From XU Magazine, 
Issue 39

How Dext and Xero connect to simplify the bookkeeping workflow

Paul Lodder, VP of Accounting Product & Strategy at Dext, talks us through the value of greater collaboration between software providers.
This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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By now, it’s clear accountancy is heading in one direction – a world whereby accountants and bookkeepers will spend far less time on repetitive bookkeeping tasks, and far more time on the work they’d rather be doing. The vehicle for all of this is technology, most notably automation.

If you’re a regular reader of the XU magazine, you'll know that this is something we feel strongly about at Dext. And, it’s got us thinking about what role we have to play in helping this new industry take shape. In short, the onus is as much on us as it is our partners.

If technology and automation is the answer, then it’s up to software providers to ensure users get what they need from the tools they use. And, with accountants and bookkeepers implementing multiple types of software, the first point of call – for us software providers – is to make sure we connect with one another.

Integrations promote collaboration and ensure a smoother way of working with uninterrupted workflows. It’s an essential component of any software, and it’s one we’re always looking to build on at Dext.

The Xero-Dext connection

One example – and perhaps our most important – is our integration with Xero. To the untrained eye it may seem that both share similar functionalities and serve the same purpose, and, to some extent, that's true. But the real value for accountants and bookkeepers (and their clients) is when these two softwares combine. Through a simple integration, you’re able to connect your bookkeeping and accounting workflows, ensuring a smooth flow of data from the moment your client submits a transaction, to the point at which you’re ready to publish items in Xero.

In this article, I’ll be highlighting a handful of the core use cases where that Dext-Xero connection is most effective. This is just one example of how tech providers are recognising the value of stronger integrations for their customers – and long may it continue.

Use case: HMRC & VAT compliance

Together, Dext and Xero make the VAT return review process so much easier. When you create a VAT return in Xero, you may have queries or concerns about certain transactions. Without Dext, you may not have visibility of the supporting paperwork associated with each transaction. That’s a lot of digging around for something that should be a quick and simple check. The Dext integration provides you with the option to view that paperwork within Xero itself, speeding up your VAT return review significantly.

Use case: HMRC & VAT enquiry

Any VAT return comes with the risk of an enquiry from HMRC. As we all know, this is a stressful, time-consuming predicament – with the possibility of a penalty plus interest.  When an assessment is raised, it may be due to incomplete records. In other words, your return is missing information that has resulted in a possible under-declaration of VAT.

Dext and Xero mitigate the risk of an enquiry on two fronts. Firstly, Dext ensures real-time data collection that, if published on time, gives you everything you need in Xero for an accurate VAT return. But, if HMRC does intend on enquiring into the VAT returns, Dext and Xero are on hand to make sure you have easy access to all the information that the officer needs. Instead of digging through paperwork, Dext’s advanced search allows you to locate and export the relevant paperwork in a matter of clicks.

Use case: Cash flow and payments

Together, Dext and Xero facilitate the entire accounts payable process, ensuring accuracy and completeness at every stage, but more so, giving you confidence that your clients are paying and getting paid correctly. When looking at your ‘Aged Payables Detail’ in Xero, you may want to query a particular invoice. With Dext, everything you need to answer that query can be found within the Xero platform; there’s no need to search for or request a copy of the invoice – it’s there right in front of you. With the Supplier Statements functionality, you can also cross reference the balance owed to a supplier with the balance in Xero and fix any discrepancies between the two.

Use case: Year-end process (reviews)

Whether you’re reviewing management accounts or year-end statutory accounts, context is key. But, without Dext or Xero, finding that context can be a long-winded process. With Dext’s Supplier Rules, you can extract key information from line items on invoices, giving you a clear indication of the nature of that invoice. It saves you from having to trawl through multiple invoices – giving you time back and reducing risk.  

Use case: Billable expenses

Whenever you raise a sales invoice, you need to know whether or not to add a billable expense. It’s an important thing to remember as you may have already paid out the expense – and until that money comes back into the business, your client is out of pocket.

Together, Dext and Xero streamline this small but necessary workflow. In Dext, you can mark the expense as re-billable and assign it to a customer. Once you publish that to Xero, it will flag that you need to add a billable expense when creating your sales invoice. Besides saving you considerable time on manual data entry, this functionality mitigates any cash flow implications.

Use case: PO Matching

If you raise PO invoices on behalf of your clients, you’ll know just how easy it is for things to get lost in translation. The PO list in Xero not only allows you to see what goods you have received in relation to which invoice, but also from a cash flow perspective, whether your client is accruing costs for an invoice they’re yet to receive.

Dext takes that one step further by automating the entire process. In Dext, we extract the PO number from the invoice, then flag and match that to any open POs in Xero, ensuring that all POs have been accounted for. It’s a seconds-saving feature, but it also removes all of that back and forth, jumping from one platform to another.

Use case: Matching bank statements

Bank reconciliation is perhaps the most important part of record keeping, which makes consistency across your accounting records a fundamental part of the process. Whether your client is paying a supplier or a customer is paying your client, you want to make sure that any outstanding balances reflect their true position. Xero automates a lot of this by correctly matching everything against invoices that have been paid and the Dext integration accelerates this process even further.

At the point of purchase – or whenever a client takes a photo of their receipt – Dext extracts the data and matches it to the outgoing transaction in your Xero bank feed. By clicking Autofill, you can also populate any invoice with all the information you need, hit publish and see all of that in Xero.

Use case: Tracking Categories

When running reports in Xero, you can set up tracking categories to help enhance the business insights. It means you can delve into the numbers in greater detail, finding out exactly what you need to know about a particular variable – whether that’s a branch or region. With Dext, you can set those tracking categories at the point at which an item is uploaded to Dext. The Dext and Xero integration then ensures that all tracking categories are correctly pulled through when you publish to Xero. Dext also allows you to set up Supplier Rules, so you can automate this process if an invoice relates to a certain category, like a branch of the firm.

Final thoughts

In this article we’ve taken a closer look at relatively specific use cases and the respective features that Dext and Xero offer. I hope it’s clear, however, that in all of these instances you can always trace things back to two key themes, namely the completeness of records and real-time data. These two factors underpin so much of the work that accountants and bookkeepers do – and they’re both at the centre of Dext’s integration with Xero.

Why leave it there?

To find out more about Dext’s latest release

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