A common type of bookkeeping mistake is incorrect coding and transaction entry errors. Unfortunately, these are so easy to make. A moment's distraction or a slip of the fingers and you've selected the wrong code or account name. However, errors like this can end up costing your business thousands, or your client's business if you're a bookkeeper – and that's mistake money!
XBert analyses your Xero cloud accounting data hourly and will detect anomalies and patterns, helping you to avoid bookkeeping mistakes. You'll save money and time, have more accurate financial reports and improve compliance.
Yes, it can be.
Account coding errors; duplicate bills, invoices and contact records; incorrect GST payments and claims; Australian Business Register (ABR) discrepancies with your contacts; and trading with cancelled business are all types of mistake money. Mistake money causes financial risks for small businesses.
Depending on the value of the transaction, a mistake here and there may not worry you, but when mistakes are repeated, never discovered, or the result of fraud-well, that's extremely worrying.
The business' chart of accounts includes account types and codes, used to record, classify and group transactions. Reports are generated from this information and used to make business decisions.
Different accounts are treated differently at the end of the financial year. If you've allocated a transaction to the wrong account, you could miss out on maximising tax deductions or taking advantage of depreciation benefits. Your reports will be inaccurate with other implications such as paying too much to the tax office or too little and getting penalised.
Your business will have many different codes, some may have similar names like Office Expenses and Office Equipment or Travel–National and Travel-International. You may have trouble remembering what gets allocated to which code.
A lot of small business owners complete their bookkeeping at night, on weekends or squeezed in between other tasks. Perhaps you have a staff member or several who manage the books, stepping in and out of the process at different times. Bookkeepers will have many clients, hundreds of entries to reconcile, and a lot of accounts and codes to manage.
It's no surprise that the wrong code can get selected.
Bookkeeping is complicated, and staying on top of it requires time, effort, attention and expertise.
Imagine business is booming, so you buy new manufacturing equipment worth $300,000. It's an investment in assets that will give returns for many years to come. You can claim the depreciation as a tax deduction, saving you thousands on current and future tax returns.If you enter that purchase against the wrong accounting code and don't realise, then you may miss out on those tax savings.
Or, say you've coded a transaction against the account named Office Expenses, which is classified as an expense. However, this transaction should be coded to the account named Office Equipment and classified as an asset. Your reports will be wrong.
What if it's not an honest mistake? As a business owner, do you know everything happening in your accounts? If you're a bookkeeper, are you confident that every transaction of your client's is legitimate?
Unusual account coding may be a sign of attempted fraud. Somebody with access to the accounts could be siphoning money, trying to sneak transactions through and hoping they'll go unnoticed.
Whether due to an honest mistake or fraud, the result is the same; it's money lost that the business can't afford to lose!
You're only human, it's hard to get things right always, and who has the time to check and re-check everything.
It's taxing but doesn't have to be.
XBert is a low-cost Xero connected app that uses artificial intelligence (AI) and machine learning to automate manual checks and data audits for you. You'll get alerts (called XBerts) when a transaction is coded to an incorrect account name. The alert is based on your past entries for that Xero customer or supplier. XBert helps ensure data integrity, improves compliance, and gives more accurate reports and snapshots of business health.
As a powerful collaboration tool, XBert means business owners, finance teams, bookkeepers and accountants work efficiently to find mistake money. Everyone saves valuable time and resolves financial risks before it's too late.
Our XBert CONNECT portal is for bookkeepers, accountants and advisors who need oversight of multiple business organisations. From one dashboard, they easily and efficiently manage practice process flows with a unique, customisable system, can streamline workflow and track clients' finances at a glance.
XBert analyses your data hourly and creates alerts when an expense or income transaction is allocated to a different account name than previously used to reconcile these transactions. It may be an error, or it may be a new allocation.
Based on your usual activity, XBert will predict what the allocation should be. If it's an error, then that's easy to resolve using a direct link to the Xero entry. If it's a new account allocation and not an error, XBert will learn your business patterns over time, and the alerts will get smarter.
You should review the transaction and decide if the allocation is correct. If you leave the transaction coded as initially entered, make sure you understand the implications on reporting and tax. There may be a different tax status associated with accounts, e.g. Free instead of GST.
If incorrect, change the allocation so that it follows the usual activity.
Incorrect account allocations lead to inaccurate records, reports and statements. Business decisions based on inaccurate information could have a significant financial impact on your business.
Accurate records also make tax time more straightforward. You'll also be more confident in your expense and depreciation claims and compliance requirements.
Let XBert do the hard work for you and perform the manual checks and audits of your accounting data and find any hidden mistake money.
Bookkeeping mistakes like account coding errors and unusual activity are just some of the many risks XBert will find analysing your accounting data hourly. Using sophisticated algorithms, predictive analytics, and machine learning, XBert is there to detect business risks, saving you time and money.