Overview of Xero Functionality

Introduction to Xero

• The video introduces an overview of Xero, highlighting its various components such as the main menu, invoices, bills, payroll, and more.

• Viewers are encouraged to check out additional resources linked in the description for further learning about Xero.

• The presenter requests viewers to like, share, or subscribe if they find value in the content.

Navigating the Main Menu

• The main menu is located at the top of the screen and provides access to all bookkeeping functions necessary for business management.

• A drop-down menu on the left side allows users to access crucial areas including files storage directly within Xero.

File Management in Xero

• Users can upload various file types (PDFs, images, spreadsheets) into the files section via multiple methods: uploading directly, using a webcam for photos, or emailing files.

Settings Configuration

• Initial setup requires entering organization details such as business name and ABN number in the settings section.

• Payroll settings must be configured if processing pay runs; payment services need setup for invoicing customers through platforms like PayPal or Stripe.

Marketplace and Dashboard Access

• The marketplace link allows users to purchase third-party software that integrates with Xero for managing expenses and inventory.

• Users can return to their dashboard from any part of Xero by clicking on its link in the main menu.

Detailed Features of Business Menu

Business Operations Management

• The business menu includes sections for invoicing customers, managing bills payable, expense claims, and product/service inventory management.

Accounting Functions

• Under accounting options, users can manage bank accounts and access reports; advanced functions include chart of accounts management and posting manual journals.

Payroll and Project Management

Payroll Setup

• If subscribed to payroll services within Xero, users will see dedicated links for setting up payroll tasks; demo company access remains available even without a live subscription.

Contact Management

• The contacts section enables management of customer/supplier details and allows grouping customers for bulk invoice sending.

Quick Access Icons

Utility Icons Overview

• A plus icon offers quick links for frequently used tasks like creating invoices or managing contacts.

Search Functionality

• A search button helps locate information within live accounts but is unavailable in demo mode.

Notifications & Help Resources

Invoicing in Xero: Overview and Creation

Navigating the Invoicing Section

• The invoicing section can be accessed via the business drop-down menu, featuring three main items: invoices, quotes, and sales overview.

• The sales overview screen provides a comprehensive view of all created sales invoices, including those sent to customers and those pending dispatch.

Sales Overview Screen Features

• Key buttons on the sales overview include options to create invoices/quotes, send customer statements for outstanding invoices, and import invoices.

• A panel displays various invoice stages; for example, there are four draft invoices totaling $2,200 in the demo company.

Invoice Status Insights

• There is one invoice awaiting approval and $16,000 worth of unpaid invoices across ten total entries; three of these are overdue with a value exceeding $7,000.

• Clicking through panels allows users to view specific invoice statuses such as drafts or awaiting payment.

Financial Projections and Customer Insights

• A chart illustrates expected cash flow based on invoice due dates; significant amounts are anticipated in December.

• Another chart highlights top customers by amount owed; Ridgeway University is identified as the highest debtor.

Creating an Invoice

• To create an invoice from the main screen, select "New Invoice," which leads to a dedicated creation interface similar to previous screens.

• Users can navigate through different panels showing all invoices at various stages (drafted, awaiting approval/payment).

Step-by-Step Invoice Creation Process

• Begin by entering the customer's name; Xero auto-suggests matching names. Select a due date two weeks ahead for this example.

• An automatically generated invoice number appears. Users can choose branding templates for their invoices—defaulting to standard branding initially.

Finalizing Invoice Details

• Users have options to upload files related to the invoice that will be permanently stored within Xero.

• Complete the invoice by detailing services rendered with quantity and unit price. Default tax rates apply unless specified otherwise.

Invoicing and Purchasing in Xero

Overview of Invoicing Process

• Xero calculates GST on top of the base amount, resulting in a total invoice of $110.

• Users can approve invoices directly or save them as drafts using the options available in the interface.

• Approved invoices appear in the "awaiting payment" section; unemailed invoices are marked as unsent.

• Invoices can be emailed by selecting them and clicking the email button, allowing for multiple email addresses to be added.

• Users can also print invoices directly from the screen or within the invoice details.

Navigating Purchases and Bills

• Access purchasing features through the business drop-down menu, focusing on purchases and bills that need payment.

• The purchases overview provides a summary of current billing situations, including buttons for creating new bills and credit notes.

• A search box is available to find specific bills by reference number or contact name.

• The timeline panel displays various stages of bills: draft, awaiting approval, approved, and overdue amounts due for payment.

Creating Bills in Xero

• To create a one-off bill, users can click on the "new bill" button from either the overview or main billing screens.

• Users can view all bills across different statuses (draft, awaiting payment).

• When creating a new bill for office supplies, users input details such as due date and reference numbers while attaching relevant files if needed.

Understanding GST and Bill Creation in Xero

GST Calculation Explained

• The total bill amount of $550 is exclusive of GST, which means Xero adds 10% GST to the base amount of $500.

• When changing to tax-inclusive, the total remains $500, with GST calculated as one-eleventh of that total, equating to approximately $45.45.

Approving and Managing Bills

• Users can save a bill as a draft or approve it for payment immediately if authorized; upon approval, a success message appears.

• If errors are found in the bill, users have options to void or edit it before finalizing.

Repeating Bills Feature

• Xero allows users to create repeating bills for regular payments (e.g., monthly phone bills), streamlining the billing process.

• Existing repeating bills can be viewed under the repeating tab; these bills automatically get approved or saved as drafts based on user settings.

Managing Expense Claims in Xero

Overview of Expense Claims

• To access expense claims, navigate through the business menu; settings allow enabling receipt analysis for automatic claim creation from photos.

• Control over who can submit claims and which general ledger accounts they can use is essential for proper expense management.

Stages of Expense Claims

• Expense claims progress through stages: incomplete (draft), submitted (awaiting approval), and approved (ready for payment).

Products and Services Management in Xero

Types of Products and Services

• The products and services section includes both physical items (like golf balls and t-shirts) with associated costs and margins, as well as service offerings with hourly rates.

Creating New Items

Overview of Xero's Products and Services Management

Basic Features of Products and Services

• The products and services section in Xero may seem basic for businesses with inventory needs. For more sophisticated options, users can explore the app marketplace for third-party add-ons.

• Item codes, such as "dev D," are useful for invoicing clients for development work. Users can create new invoices and select item codes to auto-populate invoice details.

• While the products and services section may not cater well to physical inventory (e.g., golf balls, t-shirts), it is beneficial for frequently invoiced services.

Managing Bank Accounts in Xero

• Bank accounts management is crucial regardless of business type; all accounts (bank, credit card, PayPal) are controlled from the bank account section in Xero.

• Users can view their bank accounts on the main dashboard, where they can click into individual accounts to reconcile transactions or access additional features.

• Accessing bank accounts through the accounting menu provides extra functionalities like adding new bank accounts during initial setup.

Setting Up a New Bank Account

• To set up a new bank account in Xero, users must follow a process that includes selecting their bank and entering account details such as name, type, BSB, and account number.

• After creating an account without transactions initially present, users can manually import statements by downloading transactions from online banking into a provided template.

Automatic Transaction Importing

• One significant advantage of using Xero is automatic importing of daily bank transactions into set-up accounts. This feature saves time compared to manual imports.

Reconciling Transactions

• In demo company settings within Xero, users will notice different statuses on their bank accounts—some requiring reconciliation while others are already reconciled.

• The reconciliation process involves matching imported bank statement lines with existing transactions in Xero. Each transaction must correspond with either sales invoices or bills before being marked as reconciled.

How to Reconcile Bank Accounts in Xero

Creating Transactions

• Users can create a "spend money" transaction for expenses, such as those from Cooper Street Bakery, and categorize it under entertainment. A description can be added if desired.

• Incoming funds, like a $2000 deposit, can also be recorded through a "receive money" transaction if they do not match an existing sales invoice.

Utilizing Bank Rules

• Xero allows users to set up bank rules that automatically create general ledger transactions based on specific criteria found in bank transactions.

• An example of a bank rule is one that looks for the payee containing "11," which helps automate matching transactions with the general ledger.

• Once a matching transaction is found (e.g., from 7-Eleven), users can quickly reconcile it by clicking OK.

Manual Coding and Transaction Overview

• The cash coding tab enables manual coding of bank feed transactions to general ledger accounts, offering an alternative method to reconciliation.

• The bank statement transactions tab displays both reconciled and unreconciled items, including any deleted entries.

Managing Multiple Accounts

• Users can manage various account types (credit cards, PayPal, etc.) from the main bank account screen by adding new accounts as needed.

Exploring Reporting Features in Xero

Accessing Reports

• The accounting menu includes a favorites section where commonly used reports like business activity statements and balance sheets are easily accessible.

• Users can explore all available reports by clicking on the reports section; favorited reports are marked with a star icon.

Customizing Report Favorites

• To customize report visibility in the favorites menu, users can click or unclick the star next to each report title.

Types of Reports Available

• Xero offers various report categories including financial reports, sales and purchases, inventory reports, payroll reports, taxation and accounting reports, and fixed asset management.

Advanced Accounting Tools in Xero

Navigating Advanced Features

• Advanced accounting tools are accessible via the accounting menu's advanced section for quick navigation to essential features.

Key Advanced Functions

Understanding Manual Journals and Fixed Assets in Xero

Manual Journals

• Xero recommends that only experienced users create journals directly; otherwise, it's advised to consult an accountant or bookkeeper.

• A journal must balance before it can be posted. An example shows a draft journal that is $108 out due to GST discrepancies.

• Users can save drafts of journals or post them immediately once they are balanced.

Fixed Assets Management

• The fixed assets section allows for similar functionalities as invoicing and bills, including saving drafts until ready for registration.

• Details such as purchase price, asset number, description, depreciation start date, and method can be entered when registering fixed assets.

• Depreciation can be calculated monthly or at year-end with a simple click once assets are registered.

Advanced Settings for Fixed Assets

• Before registering any assets, users need to set up asset types in the advanced settings section of Xero.

• General ledger accounts related to asset disposal and accumulated depreciation must also be configured prior to adding fixed assets.

Financial Settings Overview

• Setting up financial settings is crucial; this includes configuring GST methods relevant to Australian regulations.

• Users should also manage PAYG withheld/income details and lock dates for account postings after specific periods.

Chart of Accounts Configuration

• Each business requires a tailored chart of accounts; users can add GL codes or archive unused ones within the system.

• Importing existing charts from other systems into Xero is possible if needed.

Tax Rates Management

• Basic GST tax rates (10% on expenses/income) are preset in the Australian version of Xero.

Understanding Tracking Categories in Xero

Overview of Tracking Categories

• Tracking categories in Xero function similarly to cost centers or profit centers, allowing users to categorize financial data effectively.

• Users can assign invoices to specific tracking categories (e.g., regions like East Side or North Side), enhancing reporting capabilities by region.

• This setup enables detailed reporting later on, as transactions can be filtered and analyzed based on the assigned tracking categories.

Conversion Balances

• Conversion balances are essential when transitioning from another accounting system to Xero; they allow for accurate financial records during the switch.

• While profit and loss codes may not require conversion balances if starting at a new financial year, bank accounts will typically need these balances set up.

Advanced Accounting Features

• The advanced accounting section includes various settings accessible via a dropdown menu, where users can favorite important links for quick access.

Setting Up Payroll in Xero

Initial Payroll Setup

• Before adding employees or processing pay runs, it is crucial to configure payroll settings within Xero.

• Access payroll settings through the main menu; this area contains tabs for setting up necessary payroll components.

General Ledger Accounts

• Users must establish general ledger accounts related to payroll, including bank accounts for payments and liabilities such as PAYG and superannuation expenses.

Payroll Calendars and Holidays

• Setting up multiple payroll calendars is possible (e.g., weekly, fortnightly), accommodating different payment schedules within a business.

• Public holidays can be configured by state in Australia, ensuring compliance with regional holiday regulations when assigning holidays to employees.

Managing Pay Items and Leave Types

Pay Items Configuration

• Various pay items should be established, including earnings for ordinary hours, overtime payments, deductions (like union fees), and reimbursements for employee expenses.

Leave Management

• Leave types such as annual leave are customizable; users can specify entitlements (e.g., 152 hours per year), which will display on employee payslips.

• Additional leave types like sick leave or parental leave can also be set up according to company policies.

Superannuation Fund Setup and Payroll Processing

Understanding Superannuation Funds

• The discussion begins with the distinction between regulated superannuation funds and self-managed superannuation funds (SMSFs). Users can choose based on their needs, but SMSFs require additional details like ABN and ESA.

• In the demo company, only regulated funds are set up, indicating a limitation for users who may want to explore SMSF options.

Payroll Settings Overview

• Before initiating pay runs, it's essential to configure payroll settings. This includes adding employees and ensuring all necessary information is in place.

• The overview screen provides a snapshot of current payroll activities, including draft pay runs and leave approvals.

Employee Setup Process

• To add an employee, navigate to the employee setup section where existing employees are listed. Historical data for terminated employees is also accessible.

• Each employee's profile requires filling out various tabs with relevant information such as personal details, employment start date, payroll calendar type (weekly or fortnightly), and holiday groups based on state.

Employment Details Management

• The employment tab allows selection of the superannuation fund for each employee. Users can add fund details along with any associated employee numbers.

• Tax details can be submitted electronically to the Australian Taxation Office (ATO), streamlining processes compared to traditional paper methods.

Leave Management and Bank Account Setup

• A leave history section tracks requests made by employees. Default leave types can be assigned easily for new hires.

• Employees' bank account details must be entered accurately to ensure correct wage payments.

Payslips and Pay Template Insights

• The payslips tab provides access to historical payslips in PDF format; however, they cannot be viewed directly on-screen.

• The pay template outlines an employee's standard pay calculations including hours worked, deductions like union fees, and superannuation contributions.

Additional Employee Information Management

• Opening balances may need entry when transitioning from other accounting software; this is crucial for accurate financial tracking.

• Notes can be added within an employee's profile for internal reference. Options exist for setting termination dates if applicable.

Final Steps in Employee Onboarding

Xero Payroll Overview

Employee Management in Xero

• The employee section allows sensitive information, like salary, to be hidden from view but visible upon hovering.

• New employees can be invited to payroll by checking a box and clicking "invite to my payroll," enabling them to apply for leave.

Leave Management

• Managers can review leave applications; options include approving or rejecting requests after editing if necessary.

• Approved leave items are recorded for future payroll processing, with a history tab available for tracking rejected requests.

Timesheets and Superannuation

• The timesheets section is optional and primarily used for casual staff; it includes uploading and approving timesheets before they enter pay runs.

• Superannuation payments can be processed directly through Xero via an affiliated clearinghouse, simplifying the payment process.

Pay Run Processing

• Users can view pay run history, including drafts; only one draft pay run per calendar period is allowed.

• Unscheduled pay runs enable adjustments for individual employees without affecting scheduled runs.

Reviewing Pay Runs

• Inside a fortnightly pay run, users see listed employees along with totals for earnings and taxes; various options are available such as adding messages or resetting the pay run.

• Reports on payslips, journal entries, and bank payments are accessible before finalizing the pay run.

Finalizing Payments

• Each employee's pay template appears during posting; changes can be made as needed (e.g., hours worked).

• After confirming details, users post the pay run successfully. An ABA file can be downloaded for banking purposes, and payslips can be emailed directly from Xero.

Overview of Payroll and Contacts in Xero

Understanding Payroll Functionality

• The demo company allows for posting a fortnightly pay run, which is now visible in the history. Only one draft can exist per calendar period.

• After posting a fortnightly pay run, another can be added as drafts are limited to one at any time. This highlights the structured nature of payroll management in Xero.

Navigating the Contacts Section

• The contacts section is accessible from the main menu, allowing users to manage all contacts effectively.

• Users can filter contacts by type (customers, suppliers, employees), and create contact groups for efficient invoicing.

Utilizing Contact Groups and Smart Lists

• Creating groups like "contractors" or "support clients" helps streamline invoicing processes by allowing bulk actions on multiple contacts.

• Smart lists enable users to categorize contacts based on specific criteria, such as overdue payments or purchase history.

Managing Individual Contacts

• Detailed information about each contact includes invoices awaiting payment and historical activity related to bills and invoices.

• Contact details such as address and phone number can be edited easily; not all fields need completion but having comprehensive data is beneficial.

Options for Contact Management

• Users can send statements directly from the contact's page, merge duplicate contacts, or archive those no longer in use through an options drop-down menu.

• Bulk importing of contacts is possible via CSV files; this feature supports transitioning from other systems into Xero efficiently.

Adding New Contacts During Transactions

• New contacts can be created during invoice generation or bank reconciliation if they do not already exist in the system.

• This functionality allows seamless integration of new clients into existing workflows without disrupting ongoing tasks.

Final Thoughts on Contact Management

• The ability to add new contacts while performing other functions enhances user efficiency within Xero’s ecosystem.

Xero Overview: Managing Contacts

Creating and Managing Contacts in Xero

• The video discusses the convenience of creating contacts from various locations within Xero, emphasizing that users are not limited to entering contacts individually through a single interface.

• It highlights the flexibility offered by Xero in managing contacts, allowing for efficient organization and access to contact information across different sections of the platform.

• The overview concludes with an invitation to watch a final video that provides guidance on next steps after learning about Xero's features.