QuickBooks and Xero are accounting solutions that can be tremendously beneficial for small businesses. Its biggest advantage is the possibility to keep and manage all the business’ financial data in one place. A wide variety of its features include managing online payments, understanding incomes and expenses on-the-go, preparing taxes, doing payroll, and many more.
However, the efficiency of accounting with QuickBooks/Xero highly depends on the quality and accuracy of the data put inside. The more details you share with the program, the more opportunities in finance management you can get in response.
Below, I’ll overview the three most significant reasons for bringing detailed transaction data into QuickBooks/Xero together with the benefits of such granular input.
1. Smarter categorization
When you download transactions into QuickBooks/Xero, they can be automatically categorized. Basically, the artificial intelligence part of the accounting solution can recognize where to put this or that transaction. However, if a transaction lacks some details, it can be placed where QuickBooks/Xero believes it to be appropriate. Often it can appear in Uncategorized Income or Expenses or be sent to the wrong category.
As a result, you may face difficulties in tracking your transactions, and your QuickBooks/Xero reports might not reflect the right state of things with your finances. Moreover, you will have to correct the issues of the wrong categorization manually opening each transaction in QuickBooks/Xero and assigning it to the right category.
Bringing more granular transaction data into accounting books, you can ensure more accurate categorization and save time on correcting the errors.
2. Understanding your cash flow and real profit
In QuickBooks/Xero, you can generate the three key financial statements used to assess your company’s financial health. Those include a balance sheet, a profit and loss report, and a cash flow statement. The latter two are specifically important to understand how things are going with your finances.
In a nutshell, a profit and loss report is a statement of a business’ financial performance. It summarizes the revenue during a given period alongside the costs and expenses charged against that revenue.
A cash flow statement aggregates all cash inflows a business gets from its ongoing operations and external investment, as well as all cash outflows that pay for business activities and investments for a certain period.
Thus to ensure that QuickBooks/Xero provides the clearest picture of your business finances, you need to have all the necessary data there to generate comprehensive reports.
3. Smooth reconciliation
There’s no need to say that you need to regularly reconcile your books with your bank accounts. Though some businesses do it quarterly or even once a year, the better practice is to do it as often as once a month.
What can possibly go wrong when you reconcile? The most “popular” issue is the difference between your books’ records and your bank statements. Sometimes it happens due to some fraudulent activities with your bank account (in this case, it’s subject to investigation). But more often, it’s a result of incorrectly recorded and categorized transactions.
As an outcome, you fail to reconcile and need to spend hours manually comparing all the transactions in your bank statement with your records in accounting books for a given period. Ouch. It hurts.
Importing your transactions into QuickBooks/Xero with the highest level of details, you can ensure more smooth reconciliation, as you will have every bit of data recorded correctly, so it won’t be lost.
How to bring transactions into QuickBooks/Xero with all the details?
With Synder, you can do this hands down.
The app brings transactions from the Stripe, PayPal, and Square payment processors to QuickBooks/Xero with all the details and automatically records them in the right categories in your accounting platform. Thus, it can capture taxes, payment processor fees, discounts, tips and locations (for Square transactions), and more. Moreover, for PayPal transactions, Synder can automatically categorize expenses, applying smart rules.
As a result, you’ll be having more accurate books, better reporting, and the ability to reconcile with ease.