Solid bookkeeping is essential in every business. Not only is it important for compliance purposes, but it lets you see exactly how much cash you have coming in and out of your business. It means you can make strategic decisions based on accurate assessments of your financial health, leaving nothing to guesswork.

However, not investing sufficient time or money in your bookkeeping is likely to incur avoidable costs. Many business owners who do their own bookkeeping regularly make errors, having to foot the bill to get an expert to rectify them at year-end.

At Tyrrell Accountants, we have a multi-stage process for bookkeeping, with even further steps if you’re VAT-registered. Following this thorough framework ensures your data is in good health and up-to-date, here’s how to avoid common bookkeeping mistakes.

 

Duplicated transactions are the most common error we see.

 

These can occur for one of three reasons:

  • An invoice or receipt is added to Xero more than once.
  • The bank transaction hasn’t been matched to an invoice. Instead, another transaction will be created during the bank reconciliation process.
  • There’s an error in your bank feed. Find out how to improve the reliability of your Xero bank feed by checking out our dedicated blog.

These duplicates can sometimes be tricky to spot, but if you’ve reviewed your aged payables and aged receivables reports, these should make sense and should only show money that is owing or payable by you. For instance, it’s unlikely any receipts paid for at the point of purchase should be showing as outstanding.

We also see business owners make the following mistakes:

1.Putting all sales invoices on Xero.

It’s important to ensure all sales invoices and data is on Xero. If you are using Xero to raise sales invoices, ensure that all have been approved and not in draft.

2.Forgetting to publish VAT invoices from Dext to Xero.

Double-check everything has transferred to show up on Xero as it should and that you’re only publishing invoices and not delivery confirmations.

3.Categorising supporting paperwork as invoices.

Make sure you’re adding the VAT invoice, not the delivery acknowledgement. Only add one otherwise it duplicates.

Tyrrell Accountants tip: Never create a transaction from the Xero bank reconciliation screen where the invoice already exists. You’ll be creating an unnecessary duplication which will need to be rectified.

 

Checklist for bookkeeping best practices.

 

If you do your own bookkeeping (which we strongly discourage if you’re not experienced in this area), we recommend you carry out these checks monthly.

Make sure you:

  • Record all sales in Xero.
  • Ensure all purchase invoices have been published from Dext to Xero (nb VAT invoices not delivery notes etc)
  • Add supplier statements to Dext and archive them (not publish them to Xero).
  • Check bank balances per Xero match with what’s showing on your bank statement.
  • Check supplier statement balances match with aged payables in Xero.
  • Check there are no invoices in draft.
  • Fully reconcile all bank accounts.
  • Run your bank reconciliation report to ensure accuracy.
  • Verify the accuracy of all aged payable and aged receivable reports.
  • Review overpayments.
  • Review aged payables report.
  • Review aged receivables report.
  • Review transactions posted to general expenses.

Tyrrell Accountants tip: Be strict about which transactions are classified as general expenses, so it doesn’t become a “dumping ground”. Only put things here which definitely can’t be categorised as anything else. General expenses should be very minimal.

 

Always return to checking if your Xero bank feed matches your bank statement.

 

It’s worth repeating again: if it doesn’t match up, you know something’s off. It indicates you either have missing transactions or duplicate transactions. By comparing the two, it’ll be much easier to spot if your bookkeeping is veering off-course.

 

Expert help guarantees accurate, reliable books.

 

You don’t have to do it all yourself. After a long week working on your business, you have little time and energy to sift through Xero to spot errors.

That’s what we’re for. At Tyrrell Accountants, our qualified bookkeepers have years of experience identifying mistakes most business owners overlook.

Our Xero health check service goes over your data with a fine-tooth comb to ensure your finances are healthy and your bookkeeping function is working effectively. Get in touch to start enjoying total peace of mind.