How to make sure bookkeeping errors don't end up costing you
Have you ever made a small account coding or transaction error that's had a big impact? It's a simple and honest bookkeeping error. Do you know exactly what's happening in your, or your client's accounts system and trust that every transaction is legitimate? XBert gives data-driven alerts to anomalies and errors in your cloud accounting entries meaning you can trust your finances and know you have an accurate snapshot.What's the big deal?Imagine you buy a new piece of equipment for your business worth hundreds of thousands of dollars. It's an investment in an asset that will pay off for years to come. You should claim the depreciation as a tax deduction, saving you thousands on your current and future tax returns.But if you or your bookkeeper enter it against the wrong accounting code, you can kiss that money goodbye. Giving the tax office more money that you need.Incorrect coding and transaction entry errors are very easy to make, just a slip of the fingers and you've selected the wrong code or account name.
But does it really matter?
Yes, it absolutely does! Let’s say you’ve coded a transaction against the account named Office Supplies, which is classified as an expense. However, this transaction should be coded to the account named Office Equipment, and classified as an asset.Not all accounts are treated the same at the end of the financial year. You could miss out on maximising your tax deductions or taking advantage of thousands of dollars worth of depreciation benefits due to the wrong account allocation.
A simple bookkeeping error like the wrong account code could be a costly mistake
Who can remember all of the codes off the top of their head and what they're for? Maybe a robot.With so many codes in your accounting system, many with similar names, it’s not hard for you or your bookkeeper to pick the wrong one when you’re entering a transaction.If you are a bookkeeper, or use a bookkeeper, then that can add up to a ridiculous amount of codes across many different clients.Most incorrect account coding is the result of an honest mistake. Not surprisingly, entering transaction after transaction after transaction can lead to human error.But, it could also be a sign of attempted fraud. Somebody with access to your accounts could be siphoning money, trying to sneak a transaction through an account with lots of records hoping it won’t be noticed. It’s happened to plenty of businesses in the past, so don’t be so sure it can't happen to you.Whether it's an honest mistake or fraud, the result is the same; the loss of money you can’t afford to lose!Speaking of robots, there is a way to make sure your transactions are all coded correctly and to get alerts if they aren't.XBert analyses your data and uses machine learning to detect if a contact's transaction gets coded to an incorrect account name. The alert is based on your past entries for that contact.If it's an error, then that's easy to resolve within your linked accounting system. 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.
XBert in action
XBert warns you that the transaction has been 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's machine learning will predict what the allocation should be.
You should review the transaction and decide if the allocation is correct, or should follow the usual activity. If incorrect, make the adjustments in your accounting software.If you decide to leave the transaction coded to the initial account entered, make sure you understand the implications. Incorrect coding can impact reporting and there may be a different tax status associated with the initial account name entered, e.g. Free instead of GST.
Peace of mind at tax time
Incorrect account allocations leads to inaccurate information. You may make business decisions based on that inaccurate information which could have a significant financial impact on your business.Accurate records make tax time easier. You can claim your expenses and depreciate your assets with confidence.Bookkeeping errors like incorrect codes and account allocations are just some of the many risks XBert will find reviewing your accounting data multiple times a day. Using sophisticated algorithms, predictive analytics, and machine learning, XBert is there to detect business risks, saving you time and money.
XBert is an easy-to-use, powerful Xero add-on for business owners, finance teams, bookkeepers and accountants to stay a step ahead in business.If you're serious about business success, sync your accounting data with XBert. In minutes, you'll know the amount of money at risk and how to prevent losing it.