Bank reconciliation is when you compare your record of sales and expenses against the record your bank has. It’s how you balance your business accounting numbers. It is one of those tasks that most small businesses do once a month, but it doesn’t have to take hours to complete. With Xero, it takes less than five minutes.

Xero provides a way to match up bank statements from your bank account with your business transactions in Xero. This is called bank reconciliation.

In Xero, there are three ways to reconcile your bank statement lines with your business transactions:

  1. Matching bank statement lines against transactions in Xero
  2. Importing bank transaction data directly into Xero
  3. Using bank feeds to import transactions automatically

The best part about Xero’s reconciliation process is that it automatically pulls up each transaction in turn and either suggests a match with a corresponding item in your bank accounts (the match will appear in green) or asks what the transaction was for. This makes it easy to track down missing funds or verify that a deposit actually went where it was supposed to go.

The Process

Once your bank feed has been imported, Xero will inform you how many bank statement lines need to be reconciled.

For each statement line, you can either match it to an existing Xero transaction, for example, an invoice, or Xero will suggest a transaction based on your setup or reconciliation history.

If you can’t find the information that reflects on the bank feed, you might still need to create the transaction in Xero. This is another great way that Xero keeps you on your toes, to ensure all transactions are accounted for. 

When Should I Do a Reconciliation?

However you do your bank reconciliation, do it often when things are still fresh in your mind. Putting this off will just create a backlog, and take you longer to play catch up, as you will also have difficulty recalling transactions. 

Schedule a time to do it weekly or even daily. A software system like Xero makes it quick and easy to access the records you need and match them with your bank feed. To find out more about Xero’s bank reconciliation features, our Xero accountants in Perth are there for you. Get in touch with Perth Mobile Tax today.