Xero Tips Documentation is the Key



The freedom of “being your own boss” sounds very appealing in theory, but the reality isn’t always so liberating. One of the less enjoyable tasks that many small business owners struggle with is managing piles of paperwork. Although it seems to accumulate ever so quickly, ignoring it is not a viable option. Good business record keeping is essential to the success of the business, and all that paperwork is where it all starts. Fortunately, cloud technology is making it easier for us to efficiently organize and process all this important information.

Many businesses trust online services like Dropbox, Microsoft OneDrive, and Google Drive to store and share documents digitally. Storage systems specifically designed for expense documentation take this process a step farther by linking source documents directly to the accounting system, making it much easier to find the related paperwork.

Why is “paperwork” so important?

Keeping source documents integrated with the accounting file helps the business owners, accountants, and managers verify the authenticity of their accounting data. This can help protect them from potential internal fraud, which unfortunately does happen!

Obviously if you ever are audited, you’ll need to have your paperwork in order. But this documentation is also handy when you want a little more detail about a transaction:

  • How much did we pay for business cards last time, and how many did we order?

  • What period does our current insurance policy cover and what are our rates based on?

  • When does our lease expire and how much are we paying per square foot?

Being able to quickly access additional information contained in the transaction source documents can help you make better informed decisions quickly.

If that storage system can also read and capture data from the receipts, a whole new level of data entry automation can be achieved. The Xero cloud accounting system has built-in tools and integrations that businesses can use to automate their filing systems and improve the flow of data.

In this article we are going to discuss three tools: the Xero Files feature, the Hubdoc App for file fetching and data capture, and the AutoEntry App for independent data capture.

Xero Files help you stay organized

Right out of the box, Xero includes its own file management system. “Files” is the first option within the Organization Menu. Within Xero Files, documents can be uploaded and used to create transactions or organized into folders.

There are three ways to upload documents to Files – directly by manual upload, via a unique Xero email address, or as a picture from your smartphone via the Xero Touch App. The folders can be named in any fashion to organize your documents by type, year, account, or other qualities.

Individual documents can be used to create a new transaction within Xero Files. This will keep it in its related folder but also accessible within the transaction. Each transaction page also gives you the ability to access Files and attach a document after-the-fact from the Files library. You can even attach multiple documents to the same transaction. Keep in mind that each documents copy can only be attached to one transaction in Xero. Users can also upload documents directly to transactions, but they won’t show up in the main Files feature.

Here are a couple of ways that the File feature can really come in handy:

Your client requires you to send documentation with your invoices. That’s easy in Xero. After you have created the invoice, simply upload and attach the necessary documentation to the invoice, and automatically include it when you email the invoice to your client.

You want to keep documentation of sales tax filings together with the payment made to the agency. Not a problem. First upload your PDF copies of the tax filing directly to their own folder in Xero Files for easy access. Then create the new payment transaction directly from Files by selecting “Add to New: Spend Money” from the document options on the right hand side. Xero opens a new transaction with the document attached. All you have to do is fill in the details and later match it on the bank feed.

Xero Files is a basic document storage system and a great tool to start getting organized. It is very useful for keeping important internal documents, like contracts, payroll quarterlies, and sales tax filings, at your fingertips. If you have lots of documents and multiple banks to keep track of, a more robust document fetching and filing system like Hubdoc might be exactly what you need.

Hubdoc brings it all together

Hubdoc is a handy digital filing cabinet that automatically fetches and stores bank and credit card statements, bills, receipts, and other financial documents – basically from any website with a sign-in. For many banks it will also pull check copies and deposit details, and when accounts are initially linked, it will often pull substantial prior history.

This means that individual users with access to the Hubdoc files won’t need direct access to bank and credit card accounts. Having everything in one easily accessible place saves time, and allows the business owners to keep control of sensitive account access.

There are several ways to send specific items like receipts and bills received from vendors to Hubdoc. You can directly upload PDF copies that you have scanned or received from vendors. If a vendor emails you an attachment, you can forward it to your own unique Hubdoc email. You could even set that as the default email with your vendor’s accounts payable department.

But Hubdoc is more than just a static filing cabinet. It can become an active member of your data processing system. Data from the documents imported into Hubdoc can be read and converted into transactions. You can create custom rules so that Hubdoc knows how to categorize and assign these transactions. They will then be pushed into Xero, with the document attached, awaiting your final approval.

For a flat monthly fee* you can fetch and process an unlimited number of statements and transactions. This useful tool can greatly eliminate the need for manual entry, saving time while increasing the quality and consistency of the data in your accounting system.

*Update: As of March 2020, Hubdoc is now included at no extra cost with Xero Early, Growing and Established subscription plans.

AutoEntry takes care of the details

If your business doesn’t need a robust fetching and filing system like Hubdoc, and are happily using Xero Files for basic document storage needs, AutoEntry might be the perfect tool to add a little more automation to your data entry process.

If you have scanned or PDF copies of bank or credit card statements that need to be converted into bank imports for Xero, this is the perfect solution. We often use it to recreate historical data for Xero when live feeds or quality CSV files aren’t available.

AutoEntry can also read data from bills and invoices to create transactions that can be imported into Xero. Since their fees are based on usage, this could be an economical and time saving way to process a handful of invoices or bills each month automatically.

Welcome to the modern file cabinet

Technology has changed the way we do business, and even the way we utilize and store documents. Recordkeeping no longer has to be a tedious and space consuming process.

Xero Files, Hubdoc, and AutoEntry are just a few of the tools that savvy small business owners use to take control of their paperwork. In future articles we’ll consider how Xero can help small business owners get a better handle on their expenses.