Reconciling means confirming each line on your bank statement against a record in Xero. On the dashboard, click Reconcile items on the bank account tile. For each line, choose Match, Create, Transfer or Discuss. Do it at least once a week. Ten minutes a week is far easier than a full day at month end.
How the bank feed works
Your bank sends transactions to Xero each day. They appear on the left of the reconcile screen. Xero's suggested match, or a blank form for you to fill in, appears on the right.
If the feed stops updating, your bank connection may need to be renewed. Look for a message on the bank account tile on the dashboard and follow the prompts. Our bank feeds page covers FNB, Absa, Standard Bank, Nedbank and Capitec.
The four options
| Option | Use it when | What to do |
|---|---|---|
| Match | There is already an invoice or bill in Xero for this money | Check the amount and contact are right, then click OK |
| Create | There is no invoice or bill (bank fees, card spend, small purchases) | Enter who, what (description), the account and tax rate, then click OK |
| Transfer | Money moved between two of your own bank accounts or cards | Choose the other account, then click OK |
| Discuss | You don't know what it is | Type a note and leave the line unreconciled |
One payment covers several invoices
On the Match tab, click Find & match, tick each invoice or bill the payment covers, and check that the totals agree before you click Reconcile.
Bank rules save time
For items that repeat with the same details, create a bank rule. On the line, click Create, then Create bank rule. Or open the bank account and choose Manage account, then Bank rules. Set the words to look for and how to code it. Next time, Xero fills it in for you. You still click OK to confirm.
Good first rules for a South African business
- Monthly bank fees and transaction fees. These usually include VAT at 15%. Ask your accountant which account and rate to use.
- Interest earned or charged. Interest has no VAT. Keep it separate from fees.
- SARS payments. VAT, PAYE (EMP201) and provisional tax payments are not expenses. Your accountant will tell you which account each one goes to. Don't guess.
- Fixed monthly costs such as rent, software subscriptions and insurance.
Never click OK just to clear the screen. A wrong match is harder to find later than an unreconciled line.
Never create a new invoice or bill on the reconcile screen if one already exists. Match to it, or you will double-count.
Never delete a bank statement line. If something looks duplicated, leave it and ask.
Check the result
Once everything is reconciled, the Statement balance and the Balance in Xero on the bank tile should agree. Compare the statement balance to the closing balance on your actual bank statement too. If they differ, a day of transactions is missing or duplicated.
Made a mistake? See how to unreconcile a transaction.