The major accounting features of Xero are covered all over the internet. But what of the lesser known Xero features? This post looks at five Xero accounting features that simplify bookkeeping, make your business look better and provide useful information for management decisions.

Account Watchlist

Let’s start with an easy one. You can see the Account Watchlist in the top-right of your Dashboard. If you can’t see the Account Watchlist, click the “Edit Dashboard” link at the bottom of the screen.

Xero account watchlist (click for larger version)

(click for larger image)

The Account Watchlist keeps track of chosen accounts, showing you the balance for this month and the financial year to date (YTD). This is useful for:

  1. Keeping an eye on expense accounts, so you don’t over-spend
  2. Quickly seeing your tax debts
  3. Watching your sales grow as the month or year progresses

Tracking tax debts through the Account Watchlist is a personal favourite and a great reminder to put money aside to pay your upcoming tax debts.

To add or remove an account from the Account Watchlist:

  1. Go to Settings -> General Settings -> Chart of Accounts
  2. Click on the name of the account that you want to add or remove from the Watchlist
  3. Click the checkbox next to “Show on Dashboard Watchlist”
  4. Click Save

Speedy Invoicing with “Items”

When you’re invoicing in Xero, do you regularly enter lines with the same descriptions, prices, accounts and/or tax rates? You could reduce your invoicing time up to 75% by using inventory “Items”.

Items on Xero invoices (click for larger image)

(click for larger image)

In the Item column above, there is a drop-down box that allows you to create a new Item or select an item created earlier. It’s also a search box, so just start typing the Item code or name.

To create a new Item while drafting an invoice:

  1. Open the drop-down box and click “+ New Item”. You may need to scroll up to see it
  2. In the window that pops up, enter an Item Code and Item Name
  3. Tick the checkbox next to “I sell this item”
  4. Enter your desired default values into the Unit Price, Sales Account, Tax Rate and Sales Description fields
  5. Click Save

A quick note on the Item Code and Item Name: you can show or hide these on your printed/emailed invoices using Invoice Branding Themes.

If you raise your prices, you can go to Accounts -> Inventory to adjust the Item, and it will be updated on the next invoice you create, without changing approved invoices.

You can also add new Items, and import/export Items, from this screen.

Invoice Template & Branding Themes

If you have a new Xero file and you print an invoice, you’ll notice that it looks boring. To change this, we need to go to Settings -> General Settings -> Invoice Settings and use the Xero ~ Invoice Template feature called “Branding Themes.”

Xero Invoice Template (click for larger image)

(click for larger image)

On this screen, you can see a Standard Branding Theme and a Custom Branding Theme. Using Standard Branding Themes, you can add a logo to your invoice fairly easily by clicking Options -> Upload Logo.

You can change some of the text using Options -> Edit. If you want to do more, you need to create a Custom Branding Theme.

A Custom Branding Theme is composed of template files used when printing quotes, invoices, statements, credit notes and purchase orders.

Add images, backgrounds, tables, lines, and text to make your documents look more professional and interesting. Add placeholders to the template, e.g. customer name, and they will be replaced with information from Xero.

To copy an existing Branding Theme, use Options -> Copy.

To create a new Standard Branding Theme, click the “+ New Branding Theme” button.

To create a new Custom Branding Theme:

  1. Click the down arrow next to the “+ New Branding theme” button
  2. Select “Custom .docx”
  3. Enter a title for the new Branding Theme and click OK
  4. Click Options -> Edit on your new theme to change the document titles, e.g. “Draft Invoice”, and select the payment service, e.g. PayPal
  5. Click “Download” to download a .zip file of the current templates
  6. Change the templates as desired using word processing software, e.g. Microsoft Word, Google Docs
  7. Click “Upload”
  8. Attach the changed files and click the green “Upload” button
  9. Xero has a template library with a few invoice and statement template files available for download
  10. Once you have more than one Branding Theme, you can choose the theme to apply to each invoice (or other document) when drafting it in Xero. You can also edit existing documents to change the Branding Theme

Email Templates

Many documents can be emailed directly from Xero: quotes, invoices, receipts, credit notes, statements, purchase orders, and remittances. The Xero default emails are fine, but in some situations it’s nice to customise them.

You can change the email manually each time or change the defaults by editing the Email Templates.

We’ve found this feature useful in setting up a default email template when sending statements to debtors. Depending on your business and the relationship you have with you customers, you might want the wording of this type of email to be a ‘friendly reminder’ or something a little more assertive.

Xero email templates (click for larger image)

(click for larger image)

To edit an Email Template:

  1. Go to Settings -> General Settings -> Email Settings
  2. On the “Templates” line, click “Edit”
  3. Select the Email Template that you want to edit
  4. In the popup window (see image above), make your desired changes
  5. Click Save
  6. You can insert placeholders into the Email Template, as well as when actually sending an email

Tracking Categories

Many businesses have separate divisions, service areas or product lines. For example, a shoe store might have 4 locations, north, south, east and west. Tracking categories can be used to track and report on the individual performance, such as sales and expenses, of each store.

Some businesses and accounting software refer to this as profit centers. In Xero this is called a Tracking Categories and can be used to create reports that look like this:

Xero Profit and Loss report with tracking (click for larger image)

(click for larger image)

You can see the sales and some expenses have been split between different regions: Eastside, North, and South.

To setup Tracking Categories:

  1. Go to Settings -> General Settings -> Tracking
  2. Click the “+Add Tracking Category” button to add a new Tracking Category. You can have two categories
  3. Enter the Tracking Category name, e.g. “Region”
  4. Enter the Category options, e.g. “Eastside”, “North” and “South”. You can have unlimited options for each category
  5. Click Save
  6. Now you will see an extra column or field on all types of transactions. By default, these will be blank until you select an option: if you leave it this way, the transaction will show as “Unassigned” in reports, like the screenshot above.

Tracking for inventory is different to the above; it relates to Tracking the quantities held.

We hope this has been a useful article. If you have any questions, please feel free to leave a comment below.

Benefits of Xero for Business

Xero not only helps your business; it also has everything you need to run things much more efficiently. It allows you to complete more work in less time which leads to improved efficiency, helps boost your revenue, and helps grow your business.

Data Flow

With Xero, it is more of a data flow than data entry. The client’s bank can be connected to the cloud ledger and all the information each morning will go directly to Xero where it can be viewed. This kind of connectivity means that everyone can stay up to date with the most current data possible. With all this data, all that needs to be done is coding the transactions.

Connectivity

Xero also offers more control which is a feature many smaller business owners love. You can view how the business is doing with just a glance and the work becomes much more rewarding.

Accurate and Easy to Access Data

Since everything is in the cloud, you can simply log into your Xero account to get any and all data that you need without having to ask for the information to be sent to you. Add-on apps are also available to help prevent any data oversights which ultimately leads to fewer errors and mistakes.

Xero FAQ

Is Xero really as secure as they say?

Xero uses 128 bit SSL encryption which is the same kind of encryption that is used for online banking. The servers are also hosted on a tire-one hosting provider. The servers and firewalls are under constant surveillance and monitoring and security is audited by an external organisation. All of your data is stored on these secure servers and backed up on a regular basis.

What is the difference between Xero and desktop software?

With a desktop application, all of your information and data would be stored on a computer. Online applications are much more secure and can’t be stolen as easily as your desktop or laptop can be stolen.

What if my business already has an accountant?

If you are looking for stronger financial control for your business, then Xero is a business decision you should at least consider. You will have access to the right amount of support that falls within your budget and you may end up finding better service at an even lower cost than you already pay for another accounting solution.

Can I import my sales invoices if I use another system?

Yes. You can manually enter those sales invoices, or you can use the Xero API. However, to properly communicate through the API, it may require a bit of development work.

Is Xero better than QuickBooks?

Xero and QuickBooks Online are two of the more popular accounting software solutions available. They both offer multiple plans you can choose from and are priced by monthly subscription plans, but there are also differences to be aware of.

Xero plans are based on the number of bills, invoices, and bank transactions. QuickBooks Online plans offer income and expense tracking, basic reporting, access for your accountant, a free mobile app, integration with other QuickBooks mobile apps and third party platforms, the ability to accept payments, and invoicing and estimates.

Xero, on the other hand, offers bank connections and reconciliation, invoicing, quotas, and bills, unlimited users, inventory management and tracking, purchase orders, dashboard and reporting, sales tax management, fixed asset management, a free mobile app, and more.

What integrations are available for Xero?

There are over 700 time-saving apps that can connect with Xero. From inventory software to time tracking, point of sale, and payroll processing and human resources, it connects users with banks and government and completes a full circle. It is all about its connections.

Which apps is Xero compared to most often?

Xero is most often compared to QuickBooks and FreshBooks when it comes to the different accounting and bookkeeping software you can find online.

Invoice Template and Free Download Checklist

Related

Ben McAdam

Founder at McAdam & Co
Virtual CFO, Australian tax accountant and CPA. Based in Sydney with his wife and young daughter.
Ben McAdam
Spread the love