Xero - tips and tricks

upnortheast · Jun 17, 2022

Alistair said:
I am using the standard edition of zero and have the bank feeds successfully set up which is working well.

If I pay for goods by cash or credit card not linked to zero how do I account for this type of payment when finalising my bills.

Thanks

View attachment 1043294

Credit card Create a bill & enter everything on your credit card statement line by line. each line allocated to the appropriate code

Then the bill will be there to reconcile against the card settlement payment when it goes through the bank.

Cash payments We have cash coming in from milk sales
So I create a invoice for, Bottled milk sales £20
Then on the second line for example, chainsaw chain sharpen - £20
So the bill total will be zero ( as nothing has gone through the bank ) but both lines will go show in the appropriate heading.

There may be better ways ??

Jerry · Jun 17, 2022

Socksitis said:
Thank you - tried that, but still not happy

You may have to log into the govt gateway site and refresh the xero permissions

Andy26 · Jun 17, 2022

upnortheast said:
We do paid date, not sure of the pros & cons

Not sure why all farms are not on monthly Accural (invoice date), as nearly every return will be a Vat reclaim, so as others have said you can claim the Vat back before you pay it in many instances.

@farmerdan7618 is there a good reason for a typical farm to use Cash quarterly?

chaffcutter · Jun 17, 2022

We are on accrual accounting and by timing the vat return filing date I use it as a cash flow tool, if a claim get it in on 1st of the month, if there’s some to pay I file it just before final payment day, 37 days free credit

theboytheboy · Jun 17, 2022

upnortheast said:
Credit card Create a bill & enter everything on your credit card statement line by line. each line allocated to the appropriate code

Then the bill will be there to reconcile against the card settlement payment when it goes through the bank.

Cash payments We have cash coming in from milk sales
So I create a invoice for, Bottled milk sales £20
Then on the second line for example, chainsaw chain sharpen - £20
So the bill total will be zero ( as nothing has gone through the bank ) but both lines will go show in the appropriate heading.

There may be better ways ??

We have created a petty cash account. You have to manually reconcile the account transactions though.

farmerdan7618 · Jun 17, 2022

Andy26 said:
Not sure why all farms are not on monthly Accural (invoice date), as nearly every return will be a Vat reclaim, so as others have said you can claim the Vat back before you pay it in many instances.

@farmerdan7618 is there a good reason for a typical farm to use Cash quarterly?

Thanks for the tag @Andy26 .

The typical farm that is mainly producing food will almost certainly be worse off financially by using cash basis for VAT, as it is not always possible to pay bills in the same month as the invoice date as no matter how well you pride yourself on paying on the nose, an invoice raised on the last day of the month and sent by post isn't going to have been paid.

The difference can be small for businesses that pay quickly, and under a paper ledger record system of old, the records for VAT were much easier kept under cash basis, as it all fell in line with the cashbook. Those benefits are gone with software, it's just as easy with accruals basis.

Where cash basis is useful, is when there are large contracting businesses run with farms, which may have some slow paying customers. Cash basis means the VAT doesn't need paying to HMRC until the debt is settled. The examples of this are minimal, and cash basis is often used 'because it's always been done this way'

upnortheast · Aug 12, 2022

Is it possible to create a report , what I would call spreadsheet view for the last 12 months trading , by month
Ledger headings down the side, months along the top

Boysground · Aug 12, 2022

Yes, look under the accounts tab, profit and loss report is by invoice and cash flow is by cash payment. Just change the report settings to show 12 months

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upnortheast · Aug 13, 2022

Thanks, I`ll give that a try later

upnortheast · Aug 13, 2022

Can only get 1 month at a time to show, what am I missing?. Was thinking if I had 12 months displayed to use that as a basis to create next year's cashflow prediction

Boysground · Aug 13, 2022

upnortheast said:
Can only get 1 month at a time to show, what am I missing?. Was thinking if I had 12 months displayed to use that as a basis to create next year's cashflow prediction

Can definitely display 12 months, I’ll have a look later and explain it if nobody else has got there 1st. In the tractor and can’t quite picture it.

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MCook · Aug 13, 2022

upnortheast said:
Can only get 1 month at a time to show, what am I missing?. Was thinking if I had 12 months displayed to use that as a basis to create next year's cashflow prediction

If you set the date range for the last month of the period in question, then under 'comparison period', specify 11 months - you will have to enter that manually, as I think it only offers up to 4. That should give you what you are after.

upnortheast · Aug 13, 2022

Boysground said:
Can definitely display 12 months, I’ll have a look later and explain it if nobody else has got there 1st. In the tractor and can’t quite picture it.

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MCook said:
If you set the date range for the last month of the period in question, then under 'comparison period', specify 11 months - you will have to enter that manually, as I think it only offers up to 4. That should give you what you are after.

Brilliant, that`s what I need. Thanks for the help.

Boysground · Aug 14, 2022

upnortheast said:
Brilliant, that`s what I need. Thanks for the help.

Here goes

With profit and loss (does not include drawings and finance and is based on invoice date)
Click Accounting Tab
Click profit and Loss (if you cant see it look under reports and you may get an option to use the new version, I am using it for this)
In the date range check its set for the last month of your 12
Click drop down arrow under Comparison periods
Click Enter a different number
Type 11 in the box and select
Click Update (top Right)

You should have your 12 months displayed

The cash summary works in the same way but will be ALL transactions through the accounts based on payment/receipt date

All the reports available are in the report option under accounting, I use the new ones where available and these 2 are fairly recent. If you want to look at the old versions they will be there and the options to change are again under the compare tab

Hope this helps

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TheRanger · Aug 16, 2022

I've been paying for the odd thing in cash if I forget the business card. For example, say a £120 bill for a tool from Screwfix. I then add the bill to Xero as normal and claim back the £20 VAT as usual. But when it comes to reconciling the payment there is no payment on the business account for it. So I've been transferring the money from the business account to my personal account and then using that payment to reconcile against it. Is this a legitimate way of doing it, or will I get into trouble for money laundering :scratchhead:

TheRanger · Aug 16, 2022

Also, do I still need to keep all of my paper invoices for 7 years, even if I'm taking a clear photograph of them and Xero is storing them digitally alongside every bill.

Boysground · Aug 16, 2022

TheRanger said:
I've been paying for the odd thing in cash if I forget the business card. For example, say a £120 bill for a tool from Screwfix. I then add the bill to Xero as normal and claim back the £20 VAT as usual. But when it comes to reconciling the payment there is no payment on the business account for it. So I've been transferring the money from the business account to my personal account and then using that payment to reconcile against it. Is this a legitimate way of doing it, or will I get into trouble for money laundering

No idea but I occasionally have to do the same, I guess it’s probably not quite right for VAT

TheRanger · Aug 16, 2022

Boysground said:
No idea but I occasionally have to do the same, I guess it’s probably not quite right for VAT

I see it as the equivalent of putting the £120 cash directly into my personal bank account. It's just went via the business account on the way there on paper.

MCook · Aug 16, 2022

upnortheast said:
Brilliant, that`s what I need. Thanks for the help.

TheRanger said:
I've been paying for the odd thing in cash if I forget the business card. For example, say a £120 bill for a tool from Screwfix. I then add the bill to Xero as normal and claim back the £20 VAT as usual. But when it comes to reconciling the payment there is no payment on the business account for it. So I've been transferring the money from the business account to my personal account and then using that payment to reconcile against it. Is this a legitimate way of doing it, or will I get into trouble for money laundering

Rather than making the actual payment to your personal bank account, you can go into the bill via Xero and under the 'Make a payment' option, post it against either your partner's current account or director's loan account (under the 'Paid From' drop down), on the transaction date. You may need to access these nominal codes via the chart of accounts and ensure they have the 'Enable payments to this account' option selected, otherwise they will not show as an option on the drop down.

This will then be treated as capital introduced by yourself, rather than the business paying for it directly. This will remove the bill from the ledger and it is fine to reclaim the VAT as normal.

With regards to paper VAT invoices, HMRC do accept digital copies. Ensuring they are legible and easily accessible (which they will be via Xero) is important.

Steevo · Aug 16, 2022

Boysground said:
No idea but I occasionally have to do the same, I guess it’s probably not quite right for VAT

I've done likewise.

It's similar to putting things on a credit card. Agree that it's not quite technically right for VAT purposes but the outcome is the "correct" one.

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