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What to do if your bank balance does not match Xero

Common causes why your bank balance doesn’t match and how to fix the problem

Sometimes the closing balance shown in Xero does not match the closing balance on your actual bank statement. When that happens, one of the transactions in the account does not agree with your bank, and it needs tracking down and putting right. This is called a discrepancy. It is usually one small thing, and the steps below will help you find it. 

What “matching” means

After you reconcile, the balance in Xero should be exactly the same as the balance on your bank statement for the same date. If the two are different, even by a few pence, one transaction in Xero does not agree with your bank. The goal is simply to find which one.

Common causes

Most mismatches come down to one of these four things:

  • The same transaction entered twice (a duplicate): Search for the amount in Xero. If it appears twice when it only happened once, delete the extra one.

  • A transaction entered with the wrong amount: For example, £150 typed as £15. Find it and correct the figure so it matches your statement.

  • A transaction that has not been matched yet: Check the Awaiting Reconciliation list and deal with anything still sitting there.

  • The wrong opening balance when the account was first set up: This is the starting figure Xero was given when the account was connected. If it is wrong, every balance after it is out by the same amount. This one is tricky to fix on your own, so contact us and we will correct it for you.

How to find the problem, step by step

  1. In Xero, go to ‘Accounting’, then ‘Reports’, and open the ‘Reconciliation Report’.

  2. Set the date range to start from the last date you know the account was correct – i.e. the last time Xero and your bank agreed.

  3. Open the tab called ‘Statement Exceptions’. This is Xero’s own list of transactions it thinks might be causing the problem.

  4. Go down that list line by line, checking each one against your actual bank statement.

  5. The first line that does not agree with your statement is almost always the cause. That is the transaction to correct. 

If you have worked through the four common causes and these steps and still cannot find the difference, do not keep guessing. Contact us for extra guidance.

 

💡 Important: Do not try to force the balances to agree by editing the opening balance or posting a manual balancing journal. That hides the problem instead of fixing it and stores up trouble later. Always find and correct the actual transaction causing the difference.

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