What is a Bank Reconcilaition?

A bank reconciliation is really ensuring that your accounting system has captured all transactions from a bank account and that they have been reconciled correctly

Doesn't My Bank Feed Do This?

Xero's bank feeds do help with one part of it - it imports the transactions from your bank automatically normally the day after they occur.

However - some banks, in particular those that rely on non-direct feeds (or Yodlee Feeds) can sometimes miss transactions entirely - this is why the bank reconciliation report is important to run.

Also - if you have accounts that have no bank feeds at all and require manual imports (such as CBA Personal Credit Cards) then you really need to use your bank reconciliation report to ensure you're capturing everything into your accounting system

Accessing The Bank Reconciliation Report

The quickest way to access the bank reconciliation report is from your Dashboard.

1. Click on "Dashboard" in the top Menu of Xero
2. Click the Overflow Menu next to one of your bank accounts (the 3 Vertical dots) and then click on "Reconciliation Report"
3. By Default the Report will default to the account you accessed the report from

In the section below we'll explain how to use it

Using The Bank Reconciliation Report

There are multiple parts to this report - we'll go through the simplest thing to check first, is your account balance in Xero right

Before starting this exercise, you'll need a bank statement from your bank to confirm the dates to use, and the balance of your accounts - once you have this follow the steps below

By Default you should be on Page 1 of the report pack "Bank Reconciliation Summary"

1. First of all set the date range in the top left, this date range should align to the start date of your statement and closing date of your statement
2. In the bank statement ending balance enter the closing balance from your bank statement
3. Click on Update

Now - if you have no variance on your Calculated Balance (it will show as -) on the report - then its great! It means all your bank transactions for the period had imported successfully and there are no problems

We have an example of the report here - in this example our statement started on the 15th of October, ended on the 14th of November and had an ending balance of $300

Make sure you change the report to match your own statement that you are comparing to for this exercise

My Calculated Balance Isn't Zero!

If your calculated balance isn't zero (shown as - on the report) there are few things to check - below are we have listed some of them

• Do you have outstanding receipts? - This means you have received money marked against the bank account but no corresponding transaction to clear it out
• Do you have outstanding payments? - This means you have spent money marked against the bank account, but no corresponding transaction to clear it out

If the above is true, this will be visible on the bank reconciliation report and you can click through to those transactions and make the relevant changes to reconcile them correctly. We find quite regularly that this can be due to people selecting incorrect bank accounts when marking things off, if this is the case remove and redo is your friend :-)

Asides from the above what else may cause the issue?

• If the account is a manual account i.e. has no bank feed you may have missed importing transactions
• If the account is a bank feed account - it is likely that the feed has a disruption and some transactions were missed

For the second set of problems the easiest way to check this is the following:

1. On the Bank Reconciliation Report under "Contents" use the drop down menu and select "Bank Statement"
2. Compare the transactions on your physical statement to the statement lines listed - remember that Xero may not necessarily import transactions in the same order as what appears on your statement so it is best to look at the "balance" at the end of each day and compare that to your bank statement
3. If a statement line is missing - you will need to manually import it onto the bank feed
4. Once you have imported the missing transactions and reconciled, rerun the report and check the result again

Why Is This Important?

If you are missing transactions then it can cause variance in all other areas of Xero - what if you missed a deposit from a customer? Or what if you missed a transaction for a big purchase?

Using the Bank reconciliation report at the end of each statement period ensures that the health, and accuracy of your Xero data is up to date.