App Tips
6  min read

Top 10 Xero Tips and Tricks For Small Business Owners in 2024

Abhishek Agrawal
By Abhishek A Agrawal
April 9, 2024
Table of Contents

    Small business owners already have a lot on their plate, from managing the business to bringing in prospective clients. Therefore, looking over every small detail of accounting isn’t possible.

    This is where Xero makes its mark. It is a powerful accounting software that manages your finances effectively. Getting the hang of all the ins and outs of Xero takes time.

    To simplify the process, we’ve compiled a list of the Top 10 Xero tips and tricks. Keep these in mind as you’re setting up your accounts or tracking your expenses, and you’ll be on your way to becoming a Xero expert!

    Xero Time-Saving Tips for Small Business Owners

    Easily locate duplicate documents with Hubdoc

    There are times when the transactions get duplicated thereby unfairly charging your customer. This heavily affects the reputation of your Business.

    But Not to Worry!

    Hubdoc is here to rescue you. It is an accounting platform that is integrated with Xero to help you get more out of automating your business accounting.

    With Hubdoc, you can easily erase the duplicate records found in the same document.

    You can read more here.

    Instant payment with the ‘PayNow’ button of PayPal

    While transacting, businesses expect the payments to be hassle-free. However, entering the payment details each time is troublesome.

    You can avoid this tedious process entirely by connecting it with your PayPal account.

    Xero adds PayPal as a supportive payment system which gives the users the‘ PayNow’ option in PayPal. 

    In fact, it even supports multiple currencies.

    Get more details about setting up PayPal with Xero here.

    Connect PayPal with Xero.

    Reconcile your Transactions

    For your business to run smoothly, your bank transactions must tally with your business accounting records. Because if they don’t, it creates an opportunity for misuse of funds (siphoning).

    Xero’s reconciliation feature compares your statement lines with your transactions recorded in Xero in real-time. Thereby creating a clear picture of your account statement.

    • Statement Lines – The data imported from your bank account specifying transactions into Xero.
    • Transactions – Invoices raised, Bills issued and other entries made in Xero.
    Xero's Reconciliation of Bills feature.

    The details of the reconciliation process can be found here.

    Reverse Reconciliation

    When you are reconciling a transaction, accounting errors may occur. For example, you might record an overpayment by a customer and the amount may not align with the statement line. This leads to wrong entry and reconciliation would also be incorrect.

    To counter this mishap, Xero also offers reverse reconciliation or unreconcile feature to remove the established link between the statement line and the transaction.

    Automate your Recurring Transactions

    If you have customers placing recurring orders on a weekly or monthly basis, the same invoice will be created manually, again and again, which becomes tiresome. 

    How about you automate this process?

    With the repeating invoices feature of Xero, you can create a template that holds all the details of that customer and the invoice will be created automatically.

    This helps save your time and effort on recurring transactions.

    To use this feature, 

    • Click on the Business tab.
    • Then click on Invoices and select the Repeating tab.
    • From here, you can create a new template or select a current one.
    Recurring Transactions in Xero.

    Let’s automate some more…

    Xero takes care of all your accounting needs. But did you know that you can go a bit further and even automate more of your workflows? 

    For example, you can link your online payment system with Xero. This automatically saves all your transactions and helps you track them.

    This productive and time-saving hack is possible with Integrately.

    Integrately is an automation platform that helps you set up your workspace with millions of ready integrations to vastly enhance your productivity and save your time.

    It provides more than 8 million ready-to-activate automations for more than 875+ applications.

    8 Million+ Ready Automations
    For 750+ Apps

    If you don’t find your automation, you can just use the webhook feature.

    Save time with the built-in calculator

    Isn’t it annoying when you have to constantly switch between your calculator and recording your invoice? 

    It indeed is!

    It consumes a lot of time when you constantly go back and forth. 

    However, you can completely avoid this hassle.

    With the inbuilt calculator of Xero,  

    • You don’t have to step out of Xero.
    • Assists in simplifying the calculations.

    Xero can streamline your calculation process with basic arithmetic functions.

    Inbuilt Calculator of Xero.

    Send Quotes

    Sending quotations is important for your business as the customer will make the purchase decision based on your quoted price.

    This is where the Quote feature of Xero proves its usefulness, informing them about the prices of your products/services.

    The acceptance or rejection of your online quote helps you identify the customer’s intention to buy your product. You can also take a follow-up on your opened but unreplied email.

    Once your quotation is accepted, you can proceed further with the invoice generation and the actual sale.

    Online Quotations through Xero.

    Analysis of the Financial Reports

    Your business performance and solvency are determined by the financial reports and ratios. They allow you to study the growth of your business by comparing the current year’s performance with the past.

    Xero’s Business Snapshot feature captures the financial position that provides performance metrics aiding you in decision making.

    With the help of this feature you can:

    • Determine the Profit or Loss of that Financial year.
    • Calculate the Gross Profit Margin to evaluate the efficiency.
    • Analyze the largest operating expenses of your business and,
    • Determine the financial position (including cash available) for that Financial Year.

    You can also set the method of accounting that your business follows, be it On-Accrual or Cash.

    To use this feature, 

    • Just head to the Business menu section and click on Business Snapshot.
    • Select your reporting period (Financial year).
    Analysis of Financial with Business Snapshot feature of Xero

    Payment Reminders

    Your customers might fail to pay their dues which leads to bad debts or arrears in payments. Bad debts lead to losses thereby affecting the Goodwill and hence should be avoided at all costs.

    This is where Xero comes to assist. It provides the option of setting Invoice reminders so that your customers are given timely reminders of the payments due to your business.

    How does it work?

    Just turn on the Invoice reminders and type in a custom message to be sent to the customer. 

    Invoice Reminders feature of Xero.

    The message timer can also be set in the number of days before the payment is due.

    Invoice Reminder.

    Access the PayRun Feature

    Employee salaries make up for a large chunk of the fixed costs of any business. Therefore, management of the payroll system becomes essential for your business.

    Xero has an inbuilt PayRun feature to manage the payroll activity of your business.

     It includes:

    • Basic Employee Information.
    • Running pay reports and,
    • Managing the entire payroll process (including taxes).

    You can read the process of managing your PayRun here.

    Final Thoughts

    Xero is embedded with the best features to help streamline accounting for your business. However, many features might be overlooked and hence avoided due to complex UI. But, you can keep our tips and tricks in mind to remove your doubts and complexities and get a better grip on Xero.

    Abhishek Agrawal
    Author - Abhishek A Agrawal
    Abhishek is the founder of Integrately, CompanyHub, and Dreamwares. He is passionate about technology and entrepreneurship. He is always looking to leverage technology for the growth of the business. He has a deep understanding of how businesses work and uses this knowledge to build products that help entrepreneurs grow their businesses.
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