Being able to reconcile transactions efficiently, and adeptly in Xero can be extremely useful for our clients.
Where a business has perhaps fallen behind with bookkeeping and unreconciled transactions have built up, cash coding is a useful feature as it enables Xero users to code numerous transaction lines simultaneously and tidy everything up!
However, before going anywhere near cash coding, you should ensure that sales invoices, purchase invoices and bills, credit notes or expense claims that have been added to Xero and need to be reconciled have been, via the ‘reconcile’ tab – i.e. matched to the right payments in the bank.
If you don’t do this first and just cash code everything, you risk ending up with lots of transactions that appear as though they haven’t been paid, when really they have.
In cash coding, you can view up to 200 statement lines at one time in a spreadsheet format and sort these transactions by date, payee, reference or description. ‘Sorting’ will effectively group any similar transactions together.
Cash coding: How to…
- Firstly, navigate to the cash coding screen
- Click on, for example, ‘payee’ which should alphabetize the list per payee’s name
- If different amounts have, on different occasions, been paid to the same payee, then these transactions will be grouped together, e.g., ‘Virgin Media’.
- Select all ‘Virgin Media’ transactions and enter the relevant nominal code in the account column, e.g., ‘489 – Telephone & Internet’.
- Add a Tax rate (20%) into the tax column.
- The detail input into the ‘account’ column and ‘tax rate’ column will be automatically assigned to all lines that you previously selected.
- Once you have worked through these steps, you can then navigate to the bottom of the page and select ‘Save & Reconcile Selected’.
Cash Coding Tips
- Whilst using cash coding, you can learn time-saving shortcuts via ‘shortcut keys’.
- Setting up bank rules for regular transactions will aid your use of cash coding (you can learn about creating bank rules in the George Hay Highlight – July).
Our cloud accounting experts in Cambridgeshire, Bedfordshire and Hertfordshire are here to help you explore what works for your business, and to ensure you’re getting the most out of your chosen software. If you’d like to find out more about how Xero, or any of the other market-leading software, could help you to stay on top of the transactions going through your business, please contact us.