Hey there I'm James you're watch Accounting Stuff and today i'll show you how to use Xero
this isn't a sponsored video there are no affiliate links so let's jump right in
what is Xero? Xero is a cloud-based accounting software package it's very similar to quickbooks
online which we covered already on this channel but while quickbooks online was introduced in the
United States of America in 2001 Xero was founded in New Zealand it was born in 2006 so it's a bit
younger however nowadays Xero is a global company and it's extremely popular amongst small to medium sized
businesses so let's see what all the fuss is about what does Xero do? Like i mentioned it's
an accounting software package so it helps you do your bookkeeping it lives in the cloud so you
can access it from anywhere and it automates a lot of boring tasks for you which should
save you a lot of time I'll show you what i mean by that in a moment but first which version of
Xero is right for you? In the USA you've got three plans to choose from early, growing and established
early is the cheapest plan at $12 per month and it's aimed at new businesses, sole traders
and the self-employed the growing plan costs a bit more it's $34 per month it removes the caps
on invoices, quotes and bills and it lets you reconcile your transactions in bulk
established is the most expensive plan at $65 per month with established you can track projects
claim expenses and you can get some in-depth analytics now listen up if you need multiple
currencies then this is the plan for you sadly the other two don't offer that and keep in mind
that payroll costs another 39 dollars per month what does Xero look like? Welcome to the Xero
dashboard you can find your company name in the top left corner as you can see we're working with
the US version of the demo company that sky blue bar above me is called the navigation bar it comes
with links to the organization menu, the dashboard which is where we are now, the business button, the
accounting menu, payroll, projects and contacts to the right hand side of me we've got the create
button, the search function and the notification bell it looks just like that one that you'll see
on this channel when you hit the subscribe button we've also got the help button, connected apps and
finally your user profile below that there's also a link to your login history on the dashboard you
get a snapshot of your business's financials you can see the balances of your bank accounts over
time, your cash in and out by month, your account watch list, the invoices owed to you, a summary
of all your expense claims and the bills that you need to pay if you click the edit dashboard
button then you can shuffle things around and hide the widgets that you aren't interested in
how does Xero work? Let's head up to the navigation bar and this dark blue button with your company's
name this is the organization menu if we click on it you can upload and access important files
and below that there's your organization settings these are split into two columns general
and features under the general column you can access your organization details it's
here that you can change your basic information, update your display name, your legal trading name
and add a logo you can also enter your line of business, pick an organization type, add a business
registration number, an employer identification number and an organization description below that
you can fill in your contact details your postal address, physical address
telephone, email and website when you're done making changes click save and we'll head back
to organization settings next up we have users if you go in there then you'll get a breakdown
of everyone with access to your Xero file you can also add more users including Xero support modify
permissions and remove them if necessary if you signed up to the established plan then you can head
into currencies to add more if you need to click add currency pick the one you're after and hit the
green button easy squeezy connected apps is where you manage your third party connections to Xero
we don't have any right now because we're in the demo company so we'll move on over to the features
column in invoice settings you can customize and preview your invoices there's that logo we added
earlier you can also see what they look like on a phone versus a computer screen payment services is
where you manage the payment options available to your customers on your sales invoices you can see
what's connected at the moment you can also add credit and debit cards via stripe or direct debits
within email settings you can make templates to tailor the emails that you send out of Xero and
in check styles you can change how your checks look like if your customers or suppliers use
Xero you can connect with them directly from Xero to Xero by sending them a Xero network invite
that way you can share invoices directly into each other's sales and purchases ledgers you
can also add custom contact links to build shortcuts to other systems let's jump back
to the organization menu beneath settings you'd usually see an option for subscription and billing
but we're in the demo company right now so it's not there but that's where you'd upgrade, downgrade
or cancel your subscription if you have multiple Xero organizations then you can switch between
them here or add a new one and further down we have a section called do more with Xero
these are some more add-ons you can use gusto to automate your payroll and tax filing
you can capture expense claims, use analytics plus for short-term cash flow projections and
business snapshots there's also workflow max and hubdock which automates the process of entering
bills and receipts there are plenty of plugins to choose from in the app store you can search for
whatever you're after or browse the most popular ones below at the bottom of the organization menu
you can access my Xero in here you can switch between your different Xero organizations, manage
your subscriptions and billing accounts and fiddle with your individual profile and account settings
and that's the organization menu now let's head on over to this little plus symbol don't worry
we'll come back for these this is called the create button and we use it to create
new transactions for example if you sell a product or a service to a customer then you might need
to produce an invoice filling this out is simple under who is it for we'll enter the customer name
add an item a quantity and a price you can then choose the account that you want the invoice coded
to in this case that's sales you can also add a tax rate and a region if you need to and that's it
you can preview the invoice to see what it looks like and approve and email once it's ready to send
you can also create new bills you might want to use this if a supplier has sent you an invoice
with a due date like this one if we fill out all the details in here then we can record it as an
expense in our income statement when it's ready click approve with the create button you can also
add new contacts, create quotes and purchase orders, there's even an option to post a manual journal
but i wouldn't recommend doing this unless you're a qualified accountant or bookkeeper
bills are one way to record expenses but you can also enter them on a cash basis
when the money leaves your bank account you can do this by creating a spend money transaction here or
you can wait and do this during the bank rec which we'll get into in a moment on the accounting tab
similarly similarly you can record bank receipts and transfers by creating receive money and
transfer money transactions but we can do these during the bank rec as well let's move on from
the create button if you're looking for a specific transaction or contact then you can use the search
function to find it the notification bell is fairly self-explanatory you'll get notified on
product updates and things like that if you find these annoying like i do then you can go
into notification settings to turn them off in the help menu you can search for support articles on
whatever you're stuck on the recommendations will pop up below you can also contact Xero support if
you can't find the answer here it's online support only sadly there's no phone number for you to ring
but if you raise a case and they can't resolve it online then they'll give you a call it's also free
which is nice we've also got a link to the advisor directory which you can use to find an accountant
or bookkeeper near you connected apps gives you a list of the integrations that you've signed up for
along with another link to the app store your user profile gives you another way to update
your individual profile and account settings right let's get down to business the business menu helps
you do your day-to-day tasks if you're signed up to analytics plus then you'll find a link to
your short-term cash flow projection as they say cash is king so it's useful to keep on top of any
invoices owed to you and the bills that you've gotta pay the business snapshot gives you some
nice charts covering your profitability, efficiency and financial position it's set to year to date
at the moment but you can change the period if that's your jam these next three options are all
geared towards sales first up is invoices which gives you a breakdown of all your sales invoices
you can check when they're due how much they're for there's also a status column which shows
you if they've been paid or if you are awaiting payment we don't want any doubtful debts now do
we you can also turn on invoice reminders if you want Xero to follow up on overdue invoices for you
reminders can be sent automatically on the dates of your choosing below invoices we have quotes
here you can send professional looking estimates to your customers for potential work then we have
the sales overview it's got a summary of all your invoices and quotes you can see the payments that
you're waiting on what's overdue and who owes you the most money don't like to see this red
ridgeway university no bueno the next three options in the business menu are devoted to
your outgoings bills pay gives us a breakdown of all your purchase invoices where we can see what
we've paid and what's awaiting payment in purchase orders you can get a breakdown of the orders
that we've requested from various suppliers once raised these can go through your approval process
just like the sales overview we have a purchases overview this time it summarizes your bills and
purchase orders there's a chart showing your upcoming bills which you can expand
and we can see what's overdue at the bottom of the business menu you can capture your employee
expense claims, monitor checks and manage your products and services items that you add to
this list can be quickly added to invoices and bills to save you time over to my favorite menu
accounting this is where you manage your bank accounts, run reports and access advanced settings
if we click on bank accounts then you can see the ones that are already active in this case that's
a checking account with a graph of its balance over time and a savings account with nothing in it
we can add new bank accounts by clicking this button right here you can connect your bank
accounts to Xero to import your transactions through automatically via the live bank feed I
recommend doing this it'll save you a lot of time trust me the bank reconciliation is a key part of
accounting as you can see this checking account has 29 items to reconcile so let's explore these
see what they are on the left we have all the statement lines from your bank and on the right
we need to make sure that these are recorded or matched to existing transactions in Xero this
is very important if we don't do this our accounts aren't accurate Xero will attempt to match as many
of these for us as possible if you're happy with them click ok but inevitably some bank statement
lines won't be matched if necessary we can create the transactions ourselves that's the customer or
supplier that they relate to the account that we want to code them to and a brief description
once you're happy click ok you might keep getting similar transactions that take place over and over
again for these ones you can create a bank rule to allocate them automatically but what about reports?
Xero includes a whole heap of reporting templates you can find your tax reports near the bottom
and your income statement, balance sheet and cash flow statement in the financial statements section
click on the little star to add a report to your favorites your income statement
or statement of profit and loss is where you measure your financial performance
it summarizes your revenues and expenses over a period of time you can find your business's
net profit on the bottom line favorited reports also appear in the accounting menu see there's
the cash flow statement we added a moment ago it reveals your cash inflows and outflows
over a period of time and there's the balance sheet it tells us your financial position giving
us a snapshot of all assets, liabilities and equity at a point in time the advanced menu
brings up some of the more complex features and settings here you can find and recode transactions
work directly with manual journals manage the fixed assets register and your chart of
accounts again you can access all your favorites via the accounting menu but i'd recommend getting
an accountant or bookkeeper to help you out with these ones if you signed up to payroll then you'd
have a tab for that up here as well that's where you can manage all your employees and contractors
and Xero projects allows you to quote, invoice and track job profitability by project the contacts
menu helps you manage your customers, suppliers and other key contacts you can check out the full list
it shows you what you owe, what you are owed and then there are tabs for customers and suppliers if
you want to look at these both separately and you can always add new contacts by clicking on this
green button up here I hope you found that little summary useful if there's any other accounting
software that you'd like me to cover let me know in the comments and i'll see you in the next one