When you are ready to start a new fiscal year, it's good practice to lock your accounting program so that transactions before a specific date can not be entered. This can prevent accidentally entering the wrong date when posting (Please tell me I'm not the only one this happens to for the first month of the new year!) which can have adverse effects on your year-end accounting.
Setting the lock date for your Xero account is quite simple. It can also be changed at any time. Once your year-end return is complete, you will get a list of adjusting journal entries from your accountant. You can easily change the lock date, make your entries and then lock it down again.
More of a "show me how to do it" learner? Check out our how to video.
Here's how you do it:
Step 1: Sign in to Xero and click ACCOUNTING
Step 2: Click Advanced
Step 3: Click Financial Settings
Step 4: Set Lock Dates
There are two options here.
Stop all users (except advisers) making changes on and before - people with advisor access (like your accountant) will still be able to post transactions dated on or before the specified date.
Stop all users making changes on and before - No one can post transactions dated on or before the specified date.
If someone tries to post a transaction that is before the lock date they will get this warning:
Post adjusting entries
When it comes time to post your adjusting entries, just follow the same steps and change the date to something just a few days before. You can enter your adjustments, and once everything matches with your accountant's records, you can change the date back.
Changing the lock date on your Xero account is a simple and effective way to help make sure your books stay accurate and post-dated transactions don't get mistakenly posted. We know that Xero is not the only accounting software on the market, so in the future, we will share instructions on how to set the lock date on other applications such as Sage and Quickbooks. If you need any help setting up your Xero account, reach out, we're always happy to help.
More of a "show me how to do it" learner? Check out our how to video.