What bank reconciliation is and why it matters
An explanation of what bank reconciliation is and how often you should do it
Bank reconciliation is the process of confirming that the transactions in your Xero bank account match your actual bank statement. It is the single most important bookkeeping task.
Why it matters
An unreconciled Xero bank account means your accounts are incomplete. You have not yet captured all accounting transactions in your bookkeeping. VAT returns prepared from unreconciled records will have gaps. Management reports will be wrong. And errors, duplicate transactions, or fraudulent entries can go unnoticed for months.
How often to reconcile
Most businesses should reconcile weekly. The Xero bank reconciliation screen shows you transactions from the bank feed waiting to be matched to Xero entries. Work through them one by one.
If you have high transaction volumes, reconcile daily or use Xero Cash Coding to reconcile up to 200 statement lines in a spreadsheet format (available on Grow and Comprehensive Xero subscriptions).
💡 Important: A fully reconciled bank account means the balance shown in Xero exactly matches the balance on your bank statement. If the two figures differ, there is a missing or duplicate transaction somewhere. A VAT return should not be submitted until the bank is fully reconciled.
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