Outstanding Bills section. For more about viewing outstanding bills online,
refer to the Help Center. This page discusses outstanding bills from a sender
and recipient view.
Customers can use this button to pay the sales invoice. You will need to link
a payment service to your invoice branding theme before the Pay now
button will appear on an online invoice. To do this, go to Settings > General
Settings> Invoice Settings. For the invoice branding theme you want to set
up a payment service for, click Options and then select Edit. In the Payment
Services field, select the payment service from the drop-down. Click Save.
Customers can click on this icon to view the attached file. Click on the
attached file to open it.
Customers can download the invoice as a PDF or CSV file. Click on the
selected format to open or save the file.
Customers can save the invoice into their Xero own organization as a draft
bill. If they dont use Xero, they can create a free login and save their online
invoices in one place.
Customers can use this link to send messages. Xero emails
any messages to the organization. Xero will also put any
messages in the History & Notes section of the invoice
and contact.
NOTE: Customers can also view online invoices on their smartphone.
13. Close the online sales invoice and then go back to the sales Awaiting Payment screen. Search for Gavin
Rutherfords invoice and then view the Sent column; it should show a vibrant green tick as shown below.
(You may need to refresh your screen before the change takes effect.)

A vibrant green tick means Xero has emailed (sent) the sales invoice and the recipient has opened it. Open
the sales invoice to view the status change in the History & Notes section.

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Review: Sales and Invoices


When would a sales invoice be transferred from the Draft tab to the Awaiting Payment tab?
Explain how you would create a new sales invoice.
Suggest a reason why you would include a description only line in a sales invoice. How would you enter it?
Describe two ways of entering a Credit Note into Xero?
When creating a new invoice, when would you use the Save button? The Approve button?
Using the Awaiting Payment tab, explain how you would alphabetically sort by contact name.
Explain how you would email several sales invoices at the same time.
A customer has informed you that they will be paying their account next Friday. How would you enter the
expected date of payment in Xero?
Demonstrate how you would copy, void or edit an existing sales invoice.
True or false? You will need to email your customer a link if you want them to view their credit note in their
web browser.
True or false? If you have set up a payment service, your customer can pay you directly from their online
invoice.
How can you tell if a customer has viewed their online invoice?
What needs to be linked to your invoice branding theme before the Pay Now button is displayed on an online
sales invoice?
Where would you find a record of all system actions against a sales invoice?
True or false? If a sales invoice is approved, Xero will not record who approved it.

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Purchases and Bills


Accounts > Purchases > New (button)
Used to enter a new standard bill.
Used to create a new repeating bill. You will need to define the repeating criteria.
After defining these, you can choose to save the repeating bill as Draft or Approved.
This means that on the appointed date, Xero creates and puts the bill either on the
Draft tab or the Awaiting Payment tab.
Used to create a new standard credit note.
Used to create a new purchase order.
When creating or editing bills or credit notes, you can click on the
icon to attach single or multiple files.
This is useful if you need to refer to the supporting documentation later.
The Invoice Only user role is suitable for someone who needs to enter customer and supplier invoices and
credit notes; that is, they dont need access to bank accounts or reports. If necessary, you can limit someone
with Invoice Only access even further by giving them Purchases Only access. An Invoice Only user with
Purchases Only access can only create and approve bills and supplier credit notes. They wont be able to create
or view sales invoices or customer credit notes.
When entering bills and supplier credit notes, you can use Xeros inbuilt calculator by entering formulas directly
into the Qty or Unit Price columns. For example, 123*1.5 and (100 + 26)*2. Press the Tab key to view the answer.

CASE STUDY 14: CREATING A REPEATING BILL S


Snappy Freight leased a new photocopier from Tannon Photocopiers. They signed the Operating Lease when
the photocopier was delivered, the 1st day of last month. The lease terms state that Tannon Photocopiers will
send bills of $60 to Snappy Freight every two weeks, from the date of delivery. Because of the regular
frequency of these bills, you decide to create a repeating bill.
1. Create the repeating bill. End date will be December 31, 2015. This means Xero will continue to
automatically create bills until the end date occurs.
2. The due date will be the same as the bill date.
3. Code to Printing & Stationery.
4. Check the dates and amounts. If correct, select the
What is the difference between
and

option and then save.


?

5. If you entered the dates correctly, Xero will have created some bills using the repeating bill template
details. Go to the Awaiting Payment tab to find them. To find these bills quickly, click on the From heading
to alphabetically sort supplier names.
When creating or adjusting a Repeating Bill (or a Repeating Sales Invoice), the screen will always show a pink
box at the top. The Repeating Bill and Repeating Sales Invoice screens both have the
and
options. You will find an additional option, the
option, in the Repeating Sales
Invoice screen. Use this option when you want to email an online invoice to a customer on the appointed date.

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CASE STUDY 15: ENTERING A FOREIGN CURRENCY BILL O


Your client, Snappy Freight, ordered some new designer office furniture from Canadian Fine Furniture.
The bill (dated on the last day of last month) has just arrived; the total comes to $5,117CAD (no tax).
Canadian Fine Furniture expects payment by the 28th of this month.
Enter the bill received from Canadian Fine Furniture:
1. Complete the From, Date, Due Date and Reference fields.
2. Xero will display the bill in Canadian dollars if the Currency field displays Canadian dollars. Click on the
arrow to the right of the Currency field and then select Add Currency. In the window that opens, select
CAD Canadian Dollar and then note the exchange rate. Click Add Currency.
3. Note the exchange rate displayed in the New Bill screen. Why is the exchange rate different?
4. Enter the tax rate. Amounts are No Tax.
5. Enter the purchased items: 10 Office Desks at $511.70CAD each. Code to Office Equipment (150).
6. Check dates, currency and amounts are correct. If so, click Approve.
Extra for Experts
Once approved, view the bill details. Find the unrealized gain or loss amount. When you view a bill
in another currency, Xero will always calculate the unrealized foreign exchange gain or loss. For our example,
what is the unrealized gain or loss? What rates did Xero use when calculating it?
Xero updates the unrealized gains or losses regularly. Each hour on the hour, Xero looks to XE.com for the
latest foreign exchange rate. Xero then recalculates the gain or loss. This means that when you view a foreign
currency bill, Xero will always display a fairly accurate gain or loss. You can use this information when making
decisions about bill payments.
Run the Aged Payables report. Which currency does Xero use to display the amount owing?

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Purchase Orders
Let your suppliers know what you want to buy from them by sending a purchase order. You can also record the
delivery date, price, arrival date and any delivery instructions.
In Xero, you can process purchase orders in bulk; that is, you can approve, copy, send or print multiple
purchase orders at the same time. You can also convert a purchase order into a bill, or copy the details in an
existing purchase order to create another purchase order. Further, if you want to charge out items listed in a
purchase order, you can create a sales invoice directly from the purchase order. The ability to save data entry
time by copying purchase order details is a good reason to create and use purchase orders.
NOTE: Xero does not include purchase order information in the general ledger, Sales Tax report or tracking
summary reports. Because purchase orders do not post any journals, adding an account code when creating
them is not necessary.
Xero lists any saved purchase orders on the Draft tab.
Used to bulk-approve purchase orders. Select all purchase orders for
approval and then click Submit for approval.
Xero lists unapproved purchase orders on the Awaiting Approval tab.
Used to approve purchase orders. Select all purchase orders for approval
and then click Approve.
Used to delete purchase orders. Select the purchase orders to remove
and then click Delete.
Once approved, Xero lists the purchase order on the Approved tab.
Used to mark a purchase order as billed. If you have already entered the bill in Xero, click
Billed to mark the purchase order as billed.
Used to print purchase orders. Select all purchase orders for printing
and then click Print.
Used to email purchase orders. Select all purchase orders for emailing and then
click Send after entering the email address and confirming the email text.
Used to convert, or copy, purchase orders.
You can print or email purchase orders.
Before you begin sending purchase orders, customize them by:
Changing the automatic numbering sequence of your purchase orders.
Creating a branding theme to change the way your purchase orders appear.
Setting up an email template specifically for your purchase orders.
To limit what users can and cannot do with purchase orders, edit their user role. For instance, stop a user from
approving a purchase order by giving them the Invoice Only (Draft) user role. If you want a user to be able to
approve a purchase order, give them the Invoice Only (Approve and Pay) user role. (Note the Income Only
user role also affects access to bills and sales invoices.)

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You can add an expected arrival date to an approved purchase order. Open
the approved purchase order and then click Add expected arrival.
You can also add an expected arrival date directly from the Approved tab.
Find the purchase order to add the arrival date to and then click on
Add date & notes, located in the Expected arrival column.

Copying Existing Purchase Orders


Use an existing purchase order to create a new bill, a new purchase order, or a sales invoice.
To use purchase order details to create a bill, select the approved purchase order and then open it.
Click Options and then select Copy to. In the dialog box that opens, select the Bill option.

Select Mark this purchase order as fully billed (tick the check box) if youve received all ordered goods and
then click Create draft.
NOTE: Xero will only display the Mark this purchase order as fully billed check box if the purchase order
has the Approved status.
After completing the bill details, approve the bill. Xero moves a billed purchase order to the Billed tab.
To create a new purchase order by copying the contents of an existing one, select the purchase order to copy
and then open it. Click Options and then select Copy to. In the dialog box that opens, select the Purchase Order
option (shown below) and then click Create draft.

Once copied, complete the purchase order details and then click Save or Approve.
You can also copy the contents of an existing purchase order to create a draft sales invoice. Find the purchase
order and then select it. Click Options and then select Copy to. In the dialog box that opens, select the Invoice
option (shown below) and then click Create draft.

If the purchase order uses an inventory item, Xero uses the items sales unit price in the sales invoice.
Complete the sales invoice details and then click Approve.
Refer to the Help Center for more about:
Using multiple purchase orders to create one or more bills
Creating a new purchase order by copying the contents of multiple existing purchase orders
Copying the contents from multiple purchase order to create a draft sales invoice

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Mark a purchase order as billed


If youve received your ordered goods and a bill from your supplier, you can:
Mark the purchase order as billed (if you have already entered the bill into Xero); or
Use the purchase order details to create the bill, marking the purchase order as billed at the same
time. Only do this if you have not yet entered the bill into Xero.
To mark a purchase order as billed in either situation:
1. Go to Accounts > Purchases and then scroll down to the Purchase Orders section.
2. Click on the Approved tab and then search for the purchase order to be marked as billed.
3. Open the purchase order and then click Mark as Billed. The dialog box shown below opens.

4. If you have already entered the bill this purchase order corresponds to, click OK. This action marks the
purchase order as billed without converting the purchase order details into a bill. View the billed purchase
order from the Billed tab.
5. If you have not yet entered the bill this purchase order corresponds to, select Copy purchase order to a
draft bill (tick the check box) and then click OK.
In the New Bill screen, enter the date and due date.
To convert the purchase order details into an approved bill, click Approve.
NOTE: Before Xero can create the bill, you will need to make sure you have completed the Account
and Tax Rate details.
View the billed purchase order from the Billed tab or the purchases Awaiting Payment tab.
NOTE: Xero links the bill to your purchase in the History & Notes section.

Unmark a purchase order as billed


If you need to, you can also unmark a purchase order as billed. In doing so, Xero will change
your purchase orders status from Billed to Approved. To unmark a purchase order as billed,
go to the Billed tab, search for the billed purchase order and then open it. Click Options and
then select Unmark as billed. Xero will then move the purchase order from the Billed tab to
the Approved tab.

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How to deal with Unsupplied Goods in your Purchase Order


There may be times when your supplier doesn't supply all the goods in your purchase order.
If you receive only some of your ordered goods, follow the steps below.
1. Copy the purchase order to a bill.
2. Edit or delete some of the lines in the bill; that is, edit the bill's details to match your supplier's bill and the
goods they've supplied.
3. When you receive your remaining goods, copy your purchase order to a bill again.

CASE STUDY 16: CREATING A DRAFT PURCHASE ORDER S


Snappy Freight needs to order stationery supplies from Office Supplies Company.
Description
Spiral Notebooks
Red Ballpoint Pens (box)

Quantity
10
2

Price per unit


(tax inclusive)
$4.30
$5.20

Create a purchase order to Office Supplies Company:


1. Complete the header fields. Use todays date. The delivery date is three days from today.
2. Code each line to Office Expenses (652). Purchase order total will be $53.40
NOTE: You can attach any supporting documentation by clicking on the

icon.

3. Add a delivery instruction: Please deliver to the back door


NOTE: Click on the Delivery Address link to select or add a delivery address.
You can also search for a delivery address by Contact from here.
4. Click Save. Xero transfers saved Purchase Orders to the Draft tab.

CASE STUDY 17: APPROVING AND BILLING A PURCHASE ORDER S


Snappy Freights stationery supplies, ordered from Office Supplies Company, arrived three days later with the
suppliers invoice. Approve the draft purchase order and then use the approved purchase order to create a bill.
1. Using the Draft tab, select the purchase order to Office Supplies Company and then approve it.
2. Using the Approved tab, find the approved purchase order and then open it.
Use the purchase order details to create a draft bill. Mark the purchase order as fully billed.
3. Edit and approve the new bill using todays date + three days. Due date is seven days from today. You can
leave the line items as they are. Snappy Freight received the ordered items.
4. View the approved bill. You can also view this bill using the paths shown below:
Accounts > Purchases > Awaiting Payment (tab)
Accounts > Purchases > Purchase orders (section heading) > Billed (link)

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Bill Payments
From the Awaiting Payments screen you can schedule payments and create batch payments from the list of bills.
If you open a bill, you can enter payment details directly into this screen. From here, you can also edit bill details
or use them to create a Repeating Bill or a Credit Note.
Check printing is available for various unreconciled payable transactions using a bank account. You can manage
all your supplier checks directly in Xero. You can style and print checks onto your voucher paper, manage check
stock for each of your bank accounts, control numbering, void and delete checks, and view a full audit history
of any changes. Your user role determines if you can access checks or not.

CASE STUDY 18: PRINTING CHECKS D


Your client, Snappy Freight, wants to pay their bills by check. Youve chosen to pay them from the
Checking Account on the 28th of the current month.
Print checks as follows:
1. Open the Awaiting Payment screen: Accounts > Purchases > Awaiting Payment (tab)
2. Sort the Suppliers in alphabetical order by clicking on the From heading.
3. Select the bills for payment, as below.
Capital Cab Co
Net Connect
PowerDirect

$242.00
$54.13
$108.60

4. Click Schedule Payments and then select the 28th of this month.
5. In the Schedule of Planned Payments located above the grid, click on the $404.73 payment schedule.
6. Select all bills and then click on Make Payment. In the dialog box that opens, click Pay by Check.
In the Pay by Check screen:
1. Edit the bank account (Checking Account) and payment date fields (28th of this month).
2. View the check numbers for each Payee. If they are not correct, you can click Check Numbering to edit.
3. If applicable, enter any memos and then choose your next action, as below.
Click Export Check CSV if you want to export the information in the checks
to a CSV file that you can import into VersaCheck for printing.
Make sure you use the same check numbers in VersaCheck.
Click Save & Print PDF if you want to print the check right now.
Make sure you load your compatible check stock into the printer first.
Click Save if you want to print the check later, or if you plan on using your own check book or other
check printing software. Clicking Save moves the checks to the Paid tab, and creates payments in the
bank account and a check in the check register for each payee.

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Review: Purchases and Bills


Explain how to enter a new bill.
When entering a foreign currency bill, what additional step needs to happen?
True or false? Xero allows you to attach files to bills for quick preview and download so that information
is at your fingertips.
Explain how you would create a new repeating bill from the Purchases Dashboard.
Once created, how does a repeating bill work?
When creating a new repeating bill, when would the Save as Draft or Approve option be selected?
The sales repeating invoice screen has an additional option, the Approve & Send option.
How is this different from the other two options?
True or false? In Xero, you can process purchase orders in bulk; that is, you can approve, copy, send or print
multiple purchase orders at the same time.
Explain how you would convert a purchase order into a bill.
Explain how you would create a sales invoice using the details in an existing purchase order.
True or false? When creating a purchase order, you can enter a delivery date and an expected arrival date.
From the Awaiting Payments tab, what would be the best way to schedule a payment for one bill only? Is
this the best way to schedule a payment for several bills? If not, what would be the best way to schedule
those?
Using the Awaiting Payment tab, explain how you would quickly schedule a payment date for all outstanding
bills.
Whats the best way of recording the payment of one bill?
Explain how you would print checks when paying more than one bill.

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Contacts
The Contacts screen lists all Customers, Suppliers, Employees and Archived contacts. It also records the
outstanding amounts due for each contact; therefore, it is a useful tool for obtaining quick Accounts Receivable
and Accounts Payable reports. Note that a contact in Xero can be both a Customer and a Supplier. In other
words, a separate record does not need to be set up. One contact record holds both types of transactions.
NOTE: Employees are created and updated from within Payroll.
Do not set employees up as a Contact; add them through the Payroll module.
Data entry fields to complete

Contacts > All Contacts > Add Contact or Add Employee (button)

Contact Groups

Contacts > All Contacts > New Group (button)


Set up a group for batch invoicing; for example, subscriptions.
Create only one sales invoice but send it to many people!

Importing or Exporting
Contacts and Contact Groups

Contacts > All Contacts > Import or Export (button)


Xero will only export the contacts on the selected tab.

Search Facilities

Click Search to quickly find a contact.

Archiving Contacts

Select the contact (tick check box) and then click Archive.
Note that contacts are not deleted in Xero, theyre archived.

Use the links below for more detailed information on this topic:
Contacts (Customers, Suppliers and Employees)
View Customer or Supplier Contact Details
Add or Edit Customer or Supplier Contacts
Managing your Customer and Supplier Contacts

CASE STUDY 19: MERGING CONTACTS S


When creating a sales invoice for your client Snappy Freight, you notice there are two contact records for the
same contact, Bayside Club and Bayside Wholesale. Merge these records.
Open the Contacts screen and then click on the Customers tab and the Suppliers tab.
Which organization (Bayside Club or Bayside Wholesale) is set up as:
1. A customer?
2. A supplier?
Now click on the All tab. This tab displays both Bayside Club and Bayside Wholesale.
1. Select Bayside Wholesale (tick check box) and then click Merge.
2. Find Bayside Club and select. Click Yes to merge the two organizations.
View the contact list on the All tab. Which contact did Xero keep? When merging, Xero will always archive the
contact selected first and then keep the contact selected second.
NOTE: Merging contacts is only possible because separate contact
records for customers and suppliers are not required in Xero.

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CASE STUDY 20: USING THE ENABLE PAYMENTS FUNCTION S


When viewing the contacts page for your client, you note there is an amount owing and an amount owed for
Bayside Club, as follows:

Your client suggested the $234 amount owing be offset against the $970 amount payable. After Bayside Club
agreed to this suggestion, your client asked you to enter the offset in Xero.
1. To offset amounts against each other youll need to use the Clearing Account (a Current Liability account).
View the settings for this account: Settings > Chart of Accounts
Make sure Enable Payments to this account has been selected.
Select the Show on Dashboard Watchlist option (tick the check box) and then save changes.
2. Go to the Dashboard. View the Clearing Account in the Account Watchlist.
It should show a nil YTD balance.
3. Find the Bayside Club sales invoice and then drill into it: Accounts > Sales > Awaiting Payment
4. Scroll down and then enter the payment details as follows:

Accept the $234 in the Amount Paid field.


Enter todays date in the Date Paid field.
Enter the Clearing Account in the Paid To field.
Enter offset against bill as a reference.
Click Add Payment.

5. Go to the Dashboard. View the Clearing Account in the Account Watchlist.


It should show a (234.00) YTD balance.
6. Find the Bayside Club bill for $840 and then drill into it: Accounts > Purchases > Awaiting Payment
7. Scroll down and then enter $234 in the Amount Paid field. Use todays date and then enter the
Clearing Account in the Paid From field. Enter offset against sales invoice as a reference and then
click Add Payment.
8. Go to the Dashboard to view the Clearing Account in the Account Watchlist.
It should show a nil YTD balance again.
9. Go back to the Contacts page. View the changes to the Bayside Club amounts.
10. Go to Reports > All Reports > Detail Reports (heading) > Account Transactions
Use this report to check the movement in the Clearing Account.
11. Think about these questions:
Did you remember to pay both the sales invoice and bill using the Clearing Account?
Or do you use a bank account? Why would using a bank account be wrong in this case?
Why is the Clearing Account listed in the Paid To/From drop-downs? What allowed this to happen?

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Extra for Experts


You can also use Enable Payments to the Account when the owners of the business do not expect a cash
reimbursement for items they bought for the business. In those cases, payments can be paid to and from
the Owners Contribution or Owners Draw account, respectively. If these accounts dont appear in the
Paid From drop-down list, select the Enable Payments to this Account check box.
You can also use the Reconcile screen for offsets but only when there is a receipt or payment that
is being matched at the same time. Click on Find & Match, enter the company name in the Search field and
then select Show Received Items or Show Spent Items (tick the check box). When Xero finds all items
matching the search criteria, select the lines for the net amount paid and then reconcile. This is a quicker way
of offsetting sales invoices or bills. However, remember the method wont work unless a receipt or a payment
bank statement line exists.

Email Addresses
You can add up to six email addresses against a contact; the primary persons email address and five additional
email addresses. If the primary person has an email address entered, Xero displays this email address when
emailing the contacts invoices, credit notes, statements, remittance advices and purchase orders. Deleting an
email address from the email template won't affect the contact.
NOTE: If the organization does not have a primary person, you can still send invoices or statements to an
individual by using the Attention field in the Contact Details section.
To add email addresses for a contact record, go to: Contacts > All Contacts > Add Contact (button)
In the Primary Person section (shown below), enter the primary persons name and email address.

To add additional email addresses, click on the Add another person link. Enter name and email address. You
will need to enter a primary persons email address before entering additional email addresses.
You can also specify the email addresses you want to use when emailing documents from Xero. Select the
Include in emails check box each time you want an additional person to receive emails when sending this
contacts invoices, credit notes, statements, remittance advices and purchase orders.

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Review: Contacts
True or false? There is one contact list in Xero. Whether a contact record is categorised as a Customer or as
a Supplier is determined when a transaction is made against the contact.
There are two ways of creating a new contact in Xero. Explain both methods.
If another contact record is created for the same contact, explain how you would merge these?
True or false? When merging, Xero archives the contact selected last.
What are the advantages of creating a Contact Group?
Explain how a contact can be added to an existing Contact Group.
True or false? When a sales invoice is created for a Contact Group, Xero displays the resulting sales invoices
on the Drafts tab. From here they will need to be approved.
What must you do before you can offset a bill against a sales invoice (or vice versa)?
How does this function work in Xero?
Explain how you would offset a bill against a sales invoice amount owing.
True or false? Xero can hold up to five email addresses against a single contact record.

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Bank Reconciliations (Part 2)


Reconciliation Issues
If Xero cannot make a match based on amount, bank statement lines can still be reconciled but
the method used will depend on the scenario taking place. Amounts received that are less than
the invoice amount can be dealt with as an adjustment or part payment.

CASE STUDY 21: DEALING WITH A MINOR UNDERPAYMENT D


Marine Systems owes Snappy Freight $396; however, due to a clerical error, they only paid $395. Snappy will
not be asking for the $1 difference, so you need to write it off.
1. In the Savings Account, find the $395 amount received from Marine Systems.
2. As Xero has not automatically matched the amount received, click on Find & Match.
3. Enter marine in the Search field and then click Go.
Note that you can search by name, ref/num or amount.
4. Match the $395 receipt to the $396 sales invoice. Note the total is out by a $1 underpayment.
5. Write the $1 underpayment off: Adjustments (button) > Minor Adjustment.
Enter -1 in the adjustment field. What does this do?
6. Click Reconcile. Xero codes the $1 underpayment to a Current Liability account called Rounding.

CASE STUDY 22: DEALING WITH A PART PAYMENT D


Gavin Rutherford (Snappy Freights customer) has made a $60 part payment. Match the payment against the
sales invoice.
1. In the Savings Account, find the $60 amount received from Gavin Rutherford.
2. As Xero has not automatically matched the amount received, click on Find & Match.
3. Enter gav in the Search field and then click Go.
4. Match the $60 receipt to the sales invoice. Note the total is out by a $386 underpayment.
5. As the receipt is a part payment, click Split (shown right).

6. Check Xero has correctly entered the part payment amount then click Split. What does this do?
7. Click Reconcile. Xero will now allocate the part payment against the sales invoice.

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Reconciling Prepayments and Overpayments


Occasionally a customer might overpay an amount owing, or you might overpay a supplier. Customers might
also prepay an amount, or you might prepay a supplier. Examples include paying annual subscriptions in
advance, paying a deposit, or receiving payment before raising the invoice.
Deal with overpayments and prepayments directly from the Reconcile screen. Xero treats these as a Spend
Money or Receive Money transaction. Xero will park the transaction until someone decides what to do with it.
The system also allows you to apply part of the payment.
Use the links below for more about this topic:
Editing Prepayments
Deleting or Voiding Prepayments
Editing Overpayments
Deleting or Voiding Overpayments

CASE STUDY 23: DEALING WITH A PREPAYMENT S


Another one of Snappy Freights customers, Jakaranda Maple Systems, has signed a contract for a $5,000
freight job. Snappys contract terms require a 50% deposit before undertaking any large freight jobs; so, to
confirm the job, Jakaranda recently paid $2,500 into the Savings Account. Snappy Freight has asked you to deal
with this amount as a prepayment.
1. In the Savings Account, find the amount received from Jakaranda Maple Systems.
2. Click on the Add Details link to process the amount as a prepayment.
3. Click Direct Payment and then select Prepayment.

4. Enter a description and then code the prepayment to the Revenue Received in Advance (835) account.
5. For this example, we will choose the Tax Exempt tax rate as we do not want to report the sales tax until the
prepayment is applied to a future invoice.
6. Save the transaction and then reconcile. View the prepayment in the Awaiting Payment screen.
Extra for Experts
Using todays date, create a sales invoice for the $5,000 freight charge. When approving the sales invoice, Xero
will automatically find the prepayment. Once found, Xero asks if you want to allocate the outstanding credit of
$2,500 against the invoice. Click Allocate and then enter the prepayment amount in the Amount to Credit
field. Click Allocate Credit. View the invoice to see how Xero applies a prepayment. You could also view the
Statement to see how Xero displays a prepayment.

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CASE STUDY 24: RECONCILING AN OVERPAYMENT AND PROCESSING A REFUND S


When reconciling the Savings Account, you note Xero has not automatically matched the $941.55 amount
received from Basket Case. You decide to find out why.
1. Find the Basket Case receipt and then click on Find & Match. Search for and select the sales invoice
(tick the check box). Why did Xero not match the invoice to the receipt?
2. Deal with the overpayment:
Click New and then select Receive Money.
Click Direct Payment and then select Overpayment.

Which account will Xero post the overpayment to?


3. Enter a suitable description and then click Save Transaction.
4. View the two transactions for the one payment and then reconcile.

NOTE: When reconciling an amount received (or paid) to a sales invoice (or bill), Xero will automatically
calculate any difference between the amount youre reconciling and the amount held in Xero. This helps
with recording split payments during the bank reconciliation process.
5. Click on the Accounts Transactions tab. Click Search to find the multiple item payment and then drill into
the payment transaction to view it. Who is the overpayment linked to?
Snappy Freight has asked you to refund the overpayment using the Business Savings Account:
1. Go to Accounts > Sales > Awaiting Payment and then drill into the overpayment line item.
2. Complete the cash refund fields found at the bottom of the screen. Date = the 28th of this month.
3. Click Add Refund. The status of the overpayment will now change to Paid. View it from the Paid tab.
4. Go back to the Reconcile screen of the Business Savings Account. Scroll down and then use the jump to
field to jump to the last page. Reconcile the $27 refund payment.
5. View the overpayment and cash refund in Basket Cases statement. Go to Contacts > Customers, click on
Basket Case and then click Send Statement.
NOTE: You can also deal with overpayments by allocating them against a future sales invoice. To allocate, drill
into the overpayment, click Overpayment Options and then select Allocate Credit.

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Creating Bank Rules


Accounts > Bank Accounts > Bank Rules (button)
Bank Rules speed up the bank reconciliation process.
There are two types of Bank Rules Spend Money Rule and Receive Money Rule.
Spend Money Rule applies only to debit transactions
Receive Money Rule applies only to credit transactions
The order in which the rules sit (in the list of Bank Rules) is the order in which Xero applies them.
Move an existing Bank Rule (drag and drop) to another location in the list to change the order.

CASE STUDY 25: CREATING BANK RULES D


Create a Bank Rule for Dick Smith Electronics for all Computer Equipment purchased over $575.
1. Open the Bank Rules screen and then create a Spend Money Rule.
2. Add the conditions, as shown below.

Why did we use contains instead of equals?


Which transactions will Xero apply this bank rule to?
3. Set the contact, as shown below.

This will be the name that Xero will use when creating the Contact. (The instruction stops the system from
creating more than one Contact should the name come through differently later.)
4. Allocate all purchases to the Computer Equipment (160) account. Leave the Description field blank. Why?
5. Give the rule a title and then save the rule.
6. Go to the Cash Coding tab (Savings Account). Click on the Payee column heading; Xero will sort the items
alphabetically. Find the Dick Smith lines.
Why was the rule applied to only one of the two transactions?
NOTE: If Xero did not apply the bank rule to the Dick Smith transactions, return to the bank rule and
identify why. Check you have contains and not equals for the Payee criteria. Why would equals not
work in this instance?

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Extra for Experts


Bank rules can also divide amounts between two or more account codes. For example, the screenshot below
shows a scenario where entertainment expenses are split equally. That is, 50% of the total cost is a business
expense, 50% is personal.

Click Add a new line to add more lines to the grid.

CASE STUDY 26: CREATING BANK RULES S


Charlie Browning, the owner of Snappy Freight, has a privately-owned car that he uses for business and
personal use. His log book supports his claim that 50% of the mileage is business related. Because he lives close
to Corner Station Fuels, he purchases fuel there.
1. Create a bank rule to automatically split and code payments made to Corner Station Fuels. Remember to
allocate items in the ratio of 50% business (code to Automobile Expenses) and 50% personal (code to
Owners Draw).
2. Go to the Cash Coding tab (for the Savings Account), sort the Payee column alphabetically and then check
the Corner Station Fuels lines. Xero has applied the bank rule to these items. How can you tell? Click on a
Multiple line items link to view the 50/50 split. (If Xero did not apply the 50/50 split; that is, did not apply
the bank rule, review the bank rule to identify why. Check you have contains and not equals for the
Payee criteria.)
3. From the Cash Coding tab (for the Savings Account), reconcile the Corner Station Fuels transactions by
clicking Save & Reconcile All. (There is no need to select the Corner Station Fuels transactions first.)
Extra for Experts
When you reconciled the Corner Station Fuels transactions, did you notice the Dick Smith transaction did not
reconcile? When coding fixed assets, you must enter a description before Xero can reconcile the amount.
When creating the bank rule, you left the description field blank. This means you will need to manually enter
the description when reconciling the transaction.
TASK: Enter Apple iPad in the Description field for the $896.99 Dick Smith purchase and then click
Save & Reconcile All. Did the transaction reconcile this time?

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Cash Coding
All users with the Advisor role have access to the Cash Coding screen. You can also give access to users with
the Standard role, if they need it.
Use the Cash Coding screen to bulk-code cash transactions. Sort the bank statement lines first then bulk-code
by Payee. Xero automatically creates Spend Money or Receive Money transactions for each bank statement
line and it does it all within a matter of seconds. When cash transaction need coding, using the Cash Coding
screen makes for efficient use of your time.
Find the Cash Coding screen: Accounts > Bank Accounts > Reconcile Items (button) > Cash Coding (tab)

You can only use the Cash Coding screen for cash transactions. If Xero holds a sales invoice or a bill for the
payment or receipt, you will need to match and reconcile the transaction from the Reconcile screen. If you use
the Cash Coding screen instead, the sales invoice or bill remains unpaid.
When cash coding, you can use shortcut keys to quickly move around or select and action multiple items. Click
on the Shortcut Keys link shown below for a list of shortcut keys and how to use them.

Increase or decrease the number of transactions in the grid by placing your cursor on the pull down bar,
located at the bottom of the grid. When your cursor is on the pull down bar, it changes to a
icon. When
this icon appears, click on the pull down bar and then drag it downwards. The number of transactions in the
grid increases. Click and drag the pull down bar upwards to decrease the number of transactions. Note that
some browsers cannot display the
icon.

CASE STUDY 27: USING CASH CODING S


Snappy Freight has many cash transactions in the Savings Account. To reconcile them you decide to use the
Cash Coding screen. Open the Cash Coding screen; sort by Payee and then code the transactions below, bulkcoding when possible. Reconcile after completing each coding job.
Contact

Amount

Code

Bank

$105.00

Code to Legal Expenses (640).

Central Copiers

$81.78

Code to Office Expenses (652).

City Stationery

$230.08

Split 50% Office Expenses (652) and 50% Owners Draw (310).
Use the / key for quick access to the Spend Money screen.

Dick Smith Electronics

$104.57

This was for cables. Code to Repairs and Maintenance (664).

Express Services

multiple

Bulk code to Printing & Stationery (656).

Interest Earned

multiple

Bulk code to Interest Income (470).

Shell and Shell Botany

multiple

Bulk code to Automobile Expenses (648).

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Review: Reconciliation Issues


When reconciling, you notice a customer paid 50 cents less than they should have. The 50 cents is to be
written off. Explain how you would reconcile this transaction.
When reconciling, you notice a customer paid $50 less than the amount owing. Because you expect to
collect the $50 later, explain how you would reconcile this transaction.
To confirm a job, your customers are required to pay a 10% deposit. When reconciling, you notice a 10%
deposit has been made. Explain how you would reconcile the amount paid.
When reconciling, you notice a customer paid $138 instead of the $128 amount owing.
How would you reconcile the difference?
If the difference is to be refunded, how would you do this?

Review: Bank Rules


Why create Bank Rules?
What are the two different types of Bank Rules?
When creating a Payee condition, what is the difference between equals and contains?
When creating a bank rule, how would you stop Xero from creating more than one Contact should a
contact name come through differently later on?
How do you enter percentages and split amounts in a Bank Rule?
True or False? When applying a rule, Xero will review each Bank Rule before applying the most appropriate
rule from the list.

Review: Cash Coding


Explain the benefits of using the Cash Coding screen? Can anyone use it?
There are several shortcut keys that can be used when reconciling cash transactions. Find the list of
shortcut keys that are available to determine what the +, / and Shift+Down Arrow keys will do.
True or false? The annual subscription of your tennis club is $135. You recently sent the annual subscription
invoices to the members of the tennis club. When reconciling the bank, you notice that several members
have paid the $135 owing already. The Cash Coding screen can be used to quickly match these payments to
the subscription invoices.

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Fixing Coding and Reconciling Errors


Editing Transactions
For one or two transactions it is quicker to drill into the transaction and then edit it from there.
To edit a single transaction:
1. Open the Dashboard. Alternatively, go to: Accounts > Bank Accounts
2. For the bank account that holds the transaction to be edited, click Manage Account and then select
Account Transactions.
3. Click Search to find the transaction to be edited. Once found, drill into the transaction.
If the Spend Money or Receive Money screen opens, click Options and then select
Edit Transaction. Note that you could also edit the transaction by selecting Unreconcile
or Remove & Redo. These options are discussed later. After selecting the Edit Transaction option, you
will note that all fields can be edited, including tax. Remember, you are only editing the Xero
transaction, not the bank statement line.
Unreconcile unhooks the transaction from the Bank Statement line.
Edit Transaction allows you to edit any field on the transaction, with the
exception of the total. This applies to both reconciled and unreconciled
Spend Money or Receive Money transactions.
Remove & Redo unreconciles the transaction and then removes the
transaction from the Account Transactions screen.
If the transaction is marked as a Payment, the Options button will still be there but you wont be able
to edit the transaction. Transactions marked as a Payment are matches made against invoices; that is,
they are not Spend Money or Receive Money transactions. This means that only the Unreconcile and
Remove & Redo options can be selected from the Options drop-down.
4. Edit the transaction as required, and then click Update.
When editing several transactions, drilling into each transaction is not the best use of your time.
Its much quicker to bulk select the transactions and then edit the transactions after using the Remove & Redo
function, discussed further on.

Unreconciling
If you need to, you can unreconcile a reconciled Spend Money or Receive Money transaction. To do this, open
the transaction, click Options and then select Unreconcile.
Unreconciling a Spend Money or Receive Money transaction simply removes the link between the imported
bank statement line and the account transaction in Xero. The transaction, along with the sales tax allocation,
will remain, as will the bank statement line.
After unreconciling, the transaction will appear on the Reconcile screen. It will also appear on the Cash Coding
screen. Only reconcile from the Cash Coding screen if you mean to create another Spend Money or Receive
Money transaction. Reconcile from the Reconcile screen to match an amount to a sales invoice or bill.

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Remove and Redo


You can use Remove & Redo to fix transactions with coding errors. It allows you to
recode several cash transactions at the same time. It unreconciles and deletes the
selected transactions so you can recode them.
Unreconciling and deleting removes the association between the Xero transaction and the bank statement line.
Using Remove & Redo will not delete any bank statement lines. It just deletes the Xero Spend Money or
Receive Money transaction.
When using Remove & Redo, three actions will occur:
Xero removes the connection between the transaction in Xero and the bank statement line.
Xero removes the transaction from the Account Transactions tab.
The bank balance in Xero changes.
After using Remove & Redo, the bank statement lines will again be available in the Cash Coding or Reconcile
screen. From here you can bulk recode them.
If the transaction date is the same as the lock date (or earlier), you may not be able to use
Remove & Redo. Your user role, and whether it's a period or end of year lock, will decide this.
To edit transactions using Remove & Redo:
1. Open the Dashboard. Alternatively, go to: Accounts > Bank Accounts
2. Open the bank account that holds the wrongly coded transaction. Click Manage Account and then select
Account Transactions.
3. Select the transactions you want to remove and redo; that is, unreconcile and delete.

4. Click Remove & Redo and then on Yes to confirm.


5. View the bank statement lines using the Cash Coding screen. Recode, as needed.

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CASE STUDY 28: FIXING CODING ERRORS IN RECONCILED TRANSACTIONS D


When using the Cash Coding screen to code Snappys $105 payment to Bank, you initially coded it to the
Legal Expenses account. However, you now find the $105 payment should have been coded to the Bank Service
Charges account. Fix the coding error using the Edit Transaction method.
1. In the Account Transactions screen (Savings Account), search for the $105 payment.
2. Open the Spend Money transaction. Click Options and then select Edit Transaction.
3. Change the account details; that is, code to the Bank Service Charges account. Click Update.
When using the Cash Coding screen to code the Express Services payments for Snappy Freight, you initially
bulk-coded all bank statement lines to the Printing & Stationery account. However, you now find these
payments should have been coded to the Postage & Delivery account. Fix the coding errors in each Spend
Money transaction using the Remove & Redo method.
1. Open the Account Transactions screen (Savings Account). How many transactions still need reconciling?
The number on the Reconcile tab gives you the answer.
2. In the Account Transactions screen, click Search to find the Express Services transactions. When youre
found them, note the status icon to the left of each transaction. What does this mean? Hover over the
status icon to find out.
3. Select all Express Services transactions.
4. Click Remove & Redo. Xero will remove all Express Services transactions from the Account Transactions
tab. How many transactions need reconciling now? The number on the Reconcile tab gives you the answer.
5. Click on the Cash Coding tab. Find the Express Services payments and view the Account column.
Remove & Redo removes the previously entered account code, enabling you to redo the coding.
6. Bulk-select the Express Services payments and then bulk-code to the Postage & Delivery account.
7. Save and reconcile.
8. Click on the Account Transactions tab and then search for the Express Services transactions.
Xero has reconciled the Spend Money transactions, created when bulk-coding the bank statement lines.
The status icon verifies this. Drill into one Spend Money transaction to check the coding.

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CASE STUDY 29: FIXING CODING ERRORS IN RECONCILED TRANSACTIONS O


When using the Cash Coding screen to code the $81.78 Central Copiers payment, you initially coded the bank
statement line to the Office Expenses account. You now find the $81.78 payment was a part payment for a bill
that exists within Xero. So, currently, Xero has two transactions for the same purchase. One is a bill and the
other is a reconciled Spend Money transaction (created when cash coding). The reconciled Spend Money
transaction is in error. Use the Remove & Redo method to remove the Spend Money transaction and then
apply the $81.78 payment to the bill.
1. Open the Savings Account and then click on the Account Transactions tab.
2. Click Search to find the $81.78 payment. Once found, open the Spend Money transaction.
Which account was it coded to?
3. Click Options and then select Remove & Redo.
4. Click on the Reconcile tab, find the $81.78 payment and then click on Find & Match.
Why would it be wrong to use the Cash Coding tab?
5. Search for the Central Copiers bill and then select it (tick the check box). Click on the Split link
to allocate the part payment. Click Split and then reconcile.

CASE STUDY 30: USING UNRECONCILE TO FIX RECONCILED TRANSACTIONS O


There is some preparatory work to do before you can do this case study. Go to Accounts > Sales > Draft (tab)
and then select the draft sales invoices (tick the check box) for Rex Media Group and Hamilton Smith.
The amount due for both invoices is $550. Click Approve. Xero will transfer the draft sales invoices to the
Awaiting Payment screen. You are now ready to begin this case study.
The office manager at Snappy Freight received a check for $550 from Rex Media Group. They only bank their
checks once a week. Meanwhile, the invoice in Xero needs to be marked as paid.
1. From the Awaiting Payment screen, find the Rex Media Group invoice and then open it.
2. Scroll down to the payment section and then enter the payment details. Use todays date.
The check will be banked into the Savings Account. Click Add Payment.
3. After processing the payment, go to the Account Transactions tab for the Savings Account. Find the $550
Rex Media Group payment and then view the Status column. Is the payment reconciled or not reconciled?
4. Now go to the Reconcile screen. Find the $550 bank statement line (a receipt) from Hamilton Smith. Xero
has automatically matched this receipt to the Rex Media Group payment, as shown below. Xero matches
on amount, not on contact name. However, Xero has identified another possible match. We know this
because Xero displays a 1 Other Possible Match Found link.

NOTE: When the amount to be reconciled is the same, Xero will always assume the imported bank
statement line should be matched to the Xero recorded payment, if one exists.

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Lets make a deliberate error:


Reconcile the receipt from Hamilton Smith to the Rex Media Group payment. Consider what has happened.
The payment has been reconciled but, as the Rex Media Group payment has been reconciled against the
Hamilton Smith receipt, the Hamilton Smith sales invoice remains unpaid.
Lets think about the best way to correct this error:
If we use Remove & Redo, we will delete the payment transaction that has been processed against the Rex
Media invoice, and it will be moved to the Awaiting Payment screen in Sales. The payment entry needs to
remain as unreconciled in the Account Transactions tab until Rex Media Groups payment has been banked.
So, in this instance, we simply need to unhook Hamilton Smiths bank statement line from Rex Media Groups
payment transaction.
To fix the error:
1. Click on the Accounts Transactions tab (Savings Account), find the Rex Media Group payment and then
click on the payment to open the payment screen.
2. Click Options, select Unreconcile and then click OK. Unreconciling the payment will remove the association
between the correct payment transaction (for Rex Media Group) and the mistaken bank statement line (for
Hamilton Smith).
NOTE: Now everything is back to the way it was before the matching error was made.
3. Go back to the Reconcile screen and then find the Hamilton Smith receipt again.
4. Click on the 1 Other Possible Match Found link.
5. In the screen that opens, remove the current selection (clear the check box for the Rex Media Group
payment), and then select the check box for the Hamilton Smith sales invoice.
6. Check the receipt has been matched correctly and then reconcile.
7. View the Rex Media Group and Hamilton Smith payments on the Accounts Transactions screen.
Search by description (enter payment) and exact amount (enter 550.00).
Note the Status column. Which payment has been reconciled? Which one has not?
8. When Rex Media Groups check is acknowledged as a deposit in the bank account, it will come into Xero as
a bank statement line through a bank feed. When that happens Xero will auto match the bank statement
line (a receipt) to the Payment: Rex Media Group transaction. Meanwhile, Rex Media Groups payment
shows as an outstanding receipt in the Reconciliation Report.

Review: Fixing Coding Errors


Youve discovered a coding error in a bill after it has been reconciled. How would you fix this?
When using the Cash Coding screen, your client bulk-coded several payments made to the Wages account
when they should have coded them to the Consulting account. How would you fix this?
What three actions will occur when Remove & Redo is used?

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Deleting Duplicate Bank Statement Transactions


Occasionally you might find more than one bank statement line for the same bank deposit or payment. For
example, when creating a CSV file to import a Bank Statement, someone entered the bank deposit on March
10 twice, in error.
If there is more than one bank statement line for the same transaction, you will need to remove the duplicate
bank statement line. Further, if the bank statement line was reconciled against a Spend Money or Receive
Money transaction, you will also need to remove the transaction it was reconciled against.
Remove duplicate bank statement lines from the Bank Statements screen or the Reconcile screen.
NOTE: You can only remove reconciled bank statement lines from the Bank Statements screen.
To remove a duplicate bank statement line from the Bank Statements screen:
1. From the Dashboard, open the bank account with the duplicate bank statement line.
2. Click on the Bank Statements tab and then open the bank statement with the duplicate bank statement
transaction.
3. Select the duplicate bank statement line (tick the check box) and then click Delete.
4. Xero displays a warning. Click Yes, if youre sure you want to continue.
5. View the status icon for the deleted bank statement line. When Xero displays this icon, it means Xero
has deleted the matching bank statement line.
To remove a duplicate bank statement line from the Reconcile screen:
1. Click on the Reconcile tab and then find the duplicate bank statement line.
NOTE: Xero displays bank statement lines on the left.
2. Click on the

delete icon, shown below.

3. Xero displays a warning. Click Yes, if youre sure you want to continue.
4. View the removed bank statement line from the Bank Statements tab. You will need to open the bank
statement with the duplicate bank statement transaction first.
If you need to, you can restore a deleted bank statement line.
To restore a deleted bank statement line:
1. Click on the Bank Statements tab and then open the Bank Statement that holds the deleted bank
statement line.
2. Find the deleted bank statement line. Look for the

status icon to find it more quickly.

3. Select the deleted bank statement line (tick the check box) and then click Restore.

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CASE STUDY 31: DELETING DUPLICATE BANK STATEMENT TRANSACTIONS O


NOTE: This case study uses the two Shell Botany transactions previously coded in Case Study 27. Make sure you
have completed Case Study 27 as Case Study 31 will not work correctly otherwise.
When checking Snappy Freights Bank Reconciliation Summary Report, you discover the Bank Statement
balance for the Savings Account is out of balance.
After checking the CSV file used to import bank statement lines into the Savings Account, you notice a
duplicate Shell Botany bank payment, shown below.

The duplication came about when creating the CSV file. As you used the CSV file to import the bank statement
lines, you could fix the problem by deleting the imported Bank Statement. However, you have since reconciled
those bank statement lines and you do not want to do the job again. It makes better sense to delete the
duplicate bank statement line. You will need to delete the corresponding Spend Money transaction as well.
1. Open the Reconcile screen for the Savings Account and then record the Statement Balance amount and
the Balance in Xero amount.
2. Click on the Bank Statements tab. Open the Bank Statement that holds the duplicate Shell Botany bank
statement line.
3. Find the two Shell Botany bank statement lines and then select one (tick the check box).
4. Click Delete. What happened? What does the

status icon mean? Hover over it to find out.

5. When initially coding the deleted bank statement line, Xero would have created a Spend Money
transaction. As you have deleted one of the Shell Botany bank statement lines, you will also need to delete
one of the Shell Botany Spend Money transactions. Do this as follows:
Open the Account Transactions screen for the Savings Account.
View the Statement Balance and Balance in Xero amounts. Which one changed?
Search for the two Shell Botany transactions. What does the status icon mean?
Xero unreconciled the Spend Money transaction when you deleted the duplicate bank statement line.
Select the unreconciled Shell Botany transaction and then click Remove & Redo.
6. View the Statement Balance and Balance in Xero amounts. Which one changed this time?
Extra for Experts
It is worth noting the Delete Entire Statement button at this point.
You can find this button at the bottom of the View Statement screen.
You cannot undo the consequences of using the Delete Entire Statement button. Once you have deleted an
entire Bank Statement, it is gone. In contrast, you can undo the consequences of using the Delete button when
deleting duplicate bank statement lines. Just select the transaction with the status and then click on
Restore. You will need to reconcile any restored transactions.

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Mark or Unmark as Reconciled


When setting up clients, you may not be able to download all required bank statements. When this is the case,
you could manually enter and reconcile them or you could enter the bank statement lines into a CSV file and
then use this file to import the bank statement lines. Alternatively, you could create a Spend Money or Receive
Money transaction and then manually mark the transaction as reconciled. When marking a Spend Money or
Receive Money transaction as reconciled, Xero will create a dummy bank statement for the transaction. Xero
will also update the Statement Balance for the bank account.

CASE STUDY 32: MANUALLY CREATING MISSING BANK TRANSACTIONS D


Earlier on you used the Cash Coding screen to code and reconcile two interest amounts earned, one for $27.80
and one for $32.23. One month later you discover the $32.23 amount was in error and the bank has since
deducted the amount from Snappy Freights bank account. The reversing entry (dated the same day as the
receipt) did not come into Xero through a bank feed. Because you have already reconciled the $32.23, you will
need to deal with the reversal showing in the bank statement.
1. Open the Account Transactions screen for the Savings Account.
2. Search for the $32.23 interest earned transaction and note the transaction date.
3. Click on Manage Account and then on Spend Money to create a reversing entry for the missing bank
transaction.
To
Date
Description
Qty
Unit Price
Account

Interest earned
As noted in step 1 above
Reversal of interest amount incorrectly deposited to bank account
1
32.23
Interest Income (470)

4. After creating the Spend Money transaction, view it in the Account Transactions screen.
What is its status?
5. Now mark the Spend Money transaction as reconciled:
From the Help menu, select Enable Mark as Reconciled.
This action puts a More button above the grid header. 1
Find and select the unreconciled interest earned
Spend Money transaction.
Click More and then select Mark as Reconciled. This
step is necessary because the bank statement line
wasnt imported.
continued over

Once a user has enabled Mark as Reconciled, it will remain enabled for that organization for that user. To disable, select
Disable Mark as Reconciled from the Help menu.

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6. Check the Account Transactions screen for your Spend Money transaction. What changed?
Xero marks manually reconciled transactions with the status icon.
Transactions with the icon also appear in the Statement Exceptions report.
7. Now click on the Bank Statements tab. Can you see the Spend Money transaction?
HINT: Look for the icon. Xero creates a dummy bank statement for transactions marked as reconciled.
8. Run the Reconciliation Report: Manage Account > Reconcile (heading) > Reconciliation Report
Click on the Statement Exceptions tab. View the manually reconciled interest earned transaction. (You
may need to adjust the date range to be able to do this.)
Click on the Bank Statement tab. View the dummy bank statement line for interest earned, located at
the bottom of the report.
NOTE: Use the method above when there are several transactions to mark as reconciled. If there is only one
transaction to mark as reconciled, theres a quicker method. Open the transaction, click Options and then
select Mark as Reconciled.

Transactions marked as reconciled can also be unreconciled.


You can do this by selecting the Unmark as Reconciled option.
When using the Unmark as Reconciled option:
1. The transaction status changes to unreconciled.
2. Xero deletes the dummy bank statement previously created.
3. The Statement Balance for the bank account changes.
4. Xero updates the Bank Statement and Statement Exception reports.

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Bank Reconciliation Reports


Dashboard > Manage Account (button) > Reconciliation Report

There are three Bank Reconciliation reports:


Bank Reconciliation Summary compares the Xero (GL) balance to the closing Bank Statement balance using
the format below. The closing Bank Statement balance as calculated by the Bank Reconciliation Summary
report should be the same as the closing amount on the actual Bank Statement.
Balance in
Xero (the GL
balance)

Outstanding
Payments

Outstanding
Receipts

+/

Unreconciled
Bank Statement
Lines

Closing Bank
Statement
Balance

Recommended best practice is to check the balance with your bank each month to verify these closing
amounts match. The message on the Bank Reconciliation report reminds you to do this. The two balances
should match each other for the same date. If your two balances don't match, this means either your starting
point in Xero is wrong or you have an error in your bank statement lines.
For help with identifying errors and how to fix them, refer to the Help Center.
Bank Statement shows all imported bank statement lines and balances for the selected Bank Account and
given selected date range. Also shows if the transaction was: (1) manually imported or brought in from bank
feeds, (2) whether the transaction has been reconciled or not. The end result should be a reconciled bank
statement.
Statement Exceptions shows all exceptions such as duplicated, deleted and/or manually created bank
statement lines for the selected Bank Account and given date range. This is the first place to look if the actual
paper bank statement balance differs to that shown in Xero. For example, if using auto bank feeds, this reports
shows manually imported bank statements as they are not considered the norm.

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Review: Deleting Duplicate Bank Statement Transactions


The Statement Balance and the Balance in Xero are out by $45. Youve discovered that this was caused
when a bank statement line was entered twice in the CSV file that was used to import the bank
transactions. How will you delete the now reconciled duplicate bank statement line?
Can a deleted bank statement line be restored? If so, how would you do this?

Review: Mark or Unmark as Reconciled


When setting up a new client, you created a CSV file to import the Bank Statement lines into Xero.
After the import was done, you discover that 1 bank statement line was omitted from the CSV file.
How would you manually enter this bank statement line into Xero?
What two things happen in Xero when a bank transaction is marked as reconciled?
When manually entering a bank statement line into Xero, why is it necessary to manually mark
it as reconciled?
Transactions with the status icon are displayed in the Account Transactions screen.
Which report will these transactions be displayed in?
What four things happen in Xero when the Unmark as Reconciled option is used?

Review: Bank Reconciliation Reports


Where do you find the Reconciliation Reports?
Are the Reconciliation Reports available from the Reports > All Reports path?
Match the reconciliation report with its description:
RECONCILIATION REPORT

DESCRIPTION

Bank Reconciliation Summary

This report shows items not matching the normal reconciliation process;
for example, items that are manually reconciled, items that are imported
and then deleted, items that are duplicates.

Bank Statement

This report shows a list of all bank statement lines, whether reconciled
or not. Also shows where each bank statement line came from.

Statement Exceptions

This report shows how the Balance in Xero amount reconciles


to the Bank Statement balance after taking into account any
unreconciled items.

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Reporting Overview
The Reports menu allows access to All Reports, Budget Manager and to the most commonly used reports
(favorites). You can add another favorite report to the list by clicking on the
icon next to the report you
want to add (from the All Reports screen).
Xero reports can be exported to Excel, PDF or Google Docs. When you save reports to PDF or Excel, Xero will
include the organizations name in the filename. This way, if youre saving reports across multiple clients, into
the same folder, youll be able to distinguish between them.
By default, users with the Standard user role have Standard + All Reports rights. If you need to, you can restrict
Standard users to Standard + No Reports permissions. Go to Settings > General Settings > Organization > Users
and then select the Standard user you want to restrict. In the View reports column, select No Reports and
then save changes. Users with Standard + No Reports permissions will still be able to access the: (1) Bank
Reconciliation Summary (without the ability to publish), (2) contact reports in Contacts, and (3) Pay Run
reports, if they have the Payroll Admin role. They wont have access to any other reports though, nor will
they have access to Budget Manager or Manual Journals.
The Journal Report is used to view posted journals or all journals, including system journals. The only exception
to this is the unrealized foreign currency gains or losses that are automatically calculated when a report is run.
In this case, any gain or loss is not journaled; rather, once the calculation is made, the amount is displayed in
the Unrealized Gains or Losses account.
The Journal Report is a full Audit Trail of all journals created by the system for a defined period.
Tick check box to view the posted manual journals.
Click Add New Journal if you want to enter a manual journal.
Note that the ability to enter a manual journal can only be
done by those with the Advisor or Standard user role.
NOTE: When creating a manual journal, you can use Xeros inbuilt calculator in the Debit and Credit columns.
Enter formulas directly into these columns. For example, 123*1.5 and (100 + 26)*2. Press the Tab key to have
Xero calculate the answer.
The Budget Manager worksheet allows budgeted income and expenditure amounts to be compared against
actuals throughout the year. Create an overall budget or, if you use tracking, set up budgets for each of your
tracking categories. Budgets can be edited, copied, renamed and deleted. They can also be imported or
exported. Keeping track of any budgets you have created can be done using the Budget Summary, Budget
Variance, Income Statement and Account Summary reports.
Xeros Sales Tax Report summarizes the transactions for the selected period. Where Xero gets the
sales tax figures from is explained in the Help Center. Xeros Sales Tax Report is accompanied by
the Sales Tax Audit Report. The reports are displayed as tabs.
NOTE: Amounts posted directly to the tax account using a manual journal are not pulled through to the Sales
Tax Report. Always use the normal channels so that all tax amounts are pulled through.
Click Publish to close the tax period.

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CASE STUDY 33: COMMON REPORTS O


1. View the reports on the All Reports screen. Note the report sections.
2. Run and view the Account Summary report for the Storage Income account.
3. Add the Account Transactions report as a favorite and then run it for the Freight Income account.
View report.
4. Run and view the Journal Report; see below for more information.
5. Run and view the Sales Tax Report. Note the other two tabs. What reports do these tabs show?

Reconciliation Reports
Advisor > Reconciliation Reports
Click on the down arrow to view Xeros reconciliation reports.
Xeros reconciliation reports are a quick way of checking
balances and picking up incorrect balances. You can use these reports as workpapers as they are a quick way of
attaching Balance Sheet items and other relevant items to accounts that need reconciling.
Xero will export each reconciliation reports to Excel, PDF or Google Docs.
Xero saves all formulas when exporting to Excel.
You can make changes to any reconciliation report. For example, you could add
another report to the set of reconciliation reports. Always click Save as Draft before
leaving the Reconciliation Reports screen. You will lose
your changes otherwise.

Management Report
Advisor > Management Report
Management style reporting packages are available from the Advisor menu in Xero. These packages group
Xeros standard reports and specific text-based information into one larger report. They are typically suitable
for month-end or year-end reporting.
Click on the down arrow to view the reports available.
Each report initially displays the current period. You can select a different period, if you need to.
The Income Statement report has several tabs. These tabs extend the number of reporting possibilities. For
instance, to display only two annual periods, click on the Compare Periods tab. Enter 12 months in the Period
field and then enter Previous 1 period in the Compare with field. Click Update to view.
You can add transaction schedules, footnotes, and account summaries to the Management Report. You can also
add aged receivables or aged payables charts, define a default report layout and customize a report layout if you
need to.

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Export
Advisor > Export
When using Xero, you can export an organizations general ledger data. Xero puts it in a format suitable for
importing into other accounting products. You can view the itemized accounting product export files and
formats in the Help Center.
Only users with the Advisor role can export general ledger data.
In Xero, transactions posted to the General Ledger (GL) are:

Bank account transactions (spend and receive money, transfers, expense claims, receipts, payments,
credit note cash refunds).
Approved sales invoices, bills and credit notes on the Awaiting Payment screen.
Authorized expense claims on the Awaiting Payment screen.
Posted and reversed manual journals.
Fixed asset depreciation and disposal or sale journals.

When exporting GL transactions, Xero exports the transaction details making up each journal line in the
General Ledger. For example: journal number, journal date, account name, account code, account type, net
amount, tax amount, gross amount, tax code and any descriptions or comments.
If applicable, Xero will also export tracking information.

History and Notes Activity Report


Xero has always kept an audit trail of user activity. The History & Notes Activity report extends that
functionality by listing it all in one place, giving you the ability to find out whats happening and whos doing it.
Users with the Advisor role can search through Xeros audit trail for specific transactions, changes, or types of
activity. Go to Advisor > History & Notes Activity and then, from the control bar shown below, choose the
Period, Item and User you want to see history and notes for.

The control bar allows you to narrow your search.


Period
Items
User

Used to define the transaction date you want to see history and notes for;
for example, last month. You can also define a custom date range.
Used to define the transaction type you want to see history and notes for;
for example, bank transactions.
Used to see history and notes by user. Leave blank to query all users.

Click Update after making your selection and then click Update again each time you make a change.
Browse through the report to find what you need. Click on an item description to view the transaction. You can
also click each column heading to sort the data by that category.

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Because the History & Notes Activity report only displays the most recent 1000 items that match your search
criteria, a quick way of narrowing your search is to use the Filter Results field.

You can filter by date, item, action, user or notes. To use this field, enter key letters, numbers or words.
The filter will not search the contents of the actual transaction, but it will search any details that
appear in the notes. For example, assuming Xero records the text shown below about a bill payment

you could search for the bill for $1,181.25 by entering 1,181.25 in the filter box. You will need to enter the
amount exactly as recorded; that is, include the comma, but not the dollar sign. Entering 1,181 would find this
transaction too, but it would also return transactions for amounts like $1,181.60 or $21,181.42.

Publishing Reports
Publishing a report means that Xero will create a snapshot for a particular period and then save that snapshot
as a report. Published reports are available from: Reports > All Reports > Published (tab)
User permissions control whether you can publish and view published reports or not.
To publish a report click Publish. You can find this button at the bottom of the report.
Xero publishes reports to Excel, PDF and Google Doc formats.
Options available when publishing a report include customizing the title, editing the authors name, entering
disclaimers and, when publishing the management report, removing any reports not needed.
NOTE: When using Xeros Partner Edition, click on Settings to choose the publishing settings for your organization.
Only people with the Practice Administrator role will have access to edit these settings.

Review: Reporting Overview


Where are the reports found? How do I mark a report as a favorite?
What three file formats can Xero reports be exported to?
Find and run the Budget Manager worksheet. Find and run the Sales Tax Report.
How might the Reconciliation or Management Reports be useful? Where are they found?
True or false? A clients general ledger data cannot be exported out of Xero.
True or false? A published report cannot be edited or deleted.

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Certification Test and Keeping Up-to-Date


The Certification Test is available from the Partner Help Center. To get there, open the Partner Edition of Xero
and then select Partner Help Center from the Training tab menu.
Alternatively, enter help.xero.com/us/#MGXResources in your web browser to access this page.
Scroll down to the Certification section and then click on Sit the online Xero certification test.

This opens the Become Xero certified page. Read the instructions and then, in the Sit the
test section (shown to the right), click on the Xero certification test link to begin the test.
The test has 25 randomly selected questions at varying degrees of difficulty, mostly multiple choice.
There is no time limit. However, as a guide, 35 minutes is a reasonable time for completion.
You must finish the test in one sitting. You cannot save and finish later.
You can go back and check your answers before finishing.
You must answer at least 20 of the 25 questions correctly to become Xero certified. If you score less than 20,
you can resit the test but you can only attempt the test three times. After the third attempt there is a two
week lock-out period. You can sit the test again after the two week lock-out period.
You can view your score at the end of the test. If you would like to receive an electronic
copy of your test results, click Email Results before logging out.
If you pass, congratulations! We will send an electronic certificate to your email address immediately after you
pass the test.
Once certified, take a look at our awesome new Xero TV. There are loads of different training videos that weve
created, and viewing them is a great way of keeping your knowledge up-to-date.
You can also check out Xero U, the perfect place to learn Xero inside and out. Here you can choose a path for
content thats tailored just for you.
And if youre a practice staff member, you can also access Xeros Learning Center to view self-paced courses
from the Training tab in My Xero. Keep you knowledge up-to-date anywhere, anytime, from any device. You
can also review which training courses youve completed from here, and see if your Xero certification is about
to expire. Refer to Xeros Help Center for more about online learning help.
And then theres the Help Center. From the home page, click on the View Changes link to see whats recently
changed in Xero. Also on the home page, view a list of New or Recently Updated features.
Changes to the Help search function in Xero now enables searches across the User Guide, FAQs, Tutorial Videos
and the Xero Community, increasing your chances of getting answers quickly.

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