Your Xero chart of accounts (CoA) is the DNA of your bookkeeping so invest some time making it useful, flexible and future-proof.
Too many accountants and bookkeepers let themselves be constrained by the standard chart of accounts in Xero. But see it as a starting point, not a fait accompli, and a whole new useful world opens up for you.
Your CoA should make bookkeeping easier
An account in Xero is made up of two components:
- Account name – salaries, VAT, advertising
- Account number
The account name, which pulls through into your reports, should always be a simple description of what transactions are included in that account.
It’s the account number that is the overlooked but critical component of a well-structured chart of accounts.
Use the account number to group together related accounts – such as rent, rates, service charges, cleaning.
Your Chart of Accounts affects reports in Xero
The main reason for using Xero is to produce financial information you can use to understand and improve the financial performance of your business.
The structure of your chart of accounts determines what your standard P&L and balance sheet reports look like. So when you change your chart of accounts, you change the look and feel of your standard reports.
How to build a useful Xero chart of accounts
This 7 minute video that shows you how to do it.
Are you getting the best out of Xero?
Xero’s great.
It’s even better if it’s used properly.
If you’re using Xero in your business and you’re thinking perhaps you should be getting more out of it than you’re actually seeing then perhaps we can help.
The chart of accounts explored in the video is a great example of how Xero can be used better but it’s also an area that, too often, we see is not being used well at all.
We do a lot of “Xero training for the real world” and we’re happy to help you if we can.
Give me a call on 020 7125 0270 or email info@bluedotconsulting.co.uk
Michael – @bluedotmichael
Related links:
Xero training for your business
