Why is my bank balance in Xero incorrect?

Why is my bank balance in Xero incorrect?

One of the beautiful features of Xero Bank Feeds is that each day the transactions from the day before automatically arrive in your Xero file ready to be reconciled. These transactions are then matched to a sale or bill already in your Xero file or a new transaction is created to record the receipt, expenditure or transfer of money through your accounts.

In a perfect world, when you have reconciled all available transactions, the balance showing in Xero should be an exact reflection of what the actual balance is in your bank account. Sometimes this is not the case, and is one of the most commonly requested support queries made to Xero.

Why is my bank balance in Xero incorrect?

As a professional bookkeeper, this is one of the many checks and balances we put in place when working with our clients. If the actual bank balance agrees to the balance showing in Xero, it is the first step in assurance of the integrity of the data within the file.

Why is my bank balance in Xero incorrect?

So why can a difference arise and what do I do about it?

Firstly, there can be two balances showing in Xero: “Statement Balance”, and “Balance in Xero”. If the two balances agree 100%, you will only see one balance. Where there are discrepancy between the two, this will be shown visibly by two numbers being present on your dashboard. To see a summary of the differences, click on the Account Transactions tab and under the Search box chose the “Unreconciled” filter.

This will show items which have been recorded in Xero, but do not have a corresponding bank transaction. It could be from an entry being entered twice, an entry entered in against an incorrect bank account, an entry which should not have been entered at all or simply a timing difference between when an entry was recorded and the actual date it presents to the bank (unpresented cheques or deposits are a classic example). Investigation may be required to locate and correct any offending transactions.

There can be two balances showing in Xero: “Statement Balance”, and “Balance in Xero”

If the Statement Balance showing in Xero disagrees to your actual bank balance however, further investigation may be required to identify if the bank feeds have being duplicated, deleted or simply not brought in for a period of time. If there has been a duplication, the offending items need to be identified and removed, or if they have been omitted altogether, these will need to be added manually to your Xero file via manual bank import.

Lastly, it is important to check the opening balance was brought to account correctly in the first place. If you have started using Xero for a bank account which was already in existence, it is possible that there was a balance in the account when you started. This balance needs to be brought to account to have the correct starting balance, as without it, the deposits and withdrawals will be made against a default NIL starting balance.

If after the reviewing the above you are still unsure why your bank balance in Xero doesn’t agree it may be worth contacting one of our Xero Gurus to assist in demystifying the issue.

Tashly Consulting Xero Bookkeepers Adelaide are Registered BAS Agents #86318001 and we are dedicated to providing seamless, high-quality, transparent bookkeeping services – If you would like any further information please contact us via telephone (08) 8121 4424 or via email.

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Disclaimer: All or any advice contained in this blog/newsletter is of a general nature only & may not apply to your individual business circumstances. For specific advice relating to your specific situation, please contact your accountant or other professional adviser for further discussion.