Welcome to the Fit Small Business Xero
training course. In this lesson we're
going to cover how to set up suppliers
in Xero. To follow along with me, log in
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 our full Xero course and
other helpful resources. Let's get
started. If you're converting from
another accounting software to Xero then
you know the amount of time that can be
saved by having access to your supplier
contact details like email, telephone,
and address, all in one place. Beyond contact
details, you can set up custom payment
terms like net 15 for those
suppliers who you have negotiated
special terms with. In addition there is
a great feature that would allow you to
batch several bills into an electronic
file and upload it for payment via
online banking or another payment
service. This is called the batch payment
feature. We will discuss this in more
detail later on. In this lesson we will
focus on how to set up supplier contacts
manually. However, if you have an existing
list of suppliers that you would like to
import into Xero, then head over to our
lesson on How to Import Customers and
Suppliers into Xero. You can click here
to access this lesson. Once you have
imported your supplier list, be sure to
come back to this lesson to learn how to
modify your supplier information. In Xero
any one you pay money to is considered a
supplier contact. Anyone who pays you
money is considered a customer contact.
When adding a new contact, the steps for
adding suppliers and customers are
almost identical. Although each have
different fields you'll need to focus on.
If you want to add a supplier, we cover
this here. Once you have added a new
contact, you will find it listed in the
all contacts group. Based on the type of
transaction, for example invoice, bill, or
credit notes, Xero will automatically
group your contacts as customers,
suppliers, or both. For example, if you
purchase products or services and sell
products and services to the same
company, they will be set up as both
a supplier and a customer contact in Xero.
To add a new supplier contact we want to
navigate to the contacts menu and select
suppliers. In the upper right hand corner
here go ahead and click on the add
contact button. This screen is broken up
between contact information and
financial details. Let's cover the
contact details first and then we'll
come back to the financial details.
In the contact name field you want to enter
your supplier's name. Be sure to enter the
name as it should appear on any checks
or payments that you make. If your
supplier issues an account number to you,
you want to go ahead and enter that
information as well. You can click on
this link here and enter that account
number into this field. This information
will appear on check remittances but you
will need to set it up. You can find more
information on how to do this by
clicking the link below. Primary person:
here you want to enter the name and the
email address of your primary contact
If you have more than one contact click
this add another person link and then
you can enter any additional contacts
information here. In the next three
fields you want to enter your suppliers
telephone number, fax number, and mobile
number that you use to contact them.
In the Skype name and number field go
ahead and enter the Skype ID of your
supplier. This is an ideal way to
communicate face-to-face when needed.
Enter your supplier's website if they have.
one in this website field. Postal address:
in the postal address field, go ahead
and enter your supplier's remit to
address. This is the address that will
appear on any payments that you make via
check to your supplier. In the street
address field, you want to go ahead and
enter the physical address of your
supplier's location in this field.
This will come in handy if you need to pick
up products as opposed to having them
deliver it to you. Please note that it's
very important to set aside the time to
ensure that this information is accurate.
It will be used for email templates,
reports, any apps that you add-on from
the marketplace and a variety of other
tasks. Once you have completed entering
this information for the supplier, we can
go down to our financial details section
and complete the necessary fields here.
As I mentioned previously, the setup
screen for customers and suppliers is
identical. For financial details, we will
only focus on the fields that relate to
suppliers. In the How to Set Up Customers
lesson, we discuss the fields related to
setting up customers. You can click here
to access this link. Remember, any
information that we enter here will be
default settings for your supplier.
However, you can override them if needed
when you enter and pay bills received
from your suppliers. From the purchase
settings drop-down, you have three
options to choose from.
Tax inclusive: this option will include
tax for each taxable item on purchase
orders and bills that you create for
suppliers. Tax exclusive: will show tax
separately on purchase orders and bills
created for suppliers. And finally, no tax.
Select this option if you are not
required to pay sales tax. Default
account: in this field you can assign a
default account that will be used on all
purchase transactions such as purchase
orders, bills, and credit notes that you
create for your supplier. We recommend
that you leave this field blank unless
the product or service that you purchase
from this supplier is always the same.
Default tracking category: Xero allows
you to set up tracking categories that
will allow you to see how different
areas of your business are performing.
For example departments, locations, or
regions. From the drop-down menu, you can
assign a default tracking category for
the supplier contact. In this example,
region has been set up as a tracking
category. So we've got four regions that
have been set up: east, north, south, and
west. The tax field: from the drop-down
you can select social security number,
employer identification number,
individual taxpayer ID number, and a T.I.N.
Employer identification number: you want
to enter the employer identification
number for your supplier. If you hire a
contractor, be sure to ask them to supply
you with a w-9 form. This form will
include their business name or DBA, their
mailing address and their E.I.N. or social
security number. When entering the E. I.N.
be sure to use the correct nine digit
format as we have done here. Please note
that it is important that you have the
E.I.N. or the social security number on
file for any supplier that you do
business with that is not incorporated.
At the end of the year you will need
this information to generate a 1099 form
for a supplier that you have paid $600
or more to in the calendar year. Social
security number: if your supplier does
not have an employer identification
number you can enter their social
security number in this field.
When entering the social security number be
sure to use the correct nine digit
format. Individual taxpayer ID number or
ITIN: this number is issued by the IRS to
individuals who do not have and are not
eligible to obtain a social security
number. It is a nine digit number that
always begins with the number 9 and
has a 7 or 8 in the fourth digit.
Tax on purchases: if the tax rate for
purchases that you make from this
supplier differs from the default tax
rates enter the tax rate for the
supplier in this field. Otherwise, just
leave it blank and the default tax rate
will apply. Batch payments: if you pay
multiple bills to a supplier you can
enter their banking details in this
field. This will allow you to create an
electronic payment file that you can
send through your online bank or other
payment service. You can click the link
below to access payment service options.
You want to be sure to enter the bank
routing number and the account number in
this field, the name of the bank, and the
type of bank account that this is.
Bills due date: if the payment terms for
the supplier differ from the default
payment terms you want to enter the
agreed-upon payment terms so the
supplier in this field. This information
will be used to alert you when a bill
due date is coming up. Options here are
you can enter a date for the following
month, you can enter the number of
days after the bill date, you can enter
the number of days after the end of the
bill month, or you can enter a specific
day of the current month that the bills
are due. So we will select 60 days
after the bills are due. For this particular
supplier. Xero network key: if your
supplier is also a Xero user, then you
can enter their unique Xero network key
in this field. This will allow them to
send you bill through Xero and it will
allow you to submit payments in this
manner as well. You can click the link
below for step-by-step instructions on
how to send a Xero network invite. Once
you've entered all the necessary
information for your supplier go ahead
and click the Save button. After you have
added a supplier contact, you can make
changes to the contact and the financial
information at any time. From the
contacts screen as you can see here
we've got a list of the contacts here
along with the email address and then
we've got a column that says you owe
them - this is going to show the balance,
your accounts payable balance of what
you owe your suppliers. And then this
column that says they owe you, this is
going to show you accounts receivable
balance which is the amount that your
customers owe you. So to go into a
supplier contact and make changes you
simply can just click on the supplier so
we'll click on this one and in this next
screen in the upper right hand corner
here you'll see the edit button, which
will take us back to the contact
information screen here where we can
make changes to this section
and the financial details section if
needed once you've made your changes be
sure to save your work. And that's how
easy it is to edit a supplier contact.
Similar to customer contacts once you
set up a supplier contact you cannot
delete it. However, you can archive a
supplier that you no longer do business
with. When you archive a supplier you
will be able to view the contact details
and any transactions that have been
created, however you will not be able to
create any new transactions. If you
decide to start purchasing from the
supplier again, you can easily restore
the supplier so that you can start
creating new transactions again. Let's
walk through the steps to archive a
supplier and then I will show you how to
restore it. So we're still in the contact
screen here and we can select the
supplier that we want to go ahead and
archive by putting a check mark in the
box to the left of the supplier name.
Click the options button here at the top
and select archive. Xero wants to confirm
are we sure we want to archive this
company, so we'll go ahead and click the
archive button to confirm. Once we've
done that and it's confirmed that that
supplier has been archived, you'll see
over to the left we have a category that
says archived. So if you wanted to start
entering new transactions for the
supplier you simply would select the
supplier here as we've done. Go ahead and
click on that and then in the upper
right hand corner you'll see a restore
button. So go ahead and click on that and
then we want to confirm yes we would
like to restore this company. That wraps
up the lesson on how to set up suppliers
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.
Also don't forget to subscribe.