Books AutomatorBefore You Start
This guide assumes you have experience with the basic bank reconciliation process in Xero. You’ll need administrator access to your Xero organization.
Overview
What You’ll Learn
- How to identify common reconciliation discrepancies
- Fixing duplicate and missing bank statement lines
- Resolving incorrectly matched transactions
- Handling foreign currency variances in reconciliation
1. Preparation Steps
Before diving into troubleshooting, ensure these foundational steps are solid:
Required Checks
- Confirm your bank feed is up-to-date and importing correctly.
- Verify no duplicate manual statement imports have occurred.
- Ensure all invoices and bills relevant to the period are entered.
Recommended Checks
- Review transactions in the ‘Cash Coding’ tab for efficiency.
- Check for any ‘Spend Money’ or ‘Receive Money’ transactions not yet reconciled.
- Clear any pending bank transfers between Xero bank accounts.
2. Identifying Common Reconciliation Issues
Unreconciled items often stem from two main categories: data entry errors and system discrepancies.
Issue A: Duplicate Statement Lines
This is a frequent culprit for an out-of-balance reconciliation.
- Manual import of a statement already covered by a bank feed.
- Overlapping date ranges between manual imports and bank feeds.
- Bank feed issues causing repeated lines.
- Mark duplicate statement lines as reconciled.
- Use the ‘Remove & Redo’ feature for incorrect manual imports.
- Contact Xero support for persistent bank feed duplications.
Issue B: Incorrectly Matched Transactions
These errors can lead to transactions showing as reconciled when they shouldn’t be, or vice-versa.
Expert Tip: Regularly review your bank reconciliation summary. A quick scan can often reveal patterns in discrepancies, pointing directly to the root cause of your issues, such as a consistent error in bank rules or a specific type of transaction.
3. Step-by-Step: Resolving Discrepancies
A systematic approach is key to cleaning up your bank reconciliation.
- Check Reconciliation Reports: Start by running the ‘Bank Reconciliation Summary’ and ‘Bank Reconciliation Detail’ reports in Xero. These reports highlight exactly what is unreconciled and can pinpoint imbalances.
- Focus on Oldest Items First: Sort your unreconciled items by date. Addressing the oldest discrepancies first often resolves cascading issues.
- Use the ‘Find & Match’ Tool: For items that don’t auto-match, use ‘Find & Match’ to manually locate corresponding transactions. Utilize date and amount filters to narrow down searches.
- Investigate Unusual Amounts: Large or unusual transactions might be the result of mispostings. Trace these back to their source documents.
4. Advanced Troubleshooting Techniques
- 1
Utilizing the Find & Match Tool Effectively
Beyond basic matching, use ‘Split’ to match partial payments or ‘New Transaction’ to create missing entries directly from the bank statement line.
- 2
Dealing with Old Unreconciled Items
For very old, untraceable items, consider writing them off to an appropriate expense or income account, clearly documenting the reason.
- 3
Handling Foreign Currency Variances
When reconciling foreign currency bank accounts, remember exchange rate fluctuations. Xero calculates gains or losses; ensure these are correctly recognized.
Common Error: Exchange Rate Differences
If a foreign currency transaction in Xero doesn’t perfectly match the bank statement line, it might be due to a difference in exchange rates. Use Xero’s built-in tools to account for these gains/losses.
5. Preventing Future Issues
Best Practices Checklist
- Set up and maintain robust bank rules for recurring transactions
- Regularly review Xero’s suggested matches for accuracy
- Reconcile bank accounts frequently (daily or weekly)
- Ensure consistent data entry practices across your team
Need Help?
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