Manual, paper-based account reconciliation can take some time.  Xero’s tools can make reconciling easier and faster.

We actually love doing reconciliations.  But we have learned that most people do not.  If you have struggled with reconciling in the past, be assured that it can get better. With the help of some tools from Xero, you may even come to enjoy reconciling your accounts.

Xero helps automate the reconciliation process, doing some of the matching itself and letting you set up “Bank Rules.” Xero’s tools make reconciling much easier than it used to be with paper and pen.

Account reconciliation can still be a challenging process.  So before you start reconciling your accounts, it would be a good idea to spend time with us, so we can share with you best practices. It is so much easier to learn how to do it right from the start than to go back and try to untangle accounts that have been modified.

Bank Feed Best                                                                                     

We are going to provide a general overview here, and show you what some of the reconciliation screens look like.

Xero’s reconciliation tools only work if you’re able to download and import your bank statements or – even better – set up a direct connection with your financial institution(s). If you’ve established a real-time bank feed, you can work on matching your transactions daily or every few days, depending on the volume. Working with statements once a month will obviously take longer.

Here is a reconciliation screen from Xero:

xero match 1

Figure 1: Xero will automatically find transactions from your bank feed or statement and the site itself that appear to match.

Once you’ve opened the reconciliation screen, you have four options:

  • Match. Xero finds transactions based on the amounts, closest dates, and contact names. In the above screen, you’ll notice that the top two entries are shaded green. This means that Xero has made an automatic match. You can click OK to accept it.
  • Find & Match. Xero displays transactions for which there wasn’t an automatic match and lets you select one or more. Sometimes Xero won’t automatically make a match because the amount that came in from the bank combined two transactions in Xero. Or one was off by a penny. So you should always try this option on unmatched transactions.
  • Create.If you can’t find a match in the right column, you can create a Spend Money or Receive Money transaction. You can’t, however, enter a new invoice, bill, or expense claim from this screen. This is why it’s so critical that you’re up to date with your bookkeeping tasks before you reconcile an account.
  • Transfer.If you need to transfer funds between accounts during this process, you can do so.

Click the Discuss tab and enter notes when you want a reminder of what went on with the transaction.

xero match 2

Figure 2: The Find & Match feature in Xero’s bank reconciliation

Although bank account reconciliation can take some time, it is important.  Xero’s tools help speed up the process. Let us know if you would like us to walk you through the process.