Cloud guide video series

In UHY Hacker Young’s Cloud guide series we will explore the functionalities of Xero to aid in your bookkeeping, saving you time and effort with the goal of helping you prosper

Video transcription

Welcome to UHY Hacker Young’s Cloud Guide Series.

Where we are exploring the functionalities of Xero to aid in your bookkeeping, saving you time and effort with the goal of helping you prosper

Please browse our content and if you have any questions, get in touch with your local UHY advisor

In this instalment we are looking further into the Bank account functions of Xero and what tools are available to enhance our efficiency and ease the bank reconciliation process. Specifically, we will be looking at the Bank rules

Video transcription

Welcome to UHY Hacker Young’s Cloud Guide Series.

In this instalment we are looking further into the Bank account functions of Xero and what tools are available to enhance our efficiency and ease the bank reconciliation process

Specifically, we will be looking at the Bank rules

Bank rules are a tool designed to avoid the need to manually reconcile transactions which have a common or recurring feature such as salary, bank charges, interest and many more

If a bank line transaction does not need to be matched to an invoice or bill raised on Xero and is a receipt or expense you will regularly incur, then a bank rule can be setup to tell Xero where to put this transaction in your accounts

By setting up these rules, you will speed up the bank reconciliation process and hopefully maintain greater consistency of transaction posting

Bank rules work by looking at the bank line transaction either imported manually or entered via a bank feed then looking for key words, phrases or other features

If the bank line transaction matches certain conditions within the bank rules then Xero will suggest where the transaction should be posted to the accounts based on the most applicable rule

If you do not agree with the suggested rule, you can always ignore it and manually decide where the transaction should be posted

There are three types of bank rule

Spend money rules – Where Xero looks at outgoing funds

Receive money rules – Where Xero looks at incoming funds

Transfer money rules – Where Xero looks at monies being moved between accounts

Typically, bank rules are split into two sections

Firstly, the conditions that need to be met for the bank rule to apply

Secondly, the accounting transaction to be posted as a result of meeting these conditions

When setting up rules on your Xero subscription, you will be able to choose which bank account the rules apply to and whether it is a receive, spend or transfer money rule

Now that you have an overview of what bank rules are designed to do, we will jump into the different areas of setting up and maintaining your rules

In this instalment we are looking at setting up bank rules for incoming and outgoing monies. There are several methods to create a bank rule.

Video transcription

Welcome to UHY Hacker Young’s Cloud Guide Series.

In this instalment we are looking at setting up bank rules for incoming and outgoing monies

There are several methods to create a bank rule

Namely, via the bank rules screen, the bank reconciliation screen or through cash coding

The first method we will go through is via the bank reconciliation screen

Once you have this method in hand, you will be able to apply the same thinking to the other two methods

Let’s get started

The first step is to get to the bank reconciliation page by clicking Accounting then Bank accounts, looking for the reconcile button on the bank you wish to create rules and selecting it

Next is to review your bank transactions for any items where you will not be issuing or receiving an invoice. These are prime candidates for bank rules

A great example is the bank fees, in this case, the Ridgeway Banking Corporation Fees

Once you have chosen the transaction you want to create a rule for, select the Options drop down and click on Create Bank Rule

Avoid clicking the Delete statement line option unless advised or certain of error

You can see that the Create Rule page is split into Spend, Receive and Transfer money rules

If you are creating rules from scratch, you can choose the applicable section

However, as we are creating via the bank reconciliation, Xero has automatically chosen the appropriate page

The Spend and Receive money rules are further broken down into 7 sections

First section – Conditions

These are the conditions needed to be met in order for the rule to apply

For the bank rules to work as you desire, the conditions may need to be amended to pick up all transaction you would expect the rule to apply to

You can have as many Condition lines as you require to pick up bank transactions from the reconciliation which can be added using the Add a condition button

You can also remove conditions if they are not required by clicking the grey X on the right

You can tell Xero whether it needs to look at All the Conditions or Any of them by selecting from the drop down at the top –

If set to All, the bank rule will only work if each and every condition line you have set matches the bank transaction details

If set to Any, the bank rule only needs to have one Condition meet the requirements to apply

Additionally, you can tell Xero to look at a part of the bank transaction details or the whole content by selecting the drop down of “equals, contains or starts with” for each of the condition lines. Please note that they don’t all have to be set the same way

In this case, we are telling Xero that both the condition lines for Payee and Description need to equal, that is match exactly, to the bank transaction details. This assumes that the details provided on future bank transaction lines will be the same as the transaction we are creating a rule for

As we have created this rule using the bank reconciliation screen, Xero has automatically populated the condition lines it thinks are most suitable

Second section – Contact

The default Contact for the rule

Here you can choose which Contact to apply to the transaction

You can either use an existing contact on Xero by searching, or choose to create a new one

Once created, this Contact will apply to all future applications of the rule

In this instalment we are looking at setting up bank rules for incoming and outgoing monies. There are several methods to create a bank rule.

Third section – Automatic fixed value

This is where an amount can be split to allocate a consistent amount from the transaction to a specific location in the accounts before allocating the remainder. For example, a monthly telephone bill with phone insurance included at £5 per month. Rather than allocate the whole amount to telephone expenses, £5 can be split and allocated to insurance automatically each time the rule is applied

In this case, we won’t use this section as we want the transaction line to be allocated based on a percentage rather than a fixed amount as it is going to one place in the financial statements

Forth section – Allocation of transaction by percentage

This is telling Xero where you would like to put the transaction in the accounts and splitting it in whatever manner you deem appropriate. For example, if a certain member of staff works in both distribution and administration, you could split their salary across multiple nominal accounts

You can add lines as required, give a default description (for example, the staff members name), choose a nominal account which is where the value will appear in your financial statements and the applicable tax rate

Additionally, you can also set the Tracking of the transaction at this point, which we will go into further in another guide

Bear in mind that the percentage split must add up to 100%

Fifth section – Transaction reference

You have a couple of options here. The reference can be set manually, defaulted to a certain reference or can be set to take details from the bank line transaction, for example making the reference the description from the bank transaction

In this case, our reference will be “Fee” which is what the bank line detail describes

Sixth section – Applicable bank account

This is where you can choose a single, or all, bank accounts to have a rule apply

In this case, we only want the rule to apply to the Business Bank Account

Seventh section – Rule title

Where you give the rule a title which indicates to you what rule is being applied during the bank reconciliation process

Once you are happy that the rule has been created and setup correctly, click the save button

You will be jumped back to the bank reconciliation page

Scroll down to the transaction you were creating the rule for and check the rule applies as expected

At this point, if the conditions have not been setup correctly there will be no bank rule title on the right hand column and you may not be able to click OK to reconcile

You can go back into the Bank rules screen, by clicking Manage account and Bank Rules, choosing the rule you need to amend and clicking edit

From here, you can tweak as required to make sure the Bank rule picks up the desired transactions

And that is how to setup a rule via the bank reconciliation

With this understanding you will be able to setup as many bank rules as you need and edit as required, helping you reconcile your bank accounts faster and more easily

As always, thank you for listening and if you have any questions please get in touch with your local UHY advisor

In this instalment we are looking at setting up bank rules for transferring monies. This guide will be built upon the Receive and Spend Money Rules Guide where there is an in depth description of multiple rule creation sections.

Video transcription

Welcome to UHY Hacker Young’s Cloud Guide Series.

In this instalment we are looking at setting up bank rules for transferring monies

This guide will be built upon the Receive and Spend Money Rules Guide where there is an in depth description of multiple rule creation sections

The same logic applies when putting the transfer rules together

We will only be covering the different aspects of this rule type

Namely, Create a transfer and Set a Tracking

Start off by finding the bank line transaction you want to create a transfer rule for using the bank reconciliation screen

Use Options and Create Bank Rule

Select the Transfer Money Rule tab

Fill in Sections 1, 4, 5 and 6 using the Receive and Spend Money Rules Guide as a tool

Second section – Create a transfer

This is where you choose which bank account the monies are to be transferred if they meet your condition criteria

Select from available banks using the drop down menu

Third section – Tracking

This is an optional feature allowing Xero to keep track of distinct categories of transaction

For example, noting all monies transferred in the Northern region

In this case, we will not be using the featureWhen happy with the rule setup click Save to jump back to the bank reconciliation screen

Scroll down to the transaction your rule is to apply to and check that it has worked as expected

You can see this has worked as the Rule Title appears in the right hand column

As always, thank you for listening and if you have any questions please get in touch with your local UHY advisor