How To Use Xero Accounting Software?

How To Use Xero Accounting Software?

Business owners dream of making a successful business from their initial years. Nothing good comes without hurdles, and accounting is a hurdle that businesses of all sizes and types encounter during their journey.

Xero is cloud-based accounting software that helps small and fast-growing startups with accounting solutions, from maintaining books, paying bills, calculating and filing VAT returns, bank reconciliation to payroll, tracking inventory, analytics, and managing fixed assets.

Here we will learn the steps of using Xero accounting software.

Steps Of Using Xero Accounting Software

Understanding The Dashboard

Once you log into your Xero account, the first page will display a dashboard with a lot of data.

The top part of the dashboard contains

  • Your bank account
  • Balances for important accounts and
  • a chart showing the unpaid customer services.

Under the “Bank Accounts” section, you will find the bank account reconciliation status, statement balance, and a line chart showing your “Daily Bank balances”.

Under “Invoices owed to you”, you will find information about outstanding customer invoices under invoice status and on a bar chart. The “New Sales Invoice” link takes you to the “New Sales Invoice” page.

The “Total Cash in and Out” depicts the cash flow of your business.

The “Bills you need to pay” offers information about the outstanding supplier bills.

The “New Bill” link takes you to the “New Bill” page.

Set-Up Organisation Details

If you are an owner of a limited company, you must have a registration number and a registered office address that you must display on your company’s invoices.

Steps to set up your organisation details on Xero accounting software:

  • Go to Settings
  • Click on Organisation Settings
  • Input or update your business details that include:

○        Display name

○        Trading name

○        Email

○        Registration number

○        Organisation Description

○        Physical address

○        Registered address

○        Phone and fax numbers

○        Organisation type

○        Business logo

○        Business website.

Set-Up Financial Settings

  • Go to Settings
  • Click on Advanced Settings
  • Click on Financial Settings to enter your company details:

○        Financial year-end

○        Sales Tax or VAT details

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Set Up Direct Bank Account Feed

You can automatically import your banking activities into the accounting software with the direct bank feed feature. To make your bank and Xero work together, know whether your bank provides direct bank feeds.

  • Visit the partner(direct) bank feeds page
  • Click your region
  • See the list of banks which offer direct bank feeds.
  • Click on your bank
  • See the account types they support for direct bank feeds
  • Fill out the application form.

Xero allows only one feed for the bank account. Setting up the direct bank feed can take up to 10 days. Find an accountant in UK to help you work with the Xero accounting software if it gets hard on you.

Set Up Payroll, Add Payment Services And Payment Remainders

All your payroll costs are kept in one place when you use Xero accounting software payroll. Go to the “Payroll Overview” comprehensive guide under “Payroll” to set up your payroll system.

You can link your Xero account with different payment services like PayPal or Stripe and add a “Pay Now” button on your invoices. You can go to “Settings”, click on “Invoice Settings”, and click on “Payment Services”.

If you want a payment reminder to organise your credit control system and get your payments faster, go to “Settings”, click on “Invoice Settings”, and click on “Invoice Remainders”. Use this feature only to create a habit of reconciling receipts regularly and not chasing customers who have already made a payment.

Add Users

Owners can add several users to their Xero Accounts and assign them different roles like Accountant, Bookkeeper, Tax Advisor, etc.

Steps to add users:

  • Navigate through “Settings”
  • Go to the “Users” page
  • Click on the “Invite a user” button
  • Fill in the user details
  • Send invitation in their email

There are certain limitations to using Xero accounting software; it takes time to learn the usage process, allows a limited number of transactions per month, problems in data transferring between Xero and other platforms and allows only 10,000 contact lists.


Xero accounting software is easy to use; however, with the busy schedule of business owners, it is challenging to handle software along with managing administration duties. Few owners may need to spend time learning how to use the software and focus less on the business operation. It is advisable to hire Xero Accountants London to help you deal with the software and provide necessary advice for business growth.

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