This is how to organize specifically xero for low impact (low workload) processing for all auction/websales. This will work with any Small business operation using any modern accounting software whether you use OMINS/Easylister or no ecommerce management software at all.

In this example we show you a setup that allows 5 min reconciling of 774 transactions from 2 months, Using the principles in this it does not really matter how many sales transactions you have in a month, it will still take around 5 mins to code and reconcile, every time!

This setup will also work for any modern accounting software that allows importing of bank statements and creation of rules to automatically code them in your accounting system (so that’s 99% of modern accounting software)

Important points:

– If you are using OMINS, all your sales customer information is stored in there and is easy to look up there is no need to replicate this in an accounting system.

– For an accounting system (such as xero) you only need the relevant information to process GST and record income/outgoings.

– This system relies on GST on a payments basis,

Trademe/web sales are predominantly cash sales, unless you are also running a “trade” operation where you are extending credit, this tends to be the most appropriate method.

(if you are one of a handful of our clients processing over 2 million per year, you may still be able to have payments basis, if most of your products are sourced using a cash based imports.)

If you are not on GST payments basis you should speak to your accountant about this it tends to be the most effective method for online traders.

Setup:

1. You need to separate your bank accounts most importantly you need a single “incoming” account, for this account you should only outgoings should ever be refunding customers, automatically charged bank fees, and transfers into your “outgoing or savings account”

2. You need to have a separate account for outgoings this is for paying bills, paying suppliers any outgoing funds your business has. (you may also have one or more high interest savings accounts)

If you currently are doing outgoings and incomings in the same account, the easiest thing to do is to create a new outgoing account, and move your outgoings (direct debits/automatic payments etc) to this.  Often it is easier and less disruptive, than getting a new account for customers to pay into. but creating a new incoming account will work too.

Accounting for your outgoing account:

You will use xero/your accounting package your own way for this, you can setup rules for common payments and you can code the other outgoings manually as you normally would. This should actually take longer than your incoming account

Accounting for your incoming account:

For this its all about setting up rules here is a typical list of rules:

Spend money:

1. RWT tax on interest (code as advised by accountant)

2. Bank fees (code as you want)

3. Anything outgoing with the word “refund” in the the reference (code as you want)

4. Transfers to savings or your outgoing account if your software lets you create rules for transfers (xero typically just matches transfers automatically)

For refund you can do these in this account make sure you always include the word refund in the reference, this should let you catch them all automatically and code them as you want.

Receive money:

1. Bank interest received (code as you want)

2. Pay Now deposits (code as you want)

3. DPS Credit card deposits /Eftpost machine (code as you want)

4. Cash Deposits (from internet sales, we suggest you code this the same as all other deposits or leave out provided you only deposit cash from internet pickups into this account this will be correctly coded, or caught by the next rule if you leave it out)

5. ALL OTHER DEPOSITS (this rule is for any amount >0.01c) – these are all coded into a revenue account called say “internet sales bank deposits”

Notice the “ALL OTHER DEPOSITS” is the final rule to be processed last. as you, are only using this bank account for your web sales then if it was not matched by one of the other 3 incoming rulse (which should be checking the for a common reference etc) then it must be a trademe/website deposit or payment. This should catch anything no matter what the reference

You may decide to code all the paynow, (dps) and bank deposits into one account called “internet sales” or you may decide to seperate them this depends on how you like to record you income

INFO: I want to seperate my Trademe sales and my website sales, or I want to separate sales on 2 trademe accounts, in my xero.

Easy get more than one incoming bank account, one for the website, one for the each trademe account. and have the rules coded separately

In practice:

Once you have an incoming only setup you can upload (or in xero it will automatically upload if setup) the bank statement, then you can visit “cash coding” in zero expand to see all the transactions, have a quick look over them, (they should all be coded and correct) then just apply them all

In this image you can see how easy it is to recognize 2 months worth (774 transactions) in around 5 mins

https://dl.dropboxusercontent.com/u/26765614/technical_files/XeroScreenshotblacked.png

The only thing that ever seems to get missed with this method is the odd refund that where the person refunding forgot to add the word “refund” to the reference, as this is a “spend money” it comes up unmatched so does require manual matching.

NOTE: You may need to create a couple more Spend money rules as there may be some bank fees or other small things that don’t always use the same reference but , there should not really be much missing. just create codes for them within a couple months everything should match up.

You can then proceed to reconcile your outgoing account as you always have. Which will now be likely be the slowest part of your accounting process, as you will likely have the odd uncoded statement etc in your outgoing account..

Things may work a bit different in other accounting packages the the principle is the same, code your receive money and spend money and keep all your uniform payments in one bank account and use another bank account for one off/different transactions.

We actually believe this is a simple and highly efficient method trying to introduce integration to this method would just complicate things and end up taking more time, and make the process more difficult

If you want some help setting up a system to work like this, or just general help with your bookkeeping talk to us about Total Assist:

http://www.snipesoft.net.nz/total-assist/