Today I’ll be discussing a particular feature of Xero that you might not be aware of – adding a billable expense to a bill and assigning it to a customer.
Business owners are routinely billed for a range of products and services which they then bill to their customers, and this feature in Xero makes it very easy to accurately follow items through purchasing to selling on.
So imagine you’re a tradesperson and you go to the wholesaler and collect the gear you’ll need for your jobs during the day. You’ll no doubt record on your packing slip/s or job card which items were used for each job and which will go to stock, or be returned. Now when you enter the bill from the wholesaler into Xero, you can select ‘Assign expenses to a customer’ (in blue down the bottom). You can assign a different customer to each line item if you like. Then, when you click Approve, you can select (in little blue writing up the top) ‘Create invoice for billable expenses’. Xero will create a new invoice to the customer you’ve assigned your items to, and you (again in blue at the top) will have the option to add the assigned items to this new invoice.
Here’s the Xero help page with more info on Billable Expenses
Now here’s the trick – when you add it, the item will appear on your invoice at the same price that it appeared on the bill, in other words, no mark up will be added, unless you add it by directly changing the amount of the item. However, if the item is one you have in your inventory list, you can click on it in the item column, click on the little drop down arrow and re-select the same item, at which point it will appear at the price that you have set in your inventory list. If the item is not in your inventory list, Xero’s price column contains a handy calculator.
So if you have a big, ongoing job, with gear from lots of different purchases, you can easily compile a list from each bill which you can put together on a single invoice. Or if you bought a whole bunch of gear and used it for several different jobs, you can easily assign each item correctly to the customer who received it.
This is a great way to link what you’ve bought directly to what you’ve sold. In theory, you could do away with staff painstakingly listing out every item used on a job, if they were to mark on the packing slip which job each item was used for and then hand that in with the description of the work done. It also saves any confusion over what exactly an item on a job card is, and it saves the painful checking of each invoice against charged out items to make sure you haven’t missed anything. In fact, you can even run a report (All Reports, Purchases, Billable Expenses Outstanding) which will tell you which items you’ve assigned to customers but have failed to invoice out.
Here are the directions to the Billable Expenses – Outstanding report.
Overall I think this is a great little feature which could be used extensively to properly and accurately track items from purchase to sale. If you would like some help navigating this feature, or any part of Xero or MYOB, our Director Kerrin is quite the expert at both and carries out consultations for customers regularly. We’re here to help 🙂