How to Reconcile a Bank Account in Xero
If you’ve ever looked at your bank balance in Xero and thought, “Why doesn’t this match my actual bank statement?”, you’re not alone. Luckily, Xero has a tool to help you match everything up and spot any mistakes or missing transactions.
Here’s a straightforward way to check your bank reconciliation.
Step 1: Run the Reconciliation Report
First, log into Xero and find your bank account. Click on the Options button, then select Reconciliation Report.
Let’s say your bank statement shows a balance of £3,914.09 at the end of last month. Enter that amount into the report.
Xero will then break down:
The balance it currently shows,
Any payments that haven’t cleared yet,
And any transactions that haven’t been matched up.
These add up to explain the difference between Xero and your bank statement.
Step 2: Know Where to Look
Inside your bank account, you’ll see two tabs:
Bank Statements (this is what comes straight from your bank)
Account Transactions (this is what you or your accountant have recorded in Xero)
Filtering the dates to the end of last month, you can see if there are transactions in one place but not the other, these need to be matched or added.
Step 3: Spot Unreconciled Transactions
Transactions that don’t yet match will usually be highlighted. If you spot a payment from a customer or a bill payment that’s in your bank feed but not matched to an invoice or bill, you can usually link them or create a new transaction in Xero.
Step 4: When Things Don’t Match Up
Sometimes, the balance in Xero still doesn’t match your bank statement. This can be caused by:
Duplicate or missing transactions,
Bank feed issues,
Or manual changes that cause confusion.
This can be tricky to fix if you’re not sure what to look for, this is where it’s best to consult with a Xero expert.
Why It’s Often Better to Get an Expert Involved
Reconciling your bank account is essential to keep your business finances accurate. You can do it yourself with these simple steps, but it can take time and a good eye for detail.
If you want to avoid the hassle and be confident your records are right, why not hand it over to someone who does this every day? Someone who can make sure your bank reconciliation is done quickly and correctly, leaving you free to focus on running your business.