Should I Use The Spend Money Or Bill Feature In Xero?

Determining whether to use the spend money or bill feature in Xero depends on the nature of the transaction and the presence of a supplier invoice. If you receive an invoice from a supplier, typically on credit terms, the bill feature is the most appropriate choice. By creating a bill in Xero, you establish a clear record of your financial obligation and streamline the payment process. Once the payment is made, you can easily link it to the respective bill, ensuring accurate accounting and efficient tracking of your accounts payable.

On the other hand, the spend money feature is ideal for transactions that do not involve supplier bills. This includes various types of payments, such as PAYE to HMRC, other tax payments, bank charges, loan repayments, interest received, salaries, and cash payments.

By understanding the spend money or bill feature in Xero you can maintain accurate financial records but also streamline your accounting processes. If you create a bill for the transactions that don’t need it, you are simply spending more time doing your bookkeeping as this feature requires recording a bill and then a payment that relates to this bill. To save on time (and also to record things correctly in Xero), you could be using the spend money feature instead. But don’t worry, we also have some tricks for you for entering bills in Xero which you can check.