Welcome to the Fit Small Business Xero training course. In this lesson
we're going to cover how to manually enter bank and credit card transactions
in Xero. To follow along with me, login to your Xero account now or click the link
below this video for a free 30-day trial of Xero. You can also click this link to
access a full Xero course and other helpful resources. Let's get started.
As you learned in the previous lesson, certain transactions must be entered
into Xero prior to reconciling your bank and
credit card accounts. For example invoices and bills should be entered
prior to reconciling so that you can easily match them up with the
corresponding deposit or check transaction downloaded from your bank.
In this lesson we're going to cover transactions that are not related to
invoices or bills and thus can be entered prior to or during the
reconciliation process. These transactions fall into one of three
categories: spend money transactions, receive money transactions, and bank
transfers. Let's discuss when to use each transaction and how to record the
transaction in Xero. In general, you should use a spend money transaction to
record money spent that is not related to a bill, a bank transfer, or an
expense claim. To learn how to manage money spent to pay a bill or an expense
claim, head over to the previous lesson: How to Reconcile Downloaded Bank and
Credit Card Transactions. You can click here to access this lesson. Bank fees,
payments made via check, ATM withdrawals, and debit and credit
card purchases, are just a few of the types of transactions that should be
entered as spend money in Xero. For example if you use the company credit
card to buy lunch for the office, this would be a spend money transaction.
However, if you used your personal credit card, this would be an expense claim.
You can click here to access our How to Manage Expense Claims lesson. Let's go
ahead and enter a spend money transaction into Xero. From the Xero dashboard you
want to go ahead and click on the plus sign here, right below your name, and then
let's go ahead and select spend money. In the next screen you want to
select the bank account that the money was withdrawn from, and then click the
next button. And here are the fields that we need to complete to create a spend
money transaction. In this first field we need to let Xero know what type of spend
money transaction we want to create. We have the option to choose from direct
payment, prepayment, or an overpayment. A direct payment is a payment made for
products or services that you received. For example office supplies or in this
example, parking fees. A prepayment is a payment that you've made in advance of
receiving goods or services that you've purchased. For example a deposit made to
secure a caterer for an office party would be a prepayment. Xero allows you to apply
the prepayment to a future bill, or treat it as a refund if it is a refundable
deposit. An overpayment: if you paid more for products or services and you were
supposed to, you can enter this transaction and reconcile it to the
refund or the credit note that you received from your supplier. So we'll go
ahead and select a direct payment. In the To field you want to go ahead and select
the payee from the drop-down or add them if you have not set them up in Xero.
In the Date field you want to enter the date of the transaction for the payment
that was made. The Reference field is an optional field. In this field you can
enter a reference number or any additional information that you'd like
to. If the payment was made by check, you could actually enter the check number in
this field. And then you want to go ahead and mark this box here that says Pay by
check. Item: if the payment was made to purchase an inventory item, select the
item from the drop-down field. If you have not set the item up in inventory,
you can do so here by clicking the New Item option here. The Description field
will automatically populate if you did select an item here in this field.
Otherwise you can type a description just so that you are aware of what this
purchase was for. Enter the quantity of items that you purchased in the
Quantity field. If a service was purchased, enter a quantity of 1 as we
have done in this field. And then go ahead and type in the Unit Price in the
next field here. Account: select on the drop-down the account that you want to
categorize this expense to. To learn more about accounts check out our How to Set up a
Chart of Accounts lesson. You can click here to access this lesson. Region:
region is a type of tracking category. If you want to track income and expenses by
department, location, sales rep, or another method, then you want to select the
tracking category from the drop down here. To learn more about how to set up
tracking categories, check out the Organization and Financial
Settings lesson. You can click here to access this lesson. The Amount field will
automatically be populated by Xero by taking the quantity column and
multiplying it by the unit price that you indicated. This icon up here allows
you to attach a scanned copy of a receipt or other documentation to
support your transaction. Please note that you can use Xero files to help you
stay organized and prepared for tax season. The Tax field: from the drop down
you want to select the appropriate tax rate if applicable.
Check out our Sales Tax lesson to learn more about how to set up a report and pay
sales tax. You can click here to access this lesson. If you purchased something
for a customer, you can flag it as a Billable Item here. Click this link to
select the customer that should be billed for this item later on. Last but
not least don't forget to save your work. Once you have saved the transaction you should
receive a notification similar to this one here. Now let's talk about receive
money transactions. In general you should use a receive money transaction to
record cash, check, or other deposits not related to an invoice, transfer, or refund.
If you receive payment at the same time that you make a sale to a customer,
then you will also record a receive money transaction. This is similar to recording
a sales receipt in QuickBooks. To learn how to manage money receipts for an
invoice, transfer, or refund, head over to our previous lesson: How to Reconcile
Downloaded Bank and Credit card Transactions. You can click here to
access this lesson. Tax refunds customer deposits, and interest earned, are just a few
of the types of transactions that should be treated as received money in Xero.
Let's go ahead and enter a receive money transaction. Similar to the spend money
transaction, you want to click on the plus sign here again at the top and this
time we'll select receive money. We'll go ahead and select the bank account that
we received the money or the deposit into, and click next. And here are the fields
that we need to complete for a receive money transaction. In this first field we
need to select from the same types of transactions that we did for spend money.
We've got direct payment, a prepayment, or an overpayment. So in this situation a
direct payment could be a payment that you've received at the time of a sale
that is not related to an open invoice, or perhaps maybe a tax refund that you
received, or interest earned from a savings account. A prepayment can be a deposit
that you received from a customer for products or services that you will
provide sometime in the future. And an overpayment is if a customer happens to
overpay you you, can enter this transaction and reconcile it to the
refund or the credit note that you sent to your customer. So we'll go ahead and
enter a prepayment transaction here. In this first fuel you want to go ahead and
select the customer or supplier contact that you received the payment from. If you
have not set them up in Xero then you can do so in this screen by typing the
contact name and selecting New Contact. Be sure to check out our lesson on How
to Set Up Customer Contacts and Suppliers to learn more about how to manage
contacts. You can click here to access this lesson. Go ahead and enter the date
that you received the money in this field here. The Invoice # field will
automatically populate if the deposit type is a prepayment or a customer
deposit. Please note that this field will not appear for the direct payment or the
overpayment selections. The Reference field is optional, this is the field
where you can enter any additional information: a purchase order number, or
any type of reference document information you'd like to include in
this field. Branding: Xero will automatically populate this field with
the default branding template you are set up for invoices. Please note that
this field will only appear if you are recording a prepayment or customer
deposit. Description: you want to enter the
description of what the deposit was for in this field here. Enter the quantity
that was purchased in this field if applicable. For Unit Price you want to
enter the unit price or the total amount that you received. The Account field
allows you to select the account where you want to categorize the expense to.
Please note that you should set up a separate account to track customer
deposits or prepayments. If you happen to use the default chart of accounts
provided by Xero, then the prepayments account is already set up for you.
To learn how to add, edit, and delete accounts, check out the How to Setup a
Chart of Accounts lesson. You can click here to access this lesson. For the Tax
Rate field you want to go ahead and select the appropriate tax rate if
applicable. Check out our Sales Tax lesson to learn more about how to set up, report,
and pay sales tax. You can click here to access this lesson. Region: region is a
tracking category. If you want to track income and expenses by department,
location, sales rep, or another method, select the tracking category from the
drop down. To learn more about how to set up tracking categories,
check out the Organization and Financial Settings lesson. You can click here to access this
lesson. Xero will go ahead and automatically calculate the amount for
you in this column. Similar to spend money transactions you can also attach
supporting documentation such as deposit slips, or perhaps a copy of that tax
refund check to your transactions here. Last but not least don't forget to save
your work. One of the most common transactions that business owners will
do is transfer money between business bank accounts. To record a credit card
payment in Xero, you would also create a transfer from a bank account to the
credit card account that you want to make the payment to. Xero makes it very
easy to record transfers and credit card payments between accounts that have bank
feeds set up. To record the transfer between bank accounts, let's go ahead and
walk through those steps now. Let's go ahead and click on the plus sign, and all
the way at the bottom we've got transfer money. Here are the fields that we need
to complete for a transfer money transaction. In the first field we want
to go ahead and select the bank account that you are withdrawing the funds from.
And in the To field we will select the account that we want the money to be
transferred to. The Date field should be the date that you actually plan to make
the transfer with your bank. And then the Amount field. It also may be helpful to
complete the reference field if the transfer is for a specific purpose.
You can also use this field to record the transfer transaction number should you
go ahead and make a transfer online perhaps with your bank, or even be a
telephone. So once you've completed all of these fields you can go ahead and
move forward with the transfer. And then you should see a transfer successful
option here. That wraps up the lesson on how to manually enter bank and credit
card transactions in Xero. To access our full Xero course or any of the other
lessons in this series, click this link. You can also find a link below this
video for a free 30-day trial of Xero. If you have feedback about this course or
if you have any questions, please leave a comment below.
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