Over the coming months we’re going to send you useful Xero tips and tricks. There’s no catches to get you to buy something from us. You’re welcome to ask us for help if you like (which we’re more than happy to offer!), but you’re also welcome to do it all yourself.
This month’s tips – how to deal with transfers between bank accounts and matching payments against invoices in three easy steps:
Transfers between bank accounts:
- Check the transaction wording. A funds transfer will be narrated like this for example – ‘TRANSFER TO XYZ Ltd – 02’. This is money that you’ve flicked from your main business account to your 02 account.
- Reconciling this transaction. Use the ‘Transfer’ tab, select the bank account the funds went to (02 might be your tax account or your savings account), then click Ok.
- Reconciling the other side. Go into the reconciliation screen for the 02 account and you’ll see the funds transfer showing in there as ‘matched’. Just click Ok. Done!
Tip – do not use the ‘spend money’ or ‘receive money’ function for transfers between business bank accounts.
Matching payments against invoices:
- You’ve done some work for a customer and at the end of the month you send them an invoice. In sales, you’ve created a new invoice and it sits as ‘awaiting payment’.
- On the due date the customer pays the invoice. The funds show up in the business account. The customer has used the invoice number as the reference for their payment.
- Select the ‘match’ tab. You will see the invoice sitting under 1. Find & select matching transactions. Check that the customer name and invoice number tie up, then click reconcile. Done!
Tip – for a customer you invoice, do not use the ‘receive money’ function when reconciling payments from them.