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Posted on Admin Army

Xero Tips – Bank Reconciliation

Are you getting the most out of your Xero subscription?

We want to help make sure you are using the full functionality Xero provides around bank reconciliations.

As Xero Partners our focus is always on how you can use Xero to make your life easier. This is the first in a series of Xero Tips to help you streamline your bookkeeping and simplify your accounts process.

Here are three ways you can keep on top of your Xero bank reconciliations:

Cash Coding

Cash coding is a great feature if your Xero bank reconciliations are out of date and you have hundreds of transactions that need to be reconciled and brought up-to-date. This feature also allows you to bulk code some of those transactions.

We wouldn’t recommend you use this feature if you’re using Xero to store electronic copies of all of your receipts, because, from this feature, you do not have the ability to add the receipt for a transaction (however, it is able to be accessed later if needed).

So, how do you use cash coding?
  • Open the bank account for reconciliation.
  • Click on the ‘Cash coding’ link. This looks like an Excel spreadsheet which gives you the benefit of being able to sort by the various categories.
  • Hold down the shift key and click on multiple transactions where you want the description, account and tax rate to be the same.
  • Enter the description, account and tax rate in the top one and it will automatically pre-populate for all the selected transactions.
  • Once you have completed this, select ‘Save & Reconcile All’ and then move on to the next round of bulk transactions.
A couple of notes:
  • If you have any bank rules set up for your account, these will automatically be suggested to you.
  • If you don’t have any transactions selected when you click on ‘Save & Reconcile All’, Xero will reconcile any that have bank rules set up.

Minor Adjustments

Minor Adjustments are a way to deal with those instances when an amount that has been spent or received through the bank transaction, doesn’t quite match the amount that has been entered as an invoice or a bill, so you can’t complete the reconciliation. There is an easy fix!

So, how do you make them match?
  • Open the bank account for reconciliation.
  • Find the transaction and select ‘Match’. Xero will suggest all of the invoices that are in the system and currently outstanding.
  • Search by name to narrow down the list and find the invoice you’re looking for.
  • As the transactions don’t match exactly (e.g. the invoice might be for $449.99 and the transaction is for $450.00), Xero won’t let you reconcile it.
  • Select adjustments and then minor adjustment.
  • Enter the amount that it is out by (e.g. one cent).
  • Select reconcile.

Xero will match that transaction to the invoice so the invoice now shows as paid. The bank account balances because the amount that has been shown or allocated as coming into the bank is the correct amount, and the minor adjustment just goes as a transaction on your profit and loss for minor adjustments.

What you might find is that over the course of 12 months, you might make 20 cents worth of minor adjustments one way and 15 cents worth of minor adjustments the other way, and really it’s just a five cent different which doesn’t have a major effect on your accounts, therefore it’s acceptable to do.

Unreconcile Transaction

We can’t all be perfect all the time, and sometimes mistakes happen with bank reconciliations where we might code or match it incorrectly. Again, there is an easy fix!

  • Open the account transactions tab. This shows you a list of all the transactions you have reconciled.
  • Sort by date so you can easily find the one you have just made the error on.
  • Select the transaction (or transactions) that have been reconciled incorrectly and click on ‘remove and redo’.
  • You can then pop back in and reconcile it again.
Notes:
  • You will get a warning from Xero because you will be removing the account transaction but not the transaction line. It removes the link between the two transactions so you can match it again.
  • If the type of transaction you are removing is one that has not been matched against a bill or an invoice, you will need to enter it from scratch.

If you like this tip and want to hear more, check out our Xero Bootcamp with Admin Army Facebook group. We upload regular tips and tricks to help you get the most out of your Xero subscription.

Interested in some of the other Xero tips we have shared?

 

 

Overwhelmed and need a hand with your bookkeeping? Contact us today and we can help you sort through the paperwork.