Bank Reconciliations in Xero

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 first blog post I will be covering Bank reconciliations and how to fix issues that can arise from this.

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. 

There are a few possible reasons for this; 

• There may be differences if you’ve created an account transaction in Xero but haven’t imported the corresponding bank statement line.
• There might be a bank statement line in Xero but you haven’t created the account transaction in Xero.
• Transactions have been deleted because you weren’t sure what the transaction was. 

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. Firstly 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 matches please go to the second step, if it doesn’t match this will be covered in the next blog post. 
2. Reconcile all bank statement lines for the bank account.
   1. Once the statement balance in Xero is correct, reconcile all the statement lines on the Reconcile tab of the bank account. This will ensure that every transaction that occurred in your bank account has been recorded in Xero.
   2. If you have future dated account transactions in Xero, there might still be a difference once all the statement lines have been reconciled. It’s OK to have a difference when the bank statement lines for these transactions will be imported in the next one (or two) bank statements imported into the bank account.
   3. If you’ve done this and the balances still don’t match, check for unreconciled account transactions in Xero.
3. Check for unreconciled account transactions in Xero
   1. To check for unreconciled account transactions, go to the account transactions tab and sort by status.

1. It’s OK to have unreconciled account transactions if they relate to statement lines that haven’t been imported into Xero yet.
2. But, if there are unreconciled account transactions you think you’ve already reconciled, you might have created additional transactions in Xero. This can often happen during bank reconciliation, when transactions are created to match statement lines instead of matching to transactions that have already been entered into Xero.
3. To delete a duplicate transaction, select the checkbox and click Remove & Redo.
4. If the transaction has been deleted; 
   1. To check for deleted account transactions, go to the bank statements tab and sort by statement line. 

1. If there are transactions marked with red as deleted, then select each one of these transactions and click restore. 
2. These transactions will now be available to reconcile, reconcile all the statement lines on the Reconcile tab of the bank account.

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

For my next post I will be covering bank reconciliations when the statement balance in Xero does not match the actual bank balance. 

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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