UHY Hacker Young's cloud guide series showing you everything you need to know about Xero
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.
You can watch the guidance and learn in whichever way you wish by clicking on the video links below. We recommend starting from ‘Module One: Introduction to UHY Hacker Young Cloud Guide Series’ as this covers the basics and ensures you have a solid foundation on Xero.
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