Xero bookkeeping software has become extremely popular with small retailers over recent years. Given its ease of use and ability to integrate seamlessly with plenty of everyday business applications that’s hardly surprising. I still get calls from small retailers asking why they should make the switch to Xero bookkeeping software. There are plenty of good reasons why but I’ve decided to create this quick “how to” as it provides some insight into just how easy using Xero bookkeeping software can be for you.
To use Xero you’ll need this:
1. A decent internet connection. For cloud-based bookkeeping to work effectively, you’re going to need access to a stable and reasonably fast internet connection. Unfortunately, anyone who tells you different to that is being less than honest about it.
2. A desktop or laptop computer, a tablet, or a smartphone. Of course, you’ll need to be able to connect these devices to the internet too!
3. A Xero account. If you don’t already use Xero they currently offer a free trial of their bookkeeping software. Click here and let me know if you’d like a free trial of Xero and I’ll organise it for you.
When you log into Xero the first thing you’ll see is a menu bar on your screen with buttons showing Dashboards, Accounts, Payroll, Reports, Advisor, Contacts and Settings. It feels intuitive and it’s one of the things I really liked about Xero right from the first time I ever used it.
NB: The Payroll and Advisor buttons may not appear on your screen due to your access setup.
My advice would be to go straight to Dashboards when you open Xero. You’ll notice that there are mini-summaries of your bank accounts, sales dash, purchases dash and your expenses in this area.
Click Accounts and a drop-down menu will allow you access to what you’ll need there. The Payroll button provides access to your employees and their details, timesheets and superannuation.
The Reports tab gives you access all reports on your accounts, plus the budget manager. Frequently used reports can be highlighted with a star and will also appear on the drop menu. Of course, you have access to all end of financial year reporting and reconciliation reports – plus you can export from Xero as well.
The Adviser tab (if you have it) is for users with advisor access, like your accountant or bookkeepers. You can manually enter journals in here if you wish to. As a retailer, you probably won’t be using this tab very much.
The Contacts tab displays customer and supplier contacts. Xero contacts are all set up in the exact same way and you can also set up contact groups. This means you can classify and group customers almost any way you wish to and see your groups in the drop-down menu.
Last of all is the setting tab. Here, you’ll find the general settings for your Xero account. If you are using an advisor (always recommended) they will generally take care of all this for you.
Now, let’s take a look at how to use Xero
If you’re new to Xero and still using their free trial, you’ll be immediately directed to their step by step guide as soon as you log in.
First up you’ll want to connect to your bank account. Click on the Get bank feeds button and it will take you through to an authorisation page that allows you to get your feed activated. When you’ve completed this your account information will be automatically linked with Xero. Just this one function helps to eliminate a great deal of human error.
It’s important that your business details are entered correctly. Navigate to the Settings menu and select General Settings, then Organisation Settings. Here is where you’ll enter your company details. Make sure you take the time necessary to get this 100% right, as this is what will appear on invoices and other forms generated by Xero.
Xero allows you to customise the look and feel of your invoices. Navigate to Settings again and then select Invoice Settings. From here you can upload your logo so it will appear on all of your invoices. You can also set a starting point for your invoice numbers, which may be really helpful if you are moving across from another bookkeeping system.
Xero makes it easy to add a payment gateway so that your customers can pay your invoices by clicking a Pay Now button. The setup process for this is fast and intuitive. You’ll be able to bill customers and get paid just as soon as you’re done with this process.
The default chart of accounts in Xero is pretty good and you might only need to make a few minor changes to be completely happy. If that’s all you need completing this should be over in a just a few minutes.
Xero has import tools to help you with this, making it possible to import your existing charts of accounts including opening balances, etc. How to import accounts from your old bookkeeping system is beyond the scope of this article. Realistically, you might want to get a Xero certified consultant to help you do this as things can and sometimes do go wrong.
If you have any unpaid invoices you can bring them across to Xero. Navigate to Sales or Purchases and just click the Import button. It’s easy enough to use the template provided. Just copy your data into that and import the template file to Xero. If you don’t have a lot of invoices you can do this manually.
If you have an existing list of suppliers they can easily be imported into Xero too. Unlike with some programs a contact can be both a supplier and a customer in Xero, so you won’t need to add a contact more than once.
Xero has a large and constantly growing variety of add-ons. Add-on’s increase the power and usability of Xero with applications for receipt scanning, point of sale payments, inventory management and even CRM solutions. You can check out the Australian Xero Apps Marketplace here: At the time of writing, there are over 600 Apps available!
If you want to grant other people in your business access Xero you can do that. Navigate to Settings, then Users and invite the people who need to use the system.
Like all bookkeeping programs, Xero is only as good as the people who use it. It’s definitely a good idea to work with a Xero Certified accountant or bookkeeper. They will know many things that you don’t about how to take advantage of Xero and will be able to guide you on the best ways to make Xero work hard for your business. As a Certified Xero Bookkeeper, I’ve helped many small businesses to implement Xero and get it working for them. If you feel that you need some help, I encourage you to reach out to me by clicking here. I’ll be happy to give you a free 30-minute consultation and help you figure out if Xero is right for you.