Allowing Xero to suggest where the expense should be allocated based on the previous reconciliation can cause many issues that are not always easy to fix.
It is a misconception that the suggestion is always correct and the system knows best. It will just remember the supplier (Who) name and assume the expense was the same as last time. This is a problem if you have a director for example that takes wages, directors fees and also transfers their own money into the business.
The system will remember the last transaction and when this happens the allocation could be wrong if you just agree and click reconcile or OK, you could be allocating all these three entries to wages for example which would be wrong. Do not rely on the automatic reconciliation you must check the allocation is correct prior to clicking OK. if you have ticked the little box at the bottom of your reconciliation page that says '𝙨𝙪𝙜𝙜𝙚𝙨𝙩 𝙥𝙧𝙚𝙫𝙞𝙤𝙪𝙨 𝙚𝙣𝙩𝙧𝙞𝙚𝙨' 𝙪𝙣𝙩𝙞𝙘𝙠 this to avoid these mistakes. This is the same when closing sales invoices, the system will just find an amount that matches the deposit, you could have 5 invoices with the same amount owing, make sure to check it is the correct invoice that has been paid and then click OK. Undoing these transactions are very time consuming.
If you are not a professional bookkeeper make sure you are getting regular help and training, this is important because, in the long run, it will save you time and money and, so you can learn how to keep correct records. You don't want to have to pay a lot of money to have someone fix errors if you can avoid them.
Common Errors We See in Bookkeeping for XERO
