There are two types of bank rules in Xero
- Spend Money Rule – applies to debit transactions
- Receive Money Rule – applies to credit transactions
Spend Money Rule
We will now explain how to create a spend money rule in Xero that will divide an amount between two or more general ledger accounts.
Let’s say you use your auto in your business and after tracking your mileage for the IRS in a log book, you determine the business use of your automobile is 75%. Each time you buy gasoline at QuikTrip you don’t want to have to manually code the transaction. You can setup a spend money rule that will automatically code 25% of the expenditure to owner’s draw, and the other 75% to automobile expense.
Click the “Go to banking” link from the dashboard, then click “Bank Rules”. Click “Create Rule” and choose Spend Money Rule.
Line 1. When money spent on the bank statement matches [ ANY ] of the following conditions…
Description, Contains, QT
Line 2. Set the contact…
Line 3. Automatically allocate fixed value line items…
no entry required
Line 4. With the remainder, allocate items in the following ratios…
Description = gasoline, G/L Account = Automobile expense, Percent = 75%
Add a new line, and input the following
Description = personal gasoline, G/L = Owner’s draw, Percent = 25%
Line 5. Set the reference…
Set this to either “from the reference” or “by me during bank rec”
Line 6. Target a bank account…
Choose your desired business bank account.
Line 7. Give the rule a title…
Name the rule something like “QT gasoline allocation”.
Next time a bank statement item is downloaded with QT in the description field, this rule will automatically code the amount to the correct general ledger accounts and percentages. You just accept it and you’re done recording and reconciling the transaction. It should save you at least 50% of the time required to do it manually each time. You can setup bank rules for numerous scenarios and each time you setup a new bank rule, it saves you time from now on and the reconciliation process gets faster and faster.
Want to talk to someone about how Xero can help your business? Call us at (918) 289-8212.