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How To Use QuickBooks And Xero For Your Month End Close Process

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Every business owner knows that managing their books is important. One of those tasks to keep their books in order is reconciling your accounts at month end. This is extremely important if you ever get audited by the IRS. 

Do you still do it manually?

If you are thinking of implementing a new accounting software or want to see how the month end close process works, we will review 2 different accounting software platforms to simplify the process for you with Quickbooks and Xero cloud based accounting software.

When your business needs to document or verify account balances, this is referred to as reconcile accounting. But not every business owner practices this.

Often times, they let someone else "deal with it" or they use outsource bookkeepers to help manage their books. 

Interested in 3 months off your Xero Accounting Software? Learn more ---->>>

In this article, we discuss two accounting software platforms to use - Quickbooks and Xero. There are other platforms out there, but these are the most popular and simplest to use.

Plus, if you are ever going to hire or work with someone else, you want to be able to implement an easy to deploy system. 

 

(Disclaimer: We are Quicbbooks and Xero certified outsource bookkeepers!) Find out more on how we help other small businesses manage their books.

 

Both of these platforms allow you to assign a bookkeeper to reconcile your accounts. However, in this case, you can do the reconciling yourself as well. 

Before you begin, Xero recommends you review some things first. 

Enter your transactions in Xero:

  • Enter invoices or bills in Xero (and make sure they're approved and awaiting payment).
  • Enter cash refunds on credit notes.
  • (Optional) Enter spend and receive money transactions.
  • (Optional) Enter part payments on bills, invoices and expense claims.
  • (Optional) Enter bank transfers.
  • Import statement lines from your online bank.

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What types of transaction can you reconcile in Xero?

Xero will try to match these types of transactions you've entered into Xero with imported statement lines:

  • Invoices or bills that are approved and awaiting payment.
  • Spend money transactions.
  • Receive money transactions.
  • Transfers between bank accounts in Xero.
  • Expense claims that are authorized and awaiting payment.
  • Cash refunds entered directly onto credit notes.
  • Invoice or bill payments entered directly onto invoices or bills.
  • Expense claim payments entered directly onto claims.

How reconciling in Xero works

1. Match transactions

Xero matches transactions based on the amount, closest date and then the contact name of the transaction in Xero compared to the imported statement line.

2. Use bank rule

Next, Xero will apply any bank rules that apply to the transaction.

3. Suggested matches

If you’ve ticked the Suggest previous entries check box, Xero will suggest a match based on a previously-reconciled transaction with similar details.

If Xero cannot find a match using one of these methods, you can create Spend or Receive Money transactions on the spot or find and match transactions you've already entered into Xero.

How to reconcile bank statements using Quickbooks

When you connect your account in Quickbooks, all your account activities get downloaded overnight to your accounting software. 

Downloading your account data straight from your bank means less data entry for you and more time for running your business or having more personal free time.

What about your business credit card accounts? Do you have multiple credit cards? 

It's almost a full-time job having to keep track of all those business receipts as well.

Stop collecting those receipts and connect your business credit account to your cloud accounting software. The importance of reconciling your bank and credit card statements will be a cinch in Quickbooks. 

The software will recognize what transactions occur most often and which need assigned to expense categories.

When it comes time to do your taxes, you will be glad you categorized. All you have to do is run your reports and your expenses will show in their proper allocated budgets.

(Disclaimer: LUXA also offer Financial Reporting.) If you want to know what reports will help you operate more efficiently we can help. 

 

Reconciling your account is your testimony that these transactions are valid and belong in that account and not in some other account.  

Sources:

  • https://help.xero.com/us/BankAccounts-Reconcile-About
  • https://help.xero.com/us/BankAccounts-Reconciliation-Before
  • http://quickbooks.intuit.com/tutorials/why-connect-bank-account/ 

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Topics: Financial Reporting Accounting Methodology Quickbooks Reporting Cloud accounting