As a business owner, it’s essential to keep track of your finances. One of the most crucial tasks is reconciling your bank balance in Xero with your actual bank statement. If your two balances don’t match, it could mean that your starting point in Xero is incorrect or that there’s an error in your statement lines. In this article, we’ll help you identify the cause of the mismatch and provide steps to fix it.
Step 1: Run the Bank Reconciliation Summary Report
To determine the cause of the mismatch, you’ll need to compare your Xero bank balance with your actual bank balance. Begin by running the Bank Reconciliation Summary report for several dates in the past. The dates you choose will depend on when your balances last matched. If, for example, your balances matched in January and it’s now April, run reports for January 31st, February 28th, and March 31st.
Step 2: Compare the Bank Reconciliation Summary Report with Your Actual Bank Balance
Compare your Bank Reconciliation Summary reports with your actual bank balances. If, for example, you find that your balances match for January 31st and February 28th but not for March 31st, you’ll know that an error occurred in March. In that case, you may need to run Bank Reconciliation Summary reports for several dates in March to determine the date of the error.
Step 3: Identify the Type of Error
Once you’ve determined the date range in which an error occurred, you’ll need to identify the type of error. There are four possibilities:
- A missing statement line
- A duplicate statement line
- A deleted statement line
- A statement line marked as reconciled in error
Step 4: View Your Bank Statements in Xero
The best way to view your bank statements in Xero is through the Bank Statement tab in the Bank Reconciliation Summary Report.
Step 5: Manually Check Your Actual Bank Statement Against Your Xero Bank Statement
Manually compare your actual bank statement lines against your Xero bank statement lines. You can do this by going through each line of your actual bank statement and comparing it to your Xero statement lines. If you have a large number of statement lines, you can export both sets of statements to an Excel spreadsheet to make the comparison easier.
Step 6: Correcting the Error in Xero
Once you’ve identified the error, you’ll need to correct it in Xero. The steps you’ll need to take depend on the type of error.
- Missing statement line: create an import file with the missing transaction or create a spend or receive money transaction and manually reconcile it.
- Duplicate statement line: delete the duplicate transaction from the Reconcile tab.
- Deleted statement line: create an import file with the missing transaction, create a spend or receive money transaction and manually reconcile it, or drill down into the imported bank statement and undelete the deleted transaction.
- Statement line marked as reconciled in error: remove and redo the posted transaction from the Account Transactions tab.
In conclusion, if your Xero bank balance doesn’t match your actual bank balance, don’t panic. By following the steps outlined in this article, you’ll be able to identify the cause of the mismatch and take the necessary steps to fix it. With regular reconciliation and careful attention to detail, you’ll be able to keep your finances in order and avoid any surprises down the road.
If you’re still having trouble getting your bank balance in Xero to match your actual bank balance, don’t hesitate to reach out to the team at Carter Clear. We’d be happy to help and support you through this process. Additionally, if you’re interested in outsourcing your bookkeeping tasks, we offer a range of bookkeeping support packages to meet your needs. Contact us today to learn more and get started.