Stop recoding the same supplier every month

Every bill that goes into Xero needs an account on each line. For most suppliers that account is the same every month: the cleaning company goes to cleaning, the courier to freight, the software vendor to subscriptions. Yet the coding is often redone from memory each time, by whoever happens to be entering bills that week. The answer is already in your books. Your past bills record how each supplier was coded.

Where coding goes wrong

• The picker slip. Account lists are long and similar names sit next to each other. Picking “Motor vehicle expenses” instead of “Motor vehicle repairs” takes one keystroke.
• New people, old suppliers. Whoever joined last month doesn't know that this supplier's “service charge” has always gone to rent.
• Suppliers who sell more than one thing. An office supplier sells paper and the occasional monitor. A single default account per supplier can't tell those lines apart.
• Descriptions that drift. “Monthly retainer”, “Retainer: October” and “Retainer fee” are the same line to a person and three different lines to a search.

None of these errors changes the bill total, so they get through approval. They show up later, as a management account that doesn't look right or a budget line that is over for no reason.

What your history already knows

Take a year of approved and paid bills. For each supplier, count which account each line went to. Most suppliers will have one account on almost every line. Some will have two or three, and each line description or item code will point to one of them. That table is a coding guide written by your own business, and it is more accurate than a guess because it is what you actually did.

Use the evidence in order of strength:

1. Item code. When the supplier prints its own product code, the same code on a past bill is the best guide there is.
2. The same description. Compare the description once case, punctuation and quantities in brackets are ignored.
3. A similar description. Most of the same words, in any order. Worth showing, but as a weaker suggestion.
4. The supplier's usual account. If nothing about the line matches but the supplier went to one account on most of its past bills, that is a reasonable default. It needs a few bills behind it to mean anything.

Only offer accounts that are still in your chart of accounts. An account archived since the last bill shouldn't come back as a suggestion.

Where history shouldn't decide

• One-off and capital purchases. The supplier's usual account is expenses, but this invoice is for equipment you capitalise. History can't know your capitalisation threshold.
• Past mistakes. If a supplier was miscoded for a year, its history repeats the mistake. Review the accounts your largest suppliers go to before relying on them, and correct the history at the source.
• Changes in what you buy. A supplier that used to sell you consumables now sells you a service contract. The first few bills after a change need a person's judgement.

That's why suggestions should be shown with their reason and applied by a person. “Coded to Cleaning on 11 bills from this supplier” is something an approver can check at a glance. “Suggested” on its own isn't.

A short routine for the person entering bills

• For a known supplier, check the account against the last bill from them before you save.
• Treat an account the supplier has never been coded to as a question, not an answer.
• Code new suppliers carefully: whatever you choose becomes the history for next month.
• Once a quarter, run an account transactions report for your top suppliers and look for strays.

How Tenet handles it

Tenet reads your Xero bills from the last 12 months, approved or paid, up to 500 of them, when you connect Xero and whenever you refresh from Xero. Each bill Tenet posts is added straight away, so the next invoice from that supplier benefits before the next refresh. The supplier must be linked to its Xero contact.

For each line, Tenet looks for the supplier's past bills with the same item code, then the same description, then a similar description, and finally the supplier's usual account. That last one is only used when the supplier went to one account on at least 60% of at least three bills. It offers up to three accounts that are in your current Xero chart and can take a bill line, each with the reason, such as “Item code PAP-A4 was coded to this account on 4 bills from Northwind”.

Nothing is applied until a person clicks. “Apply all” fills only lines that have no account yet and whose item code or description went to a single account on at least two bills. Tenet also points out a line coded to an account that this supplier's past Xero bills never used. Coding suggestions are on every plan. They are learned from Xero bills, so they aren't available for QuickBooks Online yet.