Bank Reconciliation in Xero is the process of matching bank statement lines imported into Xero from the company’s Bank (or Banks) with account transactions that have been created in Xero.
1. Before starting the bank reconciliation, make sure that all transactions have been entered in Xero. Transactions include invoices, bills, credit notes, and expense claims.
2. Payments for transactions may be entered before or during the bank reconciliation.
Bank Statement Lines
1. Statement Lines are imported into Xero from connected bank account or accounts.
2. The Reconcile [number] items button from the Xero Dashboard shows the number of lines imported from the Bank. Each bank account, if there is more than one. will have their own Reconcile [n] Item buttons.
Xero follows these steps in order to attempt to reconcile the transaction with the bank statement lines.
1. Xero automatically finds matches between the statement lines and the transactions entered into Xero.
2. A suggestion to create a transaction is made if Xero can’t match a transaction but was able to match a bank rule that has been previously set up. The suggested transaction contains all the details of the bank rule.
3. If Xero is unable to find a match or a bank rule to apply, a suggestion to create a transaction is made. The Suggest previous entries option should be turned on for Xero to do this action.
Reconcile the Bank Statement Lines with the Xero Transactions
The aim is to correctly match account transactions created in Xero with the bank statement lines.
1. Review each bank statement line and the match that Xero has found to make sure that this is correct.
2. Accept the match if this is correct.
3. Search for or create account transactions for bank statement lines that have incorrect matches or suggestions.
4. Search for or create account transactions for bank statement lines that have no matches or suggestion.