Ninety percent of a small business’ transactions affect bank or credit card accounts. That is a lot of reconciling! Xero’s bank rules allow you to automagically clear your bank feed.
Here are our Top Ten favorite features of and uses for Xero bank rules:
- Name Game – When you create a bank rule in Xero, you must give it a name. The name, but not the underlying qualities, is displayed on the bank reconciliation screen. Consider giving your bank rule a name that includes, not just the vendor, but also a reference to the coding, like “Shell-Gas.” When you have dozens of rules, you may not remember whether “Adobe” is coded to Office Supplies or Software Subscriptions or Computer Expense. Giving the title of the rule a little more description helps ensure transactions are going where you want. When you add a new rule for say, Slack, you can look at the names of the other rules for similar vendors, like “Adobe- Software Subs” and can easily be consistent. Also, some recurring vendors may have similar confusing names. When I have “Uber” as a rule, I’m always second guessing whether it’s Uber ridesharing or Uber teleconferencing. By denoting the rule as “Uber-Travel,” I can be sure.
- Cash Coding – Xero has a hierarchy of bank reconciliation matching, including matching on amount or previously coded transactions, but those don’t show up in cash coding. However, bank rules do. When you have hundreds of lines of catch-up transactions, like on the first bank download in a new company, you can just click the big green button at the bottom and in a second, reconcile them all.
- Xero Touch – Bank rules also show up in Xero Touch for reconciliation on the go. Easily clear your queue waiting at the coffee shop or watching your kids finish soccer practice with the same confidence.
- Contact Management – Some retailers include store numbers or locations as a payee reference with every charge (think Whole Foods and gas stations). This would mean a Contact for each location is automatically created with each Spend Money transaction. Xero lets you consolidate Contacts easily, but why not manage the entry on the front-end so you don’t have to spend time merging Contacts? By setting up bank rules for gas stations, grocers and such, you can force the Contact to be “Shell” rather than Xero creating dozens of Shell contacts (ie Shell #123, Shell #456, Shell Main St.)
- Simple Math – Bank rules can do the math for you. You may receive deposits net of merchant fees when using a payment processor. How do you record both the merchant fee and the full revenue amount without calculating making a manual entry? Create rules where the coding for the revenue account is greater than 100%, then the fee expense is a negative percentage. As long as the total equals 100%, Xero is cool with it. (Sales = 103%, Merchant Fees = -3%) It’s not perfect, but it’s REALLY close. It is good enough for monthly financials and your advisor can make entries at year-end to true it up.
[clear]Other examples would include monthly civic club dues that include a split between meals and dues, or a monthly payment that needs to be allocated between departments.
- Consistency– Bank rules help “dummy-proof” the data. You don’t have to remember if this monthly charge goes to Dues & Subscriptions Expense or to Web Hosting Expense, or what the difference is between Advertising Expense and Printing & Stationary Expense. And if the data isn’t consistent, then it becomes meaningless in the end.
- Automation – Bank rules let business owners go through their transactions with zero typing and zero data entry. The easier it is, the more likely you are to keep up with it. And if you use Xero Touch you can reconcile with one hand and brush your teeth with the other.
- Delegate Down – Bank rules let owners who have customized their users’ access delegate simple duties, like clicking an “OK” button to lower level staff. Free up your time to grow your business.
- Multiple Accounts – You can apply a bank rule across all bank and credit card accounts or just one. Apply a rule to all accounts if employees are using different credit cards at the same vendors or if there are a lot of recurring transactions. But if a salesman’s expenses on one card need to be coded differently than the owner’s expenses on another card for the same vendor, bank rules give you the flexibility to do that too.
- Fun! – Believe it or not, reconciling bank transactions can be fun! Make a game out of clearing out transactions. One of our clients compared it to video poker. Tap, tap, tap…every time you click the “OK” button, you can say “Hit me again!”