When it comes to keeping your books up to date, it’s all about choosing the best tools. And for most of us, that means accounting software. So…which one should you choose?
It’s no secret that I love Xero. It’s my favorite program to recommend to clients — and it’s what my team and I use here at Madison Dearly Bookkeeping too!
But even though I talk all the time about how much I love Xero, I haven’t given you a tour of my favorite features… until now!
That’s right, this is your chance to go behind the scenes with me and see some of the ways Xero can make your bookkeeping life easier. I’m covering four of my favorite Xero features and showing you how to get the most out of them!
So grab your laptop, get comfy, and let’s get started!
First up, let’s look at bank rules. I know, it sounds boring (or maybe even a little intimidating), but don’t worry — you’re in charge of these rules! Basically, bank rules help automate the process of categorizing your transactions.
When you first get started with Xero, you’ll link your bank accounts in the software so it can start pulling in transactions. The next step is to set up some rules! That means telling Xero what it should do with certain types of transactions.
Once you have these rules set up, the software should start categorizing most of your transactions for you. Of course, it’s always a good idea to check and make sure Xero did it right. But in my experience, it does a great job as long as you set up the rules correctly.
Here’s an example: I told Xero that charges with “Loom” in the name should be categorized as software subscriptions. Now, the software does that for me — my Loom charges get pulled into the “software subscription” category of my business expenses.
And Xero also has a little bit of AI going on. Once you’ve categorized a few transactions (rules or no rules), it will try to categorize similar transactions for you. It doesn’t always get this right, of course, (so be sure to check for accuracy) but it does a pretty darn good job.
Just check every so often to make sure Xero is following the bank rules correctly. And trust me — doing those occasional checks takes way less time than categorizing all your transactions by hand!
Here’s another thing I love about Xero — it’s besties with Stripe and PayPal. What does that mean for you? That everything’s set up for (pretty much) hands-off payment tracking.
When you get paid via Stripe or PayPal, that payment is basically three different transactions:
And you don’t want to forget about any of those steps in your books! If you leave one out, things can get confusing real fast.
But Xero has Stripe and PayPal integrations built right in! This means that it understands all those components of each transaction and records/categorizes them for you very easily!
So easy, so accurate — I’m obsessed!
And yeah, QuickBooks has integrations too, but I think Xero’s are so much better!
One of the things that’s most important to us here at Madison Dearly Bookkeeping is giving our clients reports that are actually useful. Not just some boring document filled with a bunch of accounting jargon — but beautiful, approachable reports that align with how clients actually think about the money in their business.
And — you guessed it — creating these personalized reports is a breeze with Xero. Just choose the aspects of your business finances that you want to know more about, and Xero will create a report that’s simple to understand.
What does that really mean for you? You’ve got the info you need to make those critical business decisions:
All those decisions require you to know exactly what’s happening with your business finances. And with custom reports from Xero, you’ll have all that data at your fingertips.
Full disclosure: I’m gonna completely nerd out here. Because this is one of the coolest features of Xero, and I’m so excited to talk about it. And yes, you do need to upgrade to a higher tier of Xero to access this feature. But if your business has a lot of transactions, it’s so worth it!
OK, so what’s this awesome feature? Cash coding!
With cash coding, you can basically categorize all your transactions at once. That means every transaction from all of your bank feeds — analyzed, sorted, and categorized in one fell swoop.
Use the cash coding tool to search all of your bank feeds for certain transactions — like anything with a specific payee or description. Then categorize all of them at once, hit Reconcile, and…done. So legit! (If you want to see this in action, scroll up to the top of this blog post and watch the YouTube video!)
I love this feature so much, and it’s incredibly useful for anyone with lots of transactions. Do you sell templates or courses? Have lots of different items in your shop? This feature is gold.
I love taking care of all those bookkeeping tasks like categorizing transactions and creating reports — especially when I’m using Xero. It just makes everything so organized, simple, and quick.
It’s my favorite bookkeeping software — but you don’t have to be a professional bookkeeper to use it. In fact, it might be even more powerful for you DIY bookkeepers out there! Just take a few minutes to set up and link your accounts, set up your bank rules, and customize your reports — the software takes care of the rest!
I’ve got more tips on using Xero — plus tons of other practical tips on keeping your books — over on my YouTube channel! Head over there for everything you need to get (and keep) your business finances in shape!