Xero in on Xero; Year End – Shoe Box Clients

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It’s the middle of February and tax season is starting to get rolling. The tax returns for clients in Xero are well on their way to completion and just waiting for tax forms to be approved. The more organized clients are starting to upload their files and the returns going out almost match those coming in. Then it happens... a shoebox (or worse, a legal box) gets dropped on your desk. We all know those clients; each year they promise next year will be different. It never changes. Fortunately, thanks to statement uploads and bank connections with Xero it can change for the better... now!

Once you make the decision to get rid of the shoebox, it’s time to determine which approach is the best option to get the data into Xero. The two primary options are loading the data to Xero using bank connections and the second option is to use statement uploads. Here is a quick summary of each option and general use case:

Bank connections – These are direct feeds to the client bank account. The significant benefit is that all transactions are automatically imported into Xero with no manual involvement. We like to set up all the bank connections we can as this is really where the magic happens. You don’t have to touch anything and the information imports right into Xero. When combined with bank rules, this gets even more powerful (and hands off).

Here is a picture of what the bank connection screens look like:

Statement Uploads – This is when you are able to export the bank data to a .csv file and then upload the data into Xero using a predefined format. Combined with cash coding, this is an extremely powerful tool. There are two primary options to get the raw data in excel to upload to Xero. The first option is to download transactions directly from the bank in a .csv format. The second (and not as preferred) is to scan the paper bank statements and leverage a conversion and data entry tool. This is not a long term solution but it fills the gap until next tax season when all the transactions are in the system from bank connections.   

Here is a link to the Xero statement upload format.

If cost is a concern you should consider the Partner Edition Xero Ledger or Xero Cashbook edition. This is a perfect balance between leveraging the awesome bank connections and statement uploads while keeping the price reasonable. Don’t discount the ability to upsell additional services to shoebox clients. They likely need additional support and you can easily turn a once a year tax return into bookkeeping and advisory services at a significantly higher fee.

The tools are available in Xero to stop the shoebox clients from controlling your tax season. Take back control and take steps towards moving forward. Those shoebox clients need the help! From a recruiting and HR perspective, your more tech-savvy team members hate the shoebox even more than you do. Why not get them involved and let them help change the process?  

Xero Pro Tip – Get the client bank account feeds setup now. While you may still have to import the prior year transactions, it’s much easier to set things up now while you are thinking about it and you will be well ahead of the game next year. Most banks allow 60 – 90 days of prior transactions; so if you get the connection setup back to January 1, you will be all set for the 2019 return.

Learn more about Xero here.

Author Bio: Michael Castle, CPA lives in Annandale, New Jersey and attended Babson College. He is a Partner at Wiss & Company in Flemington New Jersey.  Mike is a certified Xero advisor and former XPAC member.