Having an accurate look at where you business stands financially is important for the day-to-day operations of your business. If you don’t know if the rent check is going to bounce or process, you need to carefully track incoming and outgoing payments. If your company is still using an external system to cut paper checks, you are at a disadvantage if you want to actively monitor your cash in the bank vs. your cash on the books.
The Xero tile on the dashboard for the bank has two numbers, “Balance in Xero” and “Statement balance.” These are often different if there are outstanding payments, outstanding deposits or unreconciled items. Printing checks from inside Xero helps keep track of outstanding payments to know your true balance even if your account isn’t showing it yet.
How to create pre-printed checks in Xero
Once in check styles, you can use the options drop down to change the alignment of either the check or the voucher separately. It may take several attempts on regular printer paper before you get the right alignment. Just re-print a new check image each time you change a setting to regular printer paper and hold it up to the blank check stock to see if it lines up ok. Also, be aware of how your paper feeds into the printer so you can load the check stock in the right orientation. Making a mark on the top piece of printer paper when you print is a good way to discern how your paper feeds into the printer.
Once you set your alignment properly one time you can now print checks from any printer. Please view the video for the full tutorial of how to write checks from inside Xero, and how to make sure you’re keeping track of your bank account balances properly.
Video Transcription:
“Hello, this is Micky Deming from Kahuna Accounting. I’m here with our latest installment of Accounting Clarity for Entrepreneurs – the series that we’re doing to help entrepreneurs understand a little bit more about their accounting, their numbers, and how to find what they’re looking for.
Today, I got a lot of help from Ryan Oltman, one of our accountants here on staff. We’re going to walk through how to use pre-printed checks in Xero, and how that helps you have a better handle on your cash flow.
When you’re cutting checks in Xero, rather than writing checks out of your own checkbook, you can write checks out of Xero. What that does is give you a better sense of the cash that is about to come out of your business. When you’re writing checks, that can cause challenges.
A lot of times you will see a difference when you’re in Xero. You’ll see your balance in Xero, and then you’ll see your statement balance. We get this question a lot, “why are these two things different?” The statement balance is the cash that is currently sitting in your physical bank account. The “balance in Xero” factors in outstanding deposits, outstanding payments, and unreconciled items. If those are different, it could be that things that aren’t reconciled, it could be that there are things outstanding that will later be settled and will balance out the two accounts.
If you ever see it’s different and you want to find out why, you can run a reconciliation report. You click on “manage,” and go down to reconciliation report, and then you can drill into what is causing the difference.
We then go to the bank reconciliation summary. In this example, you will see that the amount is different, and then you see why. The reason why is there are three outstanding payments. This gives us a more accurate standing of where our cash flow stands.
Next, go into accounts and click on “checks” to see that there are uncleared checks still outstanding.
If we want to start doing that, let’s create a check. Xero has the ability to cut checks. You can come up with a pre-printed check stock from any office supply store online or otherwise. Once you’ve done that, you can configure Xero to print out checks and then write those checks with the knowledge of it in your accounting system.
Go to “settings” and “general settings” to see in the drop down “check styles.” Once you’ve done that, the key is finding the right alignment. Click on “options” and “alignment.”
Once you’re doing that and writing expenses out of your pre-printed checks in Xero, it’s a huge advantage for your business. One big thing that you’re avoiding is overdrawing because you aren’t tracking outstanding expenses.
If you are not tracking your checks, that can sneak up on you and lead you to the belief that you have more money than you actually have. Use Xero pre-printed checks to avoid that.
We appreciate you joining us. We hope this helps out. Reach out to me at Micky@KahunaWorld.com. If you are new to Kahuna and you want to be in a cool accounting system like Xero, and have a handle on your financials, we’ll be happy to help. Check us out at KahunaAccounting.com.”
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