• New Wave Accountants

4 Tips to Avoid Costly Xero Errors For Your Financial Management

Updated: May 24, 2021

There’s no doubt that accounting and bookkeeping are all crucial functions that directly impact the financial performance of every business, but owners often find it tricky to delegate tasks with other responsibilities dividing their attention.

Automation technology should ease the administrative burden of tracking business finances, which is why a cloud-based accounting system like Xero is dominating the industry as it streamlines standard bookkeeping and accounting functions.

While it’s designed to address inefficiencies and reduce human error, there are still common mistakes that can prevent you from maximising the full potential of your accounting system. Spotting them is the first step to correcting these blunders, so consider the tips below so you can save yourself the burden of paying penalties down the line:

Tip #1: Don’t Forget to Link All Business Bank and Credit Card Accounts

Xero is designed to take the guesswork out of organising your finances, so it’ll miss its mark if you fail to sync your business bank and credit card accounts to your software. This will make it harder for you to track the cash flow for your reports.

On the other hand, syncing your personal account with your professional one is a recipe for disaster since it can muddle up your tax preparation, making it harder to stay on top of the comings and goings of your money.

Tip #2: Always Reconcile Your Bank Account in Xero to Bank Statements

It’s good practice to reconcile your bank account into bank statements so you can run a report that vets its accuracy and correctness. Failing to make a reconciliation report increases your risk of submitting documents with incomplete data, errors, or duplication, all of which can dig deeper holes in your pocket once tax season arrives.

Tip #3: Secure Your User Access by Monitoring Permission Levels

Xero makes it easier for all key team members to access, share, and organise the cloud-based accounting system for a more efficient workflow. While providing instant access cuts back the time it takes to pass data, it’s important to practice strict monitoring and only offer access “as needed” to protect sensitive information stored in your system.

Tip #4: Create Proper Financial Standard Operating Procedures (SOPs)

Xero is indeed a system built to simplify the bookkeeping and accounting process, but it still needs a standard operating procedure so everyone can perform their duties in a consistent, predictable, and well-prepared manner.

Setting a financial SOP means your team understands the process and knows what is expected of them, allowing you to create a trackable metric that follows what should be done, who should do it, and when it should be delivered.

The Bottom Line: Avoiding Money Pits by Minimizing Common Xero Mistakes for Accountants

Rising on top of the industry as an excellent contender against QuickBooks, Xero is an up and comer accounting software designed to help small businesses iron out their financial health. Nonetheless, operating this cloud-based system requires practice and technical expertise, so it helps to work with experienced accounts that know the ins and outs of Xero.

Why Choose Us?

If you’re looking for reliable accounting and bookkeeping services in Mermaid Beach to manage your tax returns and apply money-saving tactics, we’re the best accounting firm to call! Contact us at (07) 55041999 and see how we can help you!

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