• Stella Jansen

How To Use Xero in 13 Easy Steps


It can be difficult to launch a new business for the first time. You've always wanted to make a living doing what you love, and you're confident that the world will take notice of your new venture the moment they hear about it.


Xero is a cloud-based accounting system for small and rapidly growing businesses.

It's no surprise that the software has over 1,000,000 users and is the primary accounting solution for over 16,000 accounting firms. It's described as 'affordable professional-level accounting software for small businesses' and 'the best at what it does.


Depending on your specific business requirements, Xero can either save you a lot of time, energy, and money, or it can cause you more trouble than it's worth. Consider the pros and cons listed below to form your own opinion.


Unfortunately, that is not always the case in reality. Even if you could get the word out quickly, chances are the world won't fall in love with your business on day one. And you quickly realize that starting a business entails a lot of things you probably don't want to do hiring employees, figuring out IT solutions, and dealing with the dreaded bookkeeping and tax.


Fortunately, another startup, Xero, can assist you with those last two. Yes, the company that everyone loves and has taken over the world was once a startup just like yours.

That is only one of the many reasons why Xero is the best accounting system for startups. Here are some more compelling reasons:


Xero is a versatile business platform.

Every startup requires tools that will both help the business grow and grow with it. And the Xero ecosystem does just that.


Starting with Xero's core accounting package, you can add other programs that integrate with Xero as your company grows. Instead of throwing out software because you've outgrown it, you simply add whatever you need to create a cutting-edge platform tailored to your business's needs.


You can create eCommerce sites, securely accept online payments, build a customer database with an integrated CRM, become more mobile, and even manage your team with rostering solutions and workflow management tools by integrating various add-ons.


As your company grows, you can quickly add and customize flexible reporting tools to generate reports for KPIs, departmental reports, and whatever else you require.


If you discover that a particular add-on no longer meets your requirements, simply unsubscribe and replace it with another that does.

Xero simplifies record keeping.


Xero is a cloud-based accounting software that is one of the most innovative on the market. They have created a simple way for your business to comply with its bookkeeping obligations by allowing you to bring bank feeds directly into the system.


Your financial advisor can also access the same data at the same time, allowing you to discuss issues as they arise rather than six or even twelve months later. Furthermore, because the software is cloud-based, your accounting system is always up to date. There will be no need to purchase or install manual software upgrades, and there will be no issues with incompatible versions.


Setting Up Xero

Although the number 13 may be unlucky for some, if you follow these 13 top tips for using Xero and getting the most out of your account, you won't need luck.


1.How to Get Started with Xero

The 'Getting Started with Xero' video is the first step in learning how Xero works.


2. Configure your bank account feeds

The next step is to configure your bank account feeds, including any credit card and PayPal accounts you may have. This video demonstrates how to do so.


3. Create your chart of accounts.

If you are switching from another accounting software, you can import your chart of accounts or modify the default chart of accounts in Xero.


If you have an accountant, you can seek their advice on this matter. If you are your own bookkeeper, we recommend that you use Xero's default chart of accounts. These accounts can be added, customized, or deleted to meet the needs of your company.

Go to Settings > Chart of Accounts to make changes to your accounts. More information on customizing your chart of accounts can be found here.


4. Reconcile frequently

Xero has made bank reconciliation easier than ever before. Just a few minutes per week spent approving pre-matched items keeps your data current. Transactions are automatically pulled through because Xero is linked to your bank. Because Xero remembers the last time you categorize a transaction, you can simply click 'OK' to have it go to the same category.


You should reconcile your accounts on a weekly, if not daily, basis to ensure that they are as accurate as possible.


Regularly updated invoices provide a more accurate picture of cash flow. With a clear picture of your cash, you can make better business decisions and avoid falling behind on payments.


5. Fill in the blanks with your organization's information.

If you own a limited company, you must have a registration number and a registered office address. This information must appear on any invoices you issue.

Go to Settings > General Settings > Organization Settings to enter or update your company's contact information, which includes:

· Display name

· Legal / Trading name

· Email

· Registration Number

· Organisation Description

· Physical address

· Registered address

· Organisation type

· Phone and fax numbers

· Logo

· Website


6. Configure your financial settings

Go to Settings > General Settings > Financial Settings to enter your company details:

Financial year end: This ensures that you have the correct year-end for your reports.

VAT Details: VAT scheme (flat, cash, or accrual rate), VAT number, and VAT period are all important considerations.


7. Add users

You can add users at Settings > General Settings > Users. Add your accountant, bookkeeper, and other necessary stakeholders.

You can find more information on users here:

Add a user’s details

Send invitation to user

View your Xero users

Edit a user


8. Include your company's logo.

Following that, you can configure your invoices with payment terms, a contract, and a logo.


Fixing your payment terms can help you improve your cash flow. Shorter payment terms can help you get paid faster.

To set up various branding schemes, go to Settings > General Settings > Invoice Settings


9. Include payment services

You should also connect any active payment services to your Xero account. PayPal, Stripe, and GoCardless are examples of such services. Customers will find it easier to pay you if you offer a wider range of payment options.


This help video demonstrates how to set up a payment service so that you can add a 'Pay Now' button to your invoices.

To do this, go to Settings > General Settings > Invoice Settings > Payment Services


10. Establish payment reminders.

Getting paid on time is critical for any business. Organizing your credit control systems and setting up payment reminders can help you get paid faster.

Go to Settings > General Settings > Invoice Settings > Invoice Reminders

Set up payment reminders only after you've gotten into the habit of reconciling receipts on a daily basis. Trying to collect payment from customers who have already paid can harm your reputation. You can return to this step once daily reconciliation has become a habit.


11. Learn basic reports

It's critical to understand how basic Xero reports work. After you've entered some data, take a look at your Balance Sheet, Profit And Loss, Aged Receivables, and Aged Payables.

Go to Reports > All Reports to see the options available to you.


12. Create a payroll system

Xero Payroll can assist you in keeping track of your employee costs. This function allows you to keep payroll costs in one place rather than having to pull data from a different system.


The payroll overview is a detailed guide that will walk you through each step of the setup process.


If you are transferring payroll from another system in the middle of the financial year – don’t forget to add the opening balances.

This can be found at Payroll > Payroll Overview


13. Connect your apps

Using Xero's numerous apps and add-ons is an excellent way to automate repetitive tasks and save time.


Xero provides apps with a wide range of functionalities, such as cash flow forecasting and document management, among others. The Xero app marketplace is the best place to start looking into your options.


Finally, if you have one, ask your accountant to double-check your setup. They may need to add year-end conversion balances, but they can ensure that your year-to-date figures are correct.


If you need any assistance please free to contact us at (07) 3804 7575



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