*Please read this article carefully before commencing with the integration. Please remember that you cannot roll back Xero if you make a mistake!*
What you can achieve
The integration is a ‘best of breed’ approach to ensure powerful and comprehensive accounting combined with exceptional property management functions right from your mobile app through to the back office allowing you to produce powerful financial reports and forecasting. The online bank feed function in Xero empowers you to get from the bank statement to the property owner statement, effortlessly, accurately and quickly.
The idea behind the integration
Xero is a powerful, simple to use accounting package with an automated bank feed function that will literally transform how you can reconcile your rent roll. To get the true benefit of the integration Xero should be configured to encompass all aspects of your property company. This isn’t just tenant and property owner transactions (such as remittances and rent demands), but all aspects of the company such as loans, mortgages and building/refurbishment costs. General administration costs, payroll costs (if applicable) and credit card bills can all be included if required. In effect Xero should be setup so that you can produce a complete set accounts for your company.
Arthur is a powerful management, maintenance and communication tool and is very good at charging rents, collecting commissions and creating unusual charges particularly where sharers are involved. It is a perfect feed for Xero in this respect as it can handle unusual charging schedules for sharers and automatically charge management fees etc.
How the systems fit together
Generally speaking you will either be integrating Arthur to an existing implementation of Xero or starting from scratch with a clean Xero chart of accounts. Either way the approach is the same in terms of configuration. When reading this guide it is important to remember that Arthur only represents an element of Xero. For example Arthur will post information into Xero regarding rents, disbursements or commissions etc, but the information is only part of the overall picture which represents true position of your business.
The general principal of the integration is:-
Under scenario (a) the only financial link between Arthur and Xero is in relation to the tenant. All rents charged by Arthur will be posted into Xero and all receipts taken from the Xero bank feed will update the Customer account in Xero and the Tenant record in Arthur. So at any one time the tenant account in Arthur will always match its respective counterpart in Xero. All charges in relation to the property are managed through Xero so as an owner you will be able to produce solid financial reports such as P&L / Balance sheet / Trial balance and forecasting.
Under scenario (b) you need to operate both a Tenant ledger and a Property Owner ledger in Arthur and in Xero. In Xero, Property Owners are created as Supplier Accounts, the logic being that you pay suppliers on a regular basis (i.e. paying the Property Owner as though they are suppliers). Received rents from tenants and any fees/disbursements are automatically posted as ‘Purchase Invoice’ against the Supplier. The draft invoice which is a collection of charges and receipts accumulate until such time as you remit to the Property Owner at which point it is authorised and paid off. Once this has happened it then appears as fully paid invoice in the Supplier record in Xero.
Tracking codes really come into their own when running Profit and Loss reports within Xero. As well as being able to produce a single report for your company you are also able to select individual codes or a group to show an extended report with multiple columns, each one appertaining to the selected tracking code. It is ideal for seeing the profitability of your portfolio by property or area etc.
We recommend that disbursements in relation to properties that are held on Arthur, are done in Arthur.
When a disbursement connected to a contractor is added to Arthur, this will create 2 transactions. One posted to the respective tenant/property owner account and the other against the contractor. This approach will enable you to manage contractor payments independently of your tenant/property owner but also ensure that you haven’t neglected to post any bills to all the respective ledgers. Please note that Contractor charges are posted directly as purchase invoices to a supplier in Xero.
All non-tenancy related transactions such as wages/mortgages/accounting fees etc must be posted in Xero as they are not connected in any way to Arthur. Only contractors that have been created in Arthur will be updated by any charges that have been made in Xero. So if you have created a supplier in Xero (i.e. your accountant) these charges will never come across to Arthur.
Things to consider before starting the integration:
You need to be mindful that you cannot ‘rollback’ Xero or Arthur. This means that if you inadvertently post hundreds of transactions between the two systems, you will have to manually reverse them out!! For this reason we advise that repeated tests and checks against a test Xero organisation are done before you finally connect to your live one.
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