Reconciling Bank Statement to Xero Statement Balance.

Hi there, I’m Nick Roberts, I am an accountant who has been working in public practice for the last 12 years. 

I was an early adopter of Xero in 2007, and have been working with this platform  (as well as other accounting systems since). I would like to use my expertise to help people with their use of Xero and other accounting software solutions.

For my second blog post I would like to follow on from my first post and cover how to match the Bank balance to the Xero statement balance. 

So you have reconciled all of your bank accounts, and the bank reconciliation on your dashboard looks like below;

First off don’t panic and let’s go over what the difference means; 

Two different balances in the account overview means that the imported statement balance doesn’t match the bank balance in Xero. 

The statement balance in Xero is the opening bank balance plus all of the bank statements imported into the bank account in Xero. 

The date displayed for the statement balance is the date of the last bank statement line in the bank account in Xero. 

The balance in Xero is the opening bank balance plus the account transactions added in the bank account in Xero.

How do I fix the difference:

1. First to check that the statement balance in Xero matches your actual bank balance via your internet banking on the date that your bank balance has gone out of balance. 
   1. If this doesn’t match, then please follow the steps below. 
2. If they don’t match, either the opening balance in Xero is wrong or there’s an error in the bank statement lines in Xero.
3. Follow the steps here to find the error.
4. Check the opening balance has been entered correctly and saved. 

1. Make sure the opening balance of the bank account matches the actual closing bank balance, as per your online banking or paper statements, for the day before you started using Xero.
   1. To get this please go to Accounting Tab – then Advanced then Conversion Balances. 

1. If they don’t match, either the opening balance in Xero is wrong or there’s an error in the bank statement lines in Xero. Follow the steps here to find the error.
2. Check the opening balance has been entered correctly and saved. 
3. Make sure the opening balance of the bank account matches the actual closing bank balance, as per your online banking or paper statements, for the day before using Xero.
   1. To get this please go to Accounting Tab – then Advanced then conversion balances. 

1. The highlighted figures are the ones that you need to check. 
2. Check the conversion balances have been confirmed and saved.

1. Identify when the error happened 
   1. Once you’ve confirmed the opening balance is correct, identify the date the error happened.
   2. Find the date the statement balance in Xero last matched the actual bank account balance.
   3. Run the Bank Reconciliation report for a month from this date.

1. Compare the balance shown on the Bank Reconciliation Summary against the actual bank balance at this date.
2. When the balances don’t match it means the error has occurred within this period. 
3. Run the Bank Reconciliation Summary report for a period within the month to narrow down the date the error happened. 
4. One important tip to remember is that if you choose a weekend or public holiday, the bank will show that it is in balance when it is not.  
   1. In this example the bank balance matched on the 8th of July 2019.
   2. And went out of balance on the 9th of July 2019. 

1. Identify the error 

Once you’ve identified the date range where you think the error happened, identify what the error is. Check for:

1. A missing bank statement or statement line.
2. A duplicate bank statement or statement line (one that was imported twice into Xero).
3. A bank statement or statement line deleted in error.
4. An account transaction that was marked as reconciled by mistake (which has created a manual bank statement line).

1. Compare the information in the Bank statement tab of the Bank Reconciliation Summary Report to your actual bank statement via your internet banking, line by line. Any differences identified may be the cause of the error.

1. Check the Statement Exceptions tab of the Bank Reconciliation Summary report for any duplicate, manual or deleted bank statement lines to confirm if they’re correct.

• Deleted – It’s correct to delete a statement line if you accidentally imported it more than once. However, if you deleted the line in error, you may need to restore it so your balances match.
• Manual – Manually marking a bank statement line as reconciled is OK if you couldn’t import the statement line from your bank account. But, if you marked a transaction as reconciled, then imported its statement line, you’ll need to delete the statement you created.
• Duplicate – Duplicate bank statement lines are usually double ups. View the bank statement lines that were imported to check.

If you have many statement lines to work through, you might find it easier to export  your bank statement in Xero and your actual bank statement via internet banking to an Excel or Google spreadsheet.

Once you have gone through all of these steps your bank reconciliation on the dashboard should look like this:

Thank you for your time in reading this, if you have any questions or suggestions for future posts please contact me at nick@zero-tohero.com or on 0224059312. 

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