Posting Expenses To Xero

Background

Integrating Xero with Prosaic provides significant benefits for small businesses, sole traders, and accountants. Xero, a leading cloud accounting software, combined with Prosaic, allows users to instantly claim various business expenses from personal bank accounts and credit cards, such as home office and vehicle costs.

If you don't already use Prosaic, you can signup, try and buy it from the Xero App Store :

Visit: https://apps.xero.com/nz/app/prosaic

For businesses, this integration enables accurate, instant posting of eligible expenses from various sources, eliminating manual sorting and receipt capturing. For accountants, it provides complete financial information for client returns without the need for requests or checklists. This integration optimises tax positions throughout the year, reduces GST and provisional tax bills, and improves cash flow efficiently.

What are the main benefits of integrating with Xero?

Post Expense Claims to Xero Journal or Bills: Instantly complete an expense report for any period—monthly, two-monthly, or annual (even backdated for a recent financial year)—then post this to Xero as a draft bill or journal.
Map Accounts Between Prosaic and Xero: Map common expense categories in Prosaic (like home office power, mortgage interest) to Xero’s chart of accounts to automate expense claims and provide granular P&L reporting.
Sign Up & Sign In With Xero: Use your Xero login details to securely sign into Prosaic.
Switch Between Xero and Prosaic: Easily toggle between Xero and Prosaic with the App Switcher and Sign In with Xero, eliminating the need to sign into two separate apps.

1. Introduction

This guide will walk you through the steps to integrate Xero with Prosaic, including setting up your account, authorising Xero, mapping accounts, and posting a journal entry.

2. Data Flows Between Prosaic and Xero

Its helpful to understand how data flows between Prosaic and Xero.

In Prosaic, business expenses are identified, categorised, and claimed, from raw bank transactions. These transactions are then summarised into an expense report, which can then be posted to Xero as either a draft journal entry (used by accountants) or bill. Xero uses this journal entry or bill to update your financial records, and include expenses in GST or income tax returns, ensuring you can claim tax deductions or elligible GST/Tax credits

3. Setting Up Xero Integration

To begin integrating Prosaic with Xero, follow these steps:

Sign into Prosaic
- If you already use Prosaic, sign in via our website using your email address or Xero login details.
- If you don't already have a Prosaic account, sign up via our website or the Xero app store
Create an expense report
- Selected a date range (eg last 2 months GST return) and review expenses. If you have nothing to claim look for more deductions to add expenses to your claim
- If you are using Prosaic for the first time, you'll need to connect bank feeds before you can review and claim expenses
- Return to the summary screen to review your expense report for the period
Select "Post To Xero"
- From the export options on the summary screen, choose post to Xero
- This will guide you through setting up your Xero integration

Connect and authorise your Xero organisation
- Follow the prompt to sign into Xero and choose your organisation.
- If you're just testing Prosaic, you choose to connect to a demo account (you can change this later)
- This will return you to Prosaic

Mapping accounts between Prosaic and Xero
1. In this step, you'll choose which categories in Prosaic, post to your chart of accounts in Xero. This ensures that the right expenses (eg "telephone and internet") in Prosaic, appear in corresponding accounts in Xero (eg "telephone and internet"), which makes it easy to complete reports, like profit loss, or year end tax returns.
2. There are a couple of recommended approaches, and we recommend speaking with your accountant, or asking them to set this up for you
  - Simple Mapping: You can simply choose to post most or all categories into a single account code in Xero (eg create a single account for "Home Office Expenses") and map every Prosaic category into this

Granular Mapping: You can map each Prosaic category into a unique account in Xero, to offer detailed reporting on expenses by category
Hybrid: You may wish to map the majority of categories (eg "Rates", "Telephone & Internet", "Subscriptions") into a single Xero category (eg "home office expenses") but then map some others into dedicated categories (eg "Motor Vehicle Expenses")

When posting Journals to Xero, you'll also need to chose an equity account to credit, typically this is something like ("Owner/shareholder funds introduced") which increases the balance of funds available to draw down (effectively reimbursing you for expenses incurred on behalf of your business)
Read more about manual journals in Xero here.
Save your settings to complete this step

4. Getting Help

After setting up the integration, or anytime you're ready to post an expense claim, simply choose 'Post To Xero' from the summary screen
You'll be presented with a summary of the expense claim that will be sent to Xero
Review these, and then post to Xero to complete the set up and first expense claim

Open Xero and review draft Journal or Bill
- Check everything looks as expected then either approve or post (or let your accountant know so they can complete it for you)

5. FAQ

How do I disconnect from Xero?

To disconnect, go to the settings in Prosaic and revoke Xero access.

What doesn’t the integration do?

Currently, it doesn't support real-time syncing of certain transaction types or fully automate all bookkeeping tasks.

When and how does data sync occur?

Data syncs occur during the posting of journal entries or bills, which can be done manually at the user's discretion.

6. Getting Help

Throughout the setup process, our team is available to help, just choose the 💬 help icon in app to connect with the team, or get in touch with your accountant.