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Hi Scott, appreciate your feedback of what you find both good and limiting when using Xero.
When you mention the need to create manual journals to bank or cash accounts are there some common situations you find yourself needing this?
For the payroll transaction I wonder if bank rules could help identify and create the transaction in Xero for you, rather than having to enter this as a bill?
Bank rules and the use of spend and receive money through reconciliation may also be able to help for other scenarios too?
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Scott Holsinger
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Hi Kelly,
Yes, there are many situations when creating manual journal entries to cash are extremely useful. The easiest example that i can give is with recording payroll, for example:
Client uses ADP to process payroll. Total cash for payroll run is $12k, with 10k for wages (1k each for 10 employees) and 2k for payroll taxes. ADP will draft the bank account twice - 9k for the net pay to employees and 3k for tax withholdings/payroll tax.
If I could post a manual journal entry, this is all that I would need to easily record and reconcile the payroll run:
Account Debit Credit
Wages 10k
Payroll Taxes 2k
Cash 9k
Cash 3k
4 lines of journal entry. 2 separate cash entries that will perfectly align with the ACH bank entries. Total time spend on this is probably 2 minutes total.
Without the ability to manual journal entry to cash account, then a "workaround" becomes necessary (bills and spend money in Xero I believe) which requires entering bills/spending money for each net paycheck (10), plus additional ones for withholdings/payroll tax (at least 3 and could be many more). Then once all those bill/pay transactions are entered (26 at least), there are many lines of cash spent that don't have a one-to-one match with the 2 ADP bank drafts of 9k and 3k. Then that adds a challenge of matching the sum of several withdrawal transactions to the sum of only 2 bank withdrawal transactions. The total time doing it this way is at least 10 times, if not more, the time involved if manual journal entries were allowed to post to cash account. And this is only with 10 employees, imagine how long it would take if there were 100? Bank rules don't help since payroll dollar can vary from one period to the next period as things change and headcount rises and falls, pay increases, etc.
This is why I can't use Xero for many of my clients. I would love to use Xero for many of my clients so please remove this limitation at the accountant user level. I do think the limitation is warranted at a basic non-accountant user level as a safeguard, but please take off the training wheels for the accountants. We (or at least I) need to move fast!