10 Common Xero Mistakes (and How to Fix Them)

The Mistakes & Fixes

1) Posting to the wrong VAT code

Fix: Run the VAT Audit report; bulk-recode where appropriate and set default tax rates on contacts/items.

2) Leaving bank items unreconciled

Fix: Create bank rules, reconcile weekly, and clear suspense/miscoding.

3) Duplicated bills from Dext/Hubdoc

Fix: Enable “prevent duplicates”, use reference matching, and set an approvals workflow.

4) Mis-posted payroll

Fix: Post payroll summary journals; reconcile against payslip totals and HMRC payments.

5) Not locking periods

Fix: Use Xero period locks after VAT/year-end to avoid back-dated changes.

6) Incorrect CIS deductions

Fix: Use CIS features correctly and reconcile monthly statements.

7) No tracking categories

Fix: Add tracking for projects/locations and update reports to include them.

8) Unused or messy chart of accounts

Fix: Archive redundant codes; align with your reporting pack.

9) Ignoring the VAT exceptions report

Fix: Review exceptions pre-submission and keep notes on adjustments.

10) No monthly review process

Fix: Implement a month-end checklist with bank, control accounts, and key ratio checks.