5 Xero features that are well worth using

Most of our clients use Xero, but many only use a fraction of what it can do. These are five features that save time, improve your cash flow and make life easier at BAS and tax time. Some are long-standing, and some are new AI tools that Xero has been rolling out this year.

1. Bank feeds, bank rules and auto reconciliation

If you do only one thing in Xero well, make it this one. Bank feeds bring your transactions in automatically, and bank rules code repeat transactions (rent, software subscriptions, fuel) for you. That means less time on data entry and fewer coding mistakes.

Xero is now adding AI on top. Its Auto Bank Reconciliation feature matches high-confidence transactions to your bank feed in real time, explains why each match was made, and flags exceptions for you to review. Xero says accountants and bookkeepers using it save about 50% of their monthly reconciliation time. It plans to extend this to more complex cases, such as splitting a single payment between sales and fees.

Tip: Set up rules for your recurring suppliers first, then review the exceptions weekly rather than leaving a month’s backlog to work through.

2. Invoice reminders, repeating invoices and online payments

Late payment is one of the biggest cash flow problems for small businesses. Xero can:

• Send automatic reminders before and after an invoice is due
• Create repeating invoices for retainers and regular clients
• Let customers pay by card or bank transfer through a payment link on the invoice, if you connect a payment service

Customers who can pay in one click usually pay faster. Xero’s AI platform, JAX, also supports payment follow-ups, and Xero says it can flag potential shortfalls before they emerge.

Tip: Set your payment terms on every invoice template and turn on reminders. It’s a small setup for a lasting cash flow benefit.

3. Capturing bills and receipts

Missing receipts are a common reason for lost deductions and slow BAS preparation. Xero’s tools for capturing bills and receipts, including Hubdoc, can extract data from documents and send it into your accounting records, so you aren’t typing in supplier names, dates and amounts.

Xero has recently announced that JAX can read source documents and extract the relevant information into the accounting system. It also announced features for tracking missing receipts, and plans to extend document reading to bank statements.

Tip: Photograph receipts as you get them, or forward supplier bills to your Xero inbox, rather than collecting a shoebox at year end. By forwarding your bills directly into Xero, it drafts the bill and attaches your invoice to the bill.

4. Bill protection and bill payment oversight

Payment fraud is a growing risk for small businesses, particularly changed bank details on supplier invoices. Xero’s bill protection is designed to review bills before you pay them and flag unusual amounts, changed bank details or unfamiliar suppliers.

Regardless of the tool, we recommend you always verify changes to a supplier’s bank details by phone, using a number you already had.

Tip: Check which bill protection and approval settings are available on your plan, and set up approval steps for larger payments – this feature is only if you use payables and pay bills through Xero.

5. Cash flow forecasting and reporting

Reports are only useful if you look at them. Xero can show you where your cash is heading, not just where it’s been. Short-term cash flow tools and the business snapshot give you a quick view of money in and out, and JAX can suggest actions to manage short-term cash pressure, such as delaying non-critical bills or protecting payroll.

Pair this with a monthly look at your profit and loss, aged receivables and aged payables. That is usually enough to catch problems early.

Tip: Ask us to set up a simple monthly report pack so you see the same few numbers each month.

A word on the AI features

The AI tools are a helpful starting point, but a human still needs to check the work. Auto-matching can be wrong, document reading can misread a figure, and the coding has to follow Australian tax rules. These tools save time, but they don’t replace a proper review.

How we can help

We can review your Xero setup, tidy up your bank rules, turn on reminders and approvals, and set up a reporting routine that suits your business. Get in touch with the STS Accounting team to book a Xero health check.