Accounting software programs are often viewed as a necessary means to track financial data to enable a business to report their affairs to the Taxation Office. Often the overlooked value is in the reporting you can extract from Xero that enables business owners to make good business decisions.
Below is a summary of the reports we recommend all business owners review regularly.
Profit and Loss
The profit and loss statement is a report that all business owners should be using regularly to track the profitability of the business. From the profit and loss, you will be able to see the total income and expenses which gives you the total profit for the period selected.
To access this report, you can either use the Xero app, Android devices or the Website. To access the report on the Website, please follow the instructions below:
- Click on the Accounting menu and select Reports.
- Find the Profit and Loss report and click into it. This will be under the Financial Statements heading or you can use the ‘Find a Report’ function in the top right corner.
- To make this a ‘Favorite’ report, click the star on the left side of the report name. This will now show up at the top of the report section.
- Select the correct Date range you want to see by clicking the arrow or typing in the date range you want to view.
- If you want to compare the period with previous periods, in the Compare with drop down, select how many periods you want to compare.
- Click Update and your report will now be showing the period you have chosen.
- To view other filters, select More. This will drop down a list of other functions you can add to your report.
You can also edit the lay out of your report. To do this, click Edit Layout in the bottom left corner. From here you can change the text, add groups of accounts, move accounts up or down, add rows and columns, etc.
When you are viewing your profit and loss statement, if you are unsure what is in the actual account, you can click the figure, and this will take you to the Accounts Transactions. You will then see each transaction that has been coded to the account. If you need to move the transaction to a different account, click into the transaction and click edit. This also is the same when you are viewing the Balance Sheet.
For more information, please click here.
Balance Sheet
The balance sheet shows the financial status of the business at the current point in time. You will be able to see a summary of the business’s assets, liabilities, and equity accounts. To get to your balance sheet in Xero, please following the steps below:
- Click on the Accounting menu and select Reports.
- Find the Balance Sheet report and click into it. This will be under the Financial Statements heading or you can use the ‘Find a Report’ function in the top right corner.
- To make this a ‘Favorite’ report, click the star on the left side of the report name. This will now show up at the top of the report section.
- Select the correct Date you want to see your businesses financial position by clicking the arrow or typing in the date you want to view.
- If you want to compare the period with previous periods, in the Compare with drop down, select how many periods you want to compare. You can change if you want to compare with Monthly, Quarterly or Yearly.
- Click Update and your report will now be showing the period you have chosen.
There is also a function where you can edit the layout as per the profit and loss notes, by grouping your assets and liabilities, changing the order or accounts, and adding different rows and columns, as well as many more features.
It is important that you are viewing this report regularly to see where your businesses financial position is. The report will easily show you how much money you have in your bank accounts as well as if you have any money owing to you or any debts to be paid off.
For more information on Balance Sheets, please click here.
Accounts Receivable Reports
Accounts Receivables reports show the customers that have invoices still owing to you. They can also be called trade debtors. There are two main reports that Xero have that shows the Accounts receivables your business has owed to you. These are:
- Aged Receivables Detail Report
- Aged Receivables Summary Report
Aged Receivables Detail
This report shows the individual invoices grouped by the customer that were outstanding at the date of the report selected. To get to this report, please follow the steps below:
- Click on the Accounting menu and select Reports.
- Find the Aged Receivables Detail report and click into it. This will be under the Payables and receivables heading or you can use the ‘Find a Report’ function in the top right corner.
- Select the correct Date you want to see your receivables at by clicking the arrow or typing in the date you want to view.
- You can also change the ‘Aging Periods’, the way it is ‘Aging By’, what ‘Columns’ are included and how it is ‘Grouping/Summarizing’. As well as changing filters.
- Click Update and your report will now be showing the receivables at that date you chose.
For more information on this report, please click here.
Aged Receivables Summary
The summary report is best for viewing the total amount each customer is still owing your business and how long it has been outstanding for. You can also set up credit limits which can be viewed in the report by changing the filters. To access this report, please see the steps below:
- Click on the Accounting menu and select Reports.
- Find the Aged Receivables Summary report and click into it. This will be under the Payables and receivables heading or you can use the ‘Find a Report’ function in the top right corner.
- Select the correct Date you want to see your receivables at by clicking the arrow or typing in the date you want to view.
- You can also change the ‘Aging Periods’, the way it is ‘Aging By’, what ‘Columns’ are included and how it is ‘Grouping/Summarizing’. As well as changing filters.
- Click Update and your report will now be showing the receivables at that date you chose.
For more information, please click here.
It is very important to view these reports to give you an overview of how much money you are still being owed. You should be checking this regularly and following up customers when they have outstanding invoices that are overdue. Within your business, you should have policies around how long you give your customers to pay, and as well as how you follow up your customers. Also giving customers credit limits can be a great way to make them start paying on time.
If you believe you are never going to receive the payment from your customer, you then need to apply a credit note to the invoice and add this to your Bad Debts. To do this, click into the invoice. Select the Invoice Options drop down and click Add Credit Note. Then change the date you want to apply the bad debt and change the account to Bad Debts and click Approve.
For information on Bad Debts in Xero, please click here.
Accounts Payable Reports
The accounts payable reports are very similar to the accounts receivables however they are the bills to be paid by the business to their suppliers. There are two main reports that Xero have that show these bills. These are:
- Aged Payables Detail
- Aged Payables Summary
Aged Payables Detail
The details report will show all the bills individually that a business has outstanding to pay grouped by the customer that were outstanding at the date of the report. To get this report, please following the steps below:
- Click on the Accounting menu and select Reports.
- Find the Aged Payables Detail report and click into it. This will be under the Payables and receivables heading or you can use the ‘Find a Report’ function in the top right corner.
- Select the correct Date you want to see your payables at by clicking the arrow or typing in the date you want to view.
- You can also change the ‘Aging Periods’, the way it is ‘Aging By’, what ‘Columns’ are included and how it is ‘Grouping/Summarizing’. As well as changing filters.
- Click Update and your report will now be showing at that date you chose.
For more information on this report, please click here.
Aged Payables Summary
This report is great because it will show the total amount owing to each supplier and how long they have been outstanding for. To view this report, please see the below:
- Click on the Accounting menu and select Reports.
- Find the Aged Payables Summary report and click into it. This will be under the Payables and receivables heading or you can use the ‘Find a Report’ function in the top right corner.
- Select the correct Date you want to see your payables at by clicking the arrow or typing in the date you want to view.
- You can also change the ‘Aging Periods’, the way it is ‘Aging By’, what ‘Columns’ are included and how it is ‘Grouping/Summarizing’. As well as changing filters.
- Click Update and your report will now be showing at that date you chose.
For more information on the Summary report, please click here.
It is very easy to miss paying bills, either on time or at all so viewing these two reports can be very important for the business so your suppliers stay happy. If you cannot pay the bills, it is vital that you contact the supplier with the related bill and update them with your situation.
It is important you check if these bills have already been paid using a different card or cash that is not linked to your Xero account. If they have already been paid you can add a payment to these using your loan account or cash account if needed. To do this, click into the bill, at the bottom of the page, add the Date Paid, and the Paid From (this will be your loan account or drawings) and click Add Payment.
If the bill has already been paid by using a card that is linked to your Xero, but it is still showing in your aged payables report, it might not have been matched correctly when you reconciled the transaction in your bank account meaning there is now a double up of bills in your expenses. To fix this, you can either remove the invoice by adding a credit note, clicking Bill Options and select the correct date and click Approve. Or you can click on Bill Options and click Void. Otherwise, if you do not want to remove the invoice, you can go into the transaction that you have already reconciled, click Remove and Redo and go back to your Bank Reconciliation and us the Match function to match this to the correct bill.
Bank Reconciliation Report
The bank reconciliation report must be used regularly for all businesses to make sure their bank accounts are in balance. This report groups three different reports into one. Including the Bank Reconciliation Summary, Bank Statement and Statement Exceptions. Running the Bank Reconciliation is best to check if the bank balance matches the bank account in Xero and if they do not match you will need to do some investigation as to why.
To get to this report please use the steps below:
- Click on the Accounting menu and select Reports.
- Find the Bank Reconciliation report and click into it. This will be under the Reconciliations heading or you can use the ‘Find a Report’ function in the top right corner.
- Choose the Pack date range you are wanting and select the Bank Account by using the drop-down arrows.
- Click Update and your report will now be showing.
For more information on the report, please click here.
Reconciling Transfers between Bank Accounts
If you have multiple bank accounts and you transfer money between all accounts, there could be errors in the way you have matched them in Xero. This will show up on your bank reconciliation if there are errors. The main error that people do is matching the wrong transactions that are the same totals but different dates. To fix this, remove and redo the transfer that is incorrect and match this to the correct transfer by going back to your bank reconciliation screen. Another error people make with transfers is if they are transferring to a personal bank account however they match it to a bank account that has a bank feed in Xero. If this happens, please remove and redo the transaction and code this transaction to your loan account or your drawings account.
Outstanding Items
If you have marked a bill or invoice paid in the Paid From section to the bank account however the transaction has not actually been matched when you completed your reconciling, this will create an error in your bank reconciliation. To fix this, you will need to find the transaction you reconciled, and remove and redo it to make it go back to your reconciliation screen. Go back to your reconciliation screen and match this to the invoice/bill you marked as paid. If the money has not actually come into your account however you marked it as paid in your invoice/bill, you will need review this and see when it was paid or where it was paid to. If it was paid in cash or in a personal account, you need to remove and redo the payment, and create the payment again by adding it to your cash account or loan/drawings account.
For more information on fixing the variance in your bank accounts, please click here.
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