Follow-up flags in Xero
Xero does not have any tagging or flagging system that would allow you to identify a transaction that has been coded but still needs some follow-up action or investigation. However, you can simulate this using Tracking Categories.
Xero provide two Tracking Categories that can be operated independently of each other. Most Xero ledgers only use one or none of these two options. If your ledger is already using both then you can’t use this approach, but for the other 99.9% – here’s how to create a flagging system. It will only allow you to assign one flag per line, but that is enough for most issues.
Create a Tracking Category
- From Settings, Tracking click “Add Tracking Category”
- Name it something like “Follow up”
- Create a list of likely tags that you may want to assign (you can always add more on the fly later, so you don’t need to be exhaustive).
Here are some of the ones we use:
- Possible Asset
- Documentation missing
- Discuss with client
- Discuss with accountant
- Waiting for reversal
- Needs Investigation
Allocate tags to transactions
When coding invoices, bills, or bank transactions you can optionally choose the required option. In Spend/Receive Money, Bills, Invoices and Journals look for the column called “Follow up” to the left of the final amount.
When coding straight from the bank reconciliation reconcile tab, use the standard Create section and look beside the tax code to see the “Follow up” drop-down list.
Report on the tags
- From Reports, New Reports, Account Transactions:
- Select all accounts
- Choose the date range
- Report Settings, Filters, choose “Follow up” (your category name) is All (de-select unassigned)
- Click Update to generate the report
Resolve the issues
I recommend that once you have resolved the issue you remove the flag from the transaction so that it does not show up on any more reports – but this is optional.