In our ‘Xero Tips and Tricks’ articles we share details of Xero features that WILL genuinely benefit our clients.
In this article, we offer a practical guide for using Xero to manage purchase invoices paperlessly.
Purchase invoices are the invoices that you receive from suppliers (i.e. invoices to pay).
Going paperless with your bookkeeping may require a slight culture and process change, but it WILL be worth it for the long-term gains.
Reducing the amount of paperwork handled within your business has many benefits, including:
- Reduced clutter
- Faster access to information
- Lower environmental impact
To clarify what you can expect from this guide, the aim is to have all your purchase invoices uploaded to Xero (so that all reference data is accessible electronically and in one place). If you follow this process, there will be no need to retain paper purchase invoices – once paperwork has been dealt with, it can be shredded and recycled.
So, here’s our step by step guide:
Managing and Uploading Paperless Purchase Invoices
1. Conduct an audit of how you currently receive invoices from suppliers. Most of you will receive some by email and some in the post. For a paperless system, the ideal scenario is to receive invoices by email, so the first step is to invite your suppliers to send electronic (rather than physical) invoices.
Many suppliers will have the means to do this, and it offers them cost savings on printing and postage…so they shouldn’t be too reluctant!
Note: not ALL suppliers will be willing or able to email invoices, so don’t worry if you don’t achieve 100% conversion. Invoices received in the post can still be scanned*, recycled and managed paperlessly.
2. Set up a folder on your computer/drive to save and scan PDF purchase invoices to. From this folder, you will upload the invoices to Xero. We recommend separating your folder into 2 sections:
- Invoices to upload to Xero
- Uploaded invoices
Within your electronic folders, it is wise to name files accordingly. For example, an invoice might be called ‘Stationery ABC_13521_09.01.18’ (‘Supplier Name_Reference_Date’).
Naming files in a logical way will help you to find them when uploading to Xero, and it means they are organised in your own, backed-up** system.
3. When your PDF files are saved or scanned to the folder on your computer/drive, it’s time to upload them to Xero:
i) Login to Xero using your existing login details.
ii) Add a new purchase invoice (Accounts > Purchases > New Bill).
iii) Enter the bill details (you will need to have the electronic invoices that you are entering visible on screen, so that you can find all the details – it is helpful to have 2 monitors*** to do this):
iv) When the details have been entered, click on the icon next to the ‘Reference’ field (a piece of paper with the top left corner folded over):
v) A pop-up box will appear to add related files. Click on ‘+ Upload files…’ and find the folder on your computer which contains your PDF invoices. Select the relevant invoice and upload it to Xero (you can also attach other relevant documents – such as purchase orders or delivery notes – if required).
vi) When the file has been uploaded, the screen will look like this (notice the number that has appeared next to the icon – this shows that a document has been attached. If more than one document has been attached, the number will correlate):
vii) Once all the details have been entered and the file attached, the invoice can be saved or approved.
viii) Your electronic purchase invoice is now saved securely within Xero and can be viewed from within the bill whenever required.
4. Once uploaded, don’t forget to move the file saved on your computer/drive to the ‘Uploaded Invoices’ section (so that you don’t upload twice).
In our next ‘Tips and Tricks’ article, we’ll explain the next step – how to manage a paperless payment run.
If you have any queries about this guide or would like help implementing Xero or a paperless system within your business, please don’t hesitate to ask.
Till next time!
*Scanned – If you already have a scanner, then you’ll be fine with this aspect. For businesses that don’t, there are several great smartphone apps which enable you to create a PDF scanned document just by taking a picture from your phone.
**Backed-up system – Whilst your files are securely stored within Xero (in accordance with government requirements), we would also recommend keeping electronic copies within your own IT system (folders in which should always be backed-up).
***2 monitors – If there is a lot of bookkeeping to be done within your business, having 2 monitors is incredibly helpful. The invoice to enter can be up on one screen, whilst Xero is open on the other. 2 screens will reduce frustration and increase efficiency for a relatively low cost.