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Getting Started with Xero

Short Answer

Dive in and play around, it’s the best way to learn

The best way to learn Xero is to dive straight in. Don’t worry too much about breaking your accounts in the early days. Any mistakes can easily be reversed by your Caprica Accountant.

Here are some great tasks to get started with:

Add a bank account to Xero

  1. Navigate to the bank accounts page by going Accounts > Bank Accounts.
  2. Click Add Bank Account dropdown > Add Bank Account.
    • Your Bank – Start to type the name of your bank then pick it from the available options. If your bank is not showing then type the name and move on.
    • Account Name – Enter a description for the account (e.g. Current Account, Savings Account, etc)
    • Currency – If you have a foreign currency account pick the currency.
    • Bank Account Number – Enter your sort code and account number, this is required for the bank feeds.
  3. Click Save

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Raise a sales invoice

  1. Navigate to the sales accounts page by going Accounts > Sales
  2. Click +New
    1. To – The customer’s name
    2. Date – Invoice date (i.e. today)
    3. Due Date – The date you want to be paid
    4. Invoice # – The invoice number (best to leave this to Xero)
    5. Reference – Any reference number you want your customer to see
    6. Amounts Are – Does the Unit Price below refer to the amount including VAT or excluding VAT.
    7. Item – Inventory item (only required if you use Xero for inventory management)
    8. Description – Description of service/product provided
    9. Quantity – How many of these are you selling
    10. Unit Price – How much does each of these cost
    11. Discount – Enter a % discount (if applicable)
    12. Account – Pick the account that you want Xero to record this in (most likely this will be 200 – Sales)
    13. Tax Rate – The VAT rate to apply to this invoice
  3. Click Approve
Tip – This is a good point to enter your customer contact details by clicking ‘Add address’

Now send the invoice to your customer

  1. Click Email
    1. To – Your customer’s email address
    2. Subject – The email subject header
    3. Message – The email text (the default is normally fine)
    4. Include files as attachments – If you have attached any additional files to your sales invoice ticking this box will send them alongside the invoice.
    5. Include PDF attachment – Add a PDF invoice attachment (without this the customer will need to use the link in the email to see the invoice)
    6. Mark as sent – Record in Xero that the invoice has been sent to the customer
    7. Send me a copy – Receive a copy of the invoice sent to your customer.
  2. Click Send

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Is it a purchase or an out of pocket expense?

When we refer to a purchase we mean something that the company has purchased and paid for from the company bank account. When we refer to an expense claim we mean a cost paid for personally but the business needs to reimburse you for.

Tip – You should try and avoid paying for business items out of personal funds. It’s much simpler if everything goes through the company bank account.


When you receive a purchase invoice from a supplier, that you have paid, or intend to pay for, out of the company bank account you will need to tell Xero about it. If you paid personally see the ‘Make an Expense Claim’ task.

  1. Click Accounts > Purchases
  2. Click + New
    1. From – The name of your supplier
    2. Date – The date shown on the invoice
    3. Due Date – The date you need to pay by
    4. Reference – The supplier’s invoice number
    5. Total – You can leave this blank and have Xero calculate it
    6. Tax Exclusive / Inclusive – Whether the unit price you are going to enter below includes VAT or excludes VAT
    7. Item – This is used for stock keeping only
    8. Description – A brief description of what your bought
    9. Quantity – The number of units bought
    10. Unit Price – The price of each unit
    11. Account – The most suitable account to post the cost to. Normally this will be in the Expenses section of the dropdown menu
    12. Tax Rate – Pick whether VAT is included on the invoice. If no VAT is shown on the invoice or receipt you cannot claim VAT
    13. Total – Double check the total matches the invoice
  3. Drag a copy of the file from your desktop into the Xero window to attach it
  4. Click Approve

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When you pay for a business cost personally, you need to tell Xero the amount and reimburse yourself. Xero expense claims are designed to include approval and authorisation by a second person, if you are a one man company or approve your own expenses this means a few extra clicks are required to authorise the purchase.

    1. Click Accounts >
    2. Click + Add Receipt
      1. Receipt From – The name of your supplier
      2. Date – The date shown on the invoice
      3. Reference – The supplier’s invoice number
      4. Total – You can leave this blank
      5. Include Tax – Whether your purchase has VAT on it and whether the amount shown is inclusive or exclusive of VAT
      6. Description – A brief description of your purchase
      7. Quantity – The number of units purchased
      8. Unit Price – The price per unit
      9. Account – The most suitable account from your dropdown list. There are usually limited accounts shown, if you want extra items added ask your Caprica accountant.
      10. Tax Rate – The VAT rate applicable on the purchase – remember if no VAT is shown on the invoice, no VAT can be claimed
      11. Drag a copy of the file into the Xero window to attach the file
    3. If you have other receipts to add at this stage click + Add Receipt and enter another expense.
    4. Once all receipts are entered click the tickbox for them all.
    5. Click Submit for Approval and Confirm
    6. Click ‘Awaiting Authorisation’ tab on the right
    7. Click your name
    8. Click the tickbox for all expense claims
    9. At the bottom of the page fill in:
      1. Payment due date – The date you intend to reimburse yourself for this expense (ie the date of transfer from your company account to personal account)
      2. Reporting date – This is the date that the expense will appear in profit and loss reports. Normally you should use today’s date
    10. Click Authorise
    11. Now the expense claim is sitting in the Awaiting Payment tab. You can now go ahead and reimburse yourself for the out of pocket expenses.

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Import and reconcile your first bank statement

Before you can reconcile your bank account you need to import a statement. This can be done one of two ways:

Tip – The automated bank feeds are the easiest option but not all banks are supported. You can see a list of the current banks supported here.

Once your statement is in Xero, from the dashboard:

  1. Click Reconcile ‘x’ Items.
  2. You then need to work down the list. The left hand column shows your bank statement the right hand column shows how the corresponding bank transaction should be handled:

Reconciling purchase invoices
Xero will recommend a match if the payment out of the bank equals the value of an invoice.
Beware, if you have multiple supplier invoices for the same supplier for the same amount Xero’s ‘guess’ may be wrong and you should allocate the payment to the correct invoice using ‘Find & Match’.If the invoice isn’t the correct one:

Click Find and Match
Click the tickbox next to the correct invoice (or multiple invoices)
Click reconcile

Transaction Type

Actions

Reconciling Salary payments
If you are taking a minimum monthly salary then you just need to to enter details opposite using the create tab.If you have more complicated payroll requirements (eg multiple employees on different salaries) then your Caprica Accountant will be able to recommend the best method for you to reconcile salary payments.
Who – The employee’s name
What – Salaries
Why – Enter a short description or leave blank
VAT – No VAT
Reconciling items that don’t have an invoice/receipt
For some items, like bank fees or insurance, you just won’t get an invoice or receipt. As long as there is no VAT to reclaim on these items it’s fine to use the ‘Create’ tab.
Who – The supplier name
What – The expense type (eg bank fees)
Why – Enter a short description or leave blank
VAT – No VAT
Reconciling sales invoices
Xero will recommend a match if the payment in equals the value of an invoice.
Beware, if you have multiple invoices to the same customer for the same amount Xero’s ‘guess’ may be wrong and you should allocate the payment to the oldest invoice using ‘Find & Match’.
If the invoice isn’t the correct one:

Click Find and Match
Click the tickbox next to the correct invoice (or multiple invoices)
Click reconcile

Tip – If a customer has part paid an invoice click the tickbox for that invoice and then click ‘Split’ to record a part-payment.
Reconciling an expense claim
An expense claim is reconciled in the same way as a purchase invoice.

Tip – Once you’ve finished the reconciliation Xero will show a ‘Statement Balance’ at a particular date. Compare this to your bank statement balance. If there is a difference it means that there are transactions missing from Xero, or duplicated in Xero and action needs to be taken. Ask your Caprica accountant if you are unsure.


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