Bank balance does not match to the statement balance

Firstly, would you know whether your bank balance in Xero matches your real bank balance, and secondly why should this be important to you?

To deal with the second point first – this check is singularly one of the most important things to do when using Xero, especially if you are manually uploading your bank statements into Xero.  If your bank balance in Xero does not match your real bank balance then something has gone wrong; a transaction could be duplicated or missing, and to put it bluntly, your accounts are wrong, which means more work for your accountant at the year-end.

To check whether the balance matches you need to look at your bank on the Dashboard in Xero

and note what the Statement balance line is (not the Balance in Xero line – we’ll come to that one later), and compare this to the actual bank balance at the same date on your bank statement or online banking. 

If the Statement balance line and the actual bank balance figures match, then you are doing okay.

If the two figures do not match then either the opening balance is wrong or there is an error in the transactions imported into Xero.  Follow the steps below to find the error:-

1. If you are just starting out check the opening bank balance is entered correctly.  If it is not, then amend it.

2. Look on the account transactions tab to see when the Statement balance last matched the actual bank balance. To get to the account transactions tab click on the 3 little dots above the Balance in Xero line on the bank account on the dashboard and click account transactions. Make sure these are in date order (click on date to re-order).

a. Run the Bank reconciliation Summary report for 1 month after the date the balances last matched and compare the balance on the report to the actual bank balance at the same date. If the balances match then run the report for the following month and check again. Keep doing this until you find a month where the balances do not match – the error must have occurred within this date range.

b. Narrow the range down until the error is identified.  It will usually be:-

    1. A missing transaction
    2. A duplicate transaction
    3. A transaction deleted in error
    4. A transaction manually reconciled in error

c. To correct the errors above

      1. Import a bank statement file for the missing transactions
      2. Delete a duplicate transaction click on options and Delete statement line on the bank reconcile screen or remove and redo from the accounts transaction tab
      3. Restore a transaction deleted in error
        1. Go to manage account and click bank statements
        2. Put a tick in the box next to the deleted statement line
        3. Click restore
      4. Delete the manual entry that has been reconciled  
        1. Go to manage account and click bank statements
        2. Put a tick in the box next to the reconciled statement line
        3. Click delete

3. Repeat as necessary

Now your Statement balance line should match to your actual bank balance at the same date.

Balance in Xero line does not match to Statement balance on the Dashboard

In most cases the difference between the two bank balances shown on the Dashboard in Xero is the (in this case 27) items to reconcile.  Once these items are reconciled then the balances should agree, and Xero will tell you that you have done a “Great job”!

If they don’t then check the accounts transactions tab for unreconciled manual amounts (via the 3 little dots on the dashboard) and clicking on status to put the unreconciled items at the top.

These items are fine to be there if the transaction has been created in Xero but has just not appeared on your bank account in Xero yet.

However, if there are manual unreconciled items in there that you know have already appeared on your bank reconciliation then these items need attention.  They often occur when new transactions are created during a bank reconciliation rather than matching to items already manually created in Xero (perhaps because they are for a slightly different amount).  To delete any duplicate manually transactions put a tick in the box on the left hand side and click remove and redo.

If you have any queries please contact one of our Xero champions for further guidance.

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Michelle Ruddick, Senior Manager

Michelle Ruddick, Senior Manager