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See pricingGUIDE · XERO RECONCILIATION
To reconcile in Xero, open the bank account’s Reconcile tab and clear each statement line: match it to a transaction already in Xero, create a new one, or record a transfer. Then run the Bank Reconciliation Summary for the statement date. Its calculated statement balance should equal the bank’s. The faster route is ZeraBooks: AI reconciles each month for you and proves it against the PDF statement to the cent.
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HOW XERO THINKS
Xero keeps two lists for every bank account. Reconciling means pairing them, one statement line at a time. Knowing which list a number lives in explains almost every reconciliation problem.
| Statement lines | Account transactions | |
|---|---|---|
| What they are | What the bank says happened | What you recorded in Xero |
| Where they come from | A bank feed, or a statement file you import | Invoices and bills paid, spend and receive money, transfers |
| Where you see them | Left side of the Reconcile tab | Right side of the Reconcile tab, and the account’s transactions |
| What drives the balance | Statement balance | Balance in Xero |
A line on one side with nothing on the other is the whole job. A statement line with no transaction needs one created. A transaction with no statement line is either still on its way through the bank, like a check not yet cashed, or a mistake. Getting the lines in when there is no feed is covered in the Xero bank statement import guide.
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THE OPTIONS
Each line on the Reconcile tab gets one of these. Checked against Xero Central, October 22, 2026:
| Option | Use it when | Bluegate example |
|---|---|---|
| Match | Xero suggests the transaction already in Xero that fits, such as a paid invoice or bill | 06/02 wholesale deposit 1,840.00 matched to the open invoice |
| Create | Nothing exists in Xero yet: Xero creates a spend or receive money transaction with the account you choose | 06/20 bank fee 15.00 created as spend money to Bank Fees |
| Transfer | Money moved between two of your own accounts | 06/09 2,000.00 to the savings account |
| Find & match | One line covers several items, or a match needs a fee or adjustment added | 06/14 card payout 4,115.50 matched to the day’s sales less processing fees |
| Discuss | You don’t know what it is: leave a note for your bookkeeper or accountant | Not needed this month |
| Cash coding | Many simple lines at once, coded in bulk | Not needed for six lines |
Bank rules save the repeat work: a rule for the monthly fee would code it the same way every month. For a transfer between two accounts that both have feeds, create the transfer once and match it on the other account, rather than creating a second transfer there.
WORKED EXAMPLE
Bluegate Coffee Roasters is a fictional roaster. Its June 2026 checking statement opens at 12,480.00 and has six lines. Each is cleared on the Reconcile tab:
| Date | Statement line | Amount | Running balance | How it was cleared |
|---|---|---|---|---|
| 06/01 | Opening balance | 12,480.00 | ||
| 06/02 | Deposit: Fern & Oak Cafe | 1,840.00 | 14,320.00 | Match: invoice |
| 06/05 | Payment: green coffee importer | −3,260.00 | 11,060.00 | Match: bill |
| 06/09 | Online transfer to savings | −2,000.00 | 9,060.00 | Transfer |
| 06/14 | Card processor payout | 4,115.50 | 13,175.50 | Find & match, fees added |
| 06/20 | Monthly service fee | −15.00 | 13,160.50 | Create: spend money |
| 06/27 | Payroll | −5,600.00 | 7,560.50 | Match: pay run |
| June | Net change and closing balance | −4,919.50 | 7,560.50 |
The proof before you trust anything else: 12,480.00 − 4,919.50 = 7,560.50, the closing balance printed on the bank statement. If the lines in Xero don’t add up to that, a line is missing or doubled, and no amount of matching will fix it.
THE REPORT
Run it from Accounting, Reports, Bank Reconciliation Summary, for one bank account and the statement date. Bluegate also wrote check 1043 for 420.00 on June 29 and recorded a 300.00 deposit on June 30; neither reached the bank by June 30.
| Line on the report | What it is | Bluegate, June 30 |
|---|---|---|
| Balance in Xero | Every transaction in Xero for the account dated on or before June 30 | 7,440.50 |
| Outstanding payments | Recorded in Xero, not yet on a statement line | + 420.00 |
| Outstanding receipts | Recorded in Xero, not yet on a statement line | − 300.00 |
| Unreconciled statement lines | On the statement, not yet cleared | 0.00 |
| Statement balance (calculated) | What the bank should show | 7,560.50 |
Xero’s own test: when everything is up to date, the Balance in Xero, the calculated statement balance and your online banking balance for that day agree, once outstanding items are allowed for. Here 7,440.50 + 420.00 − 300.00 = 7,560.50, the bank’s figure. If they last agreed on March 31, Xero suggests running the report as at April 30 to find what changed.
WHEN IT DOESN’T AGREE
A reconcile tab with nothing left on it can still disagree with the bank. These are the usual reasons and how to fix each one in Xero.
| What you see | Likely cause | Fix |
|---|---|---|
| Statement balance in Xero is higher than the bank | The same lines came in twice, from an import and a feed | Find and remove duplicate bank statement lines |
| A payment shows twice in the books | A line was created as new spend money when the bill payment already existed | Unreconcile it, remove the extra transaction, then match the bill |
| Old transactions sit as outstanding for months | Checks voided or payments entered twice and never cleared | Void or delete the stale ones after checking the bank |
| A transaction marked reconciled with no statement line | It was manually marked as reconciled | Fine when the line can’t be imported; otherwise import the line and match it |
| Transfer counted on both accounts | A transfer was created from each side | Keep one transfer and match it on the second account |
To take a reconciled line apart, Xero lets you unreconcile one transaction at a time. It has no whole-month undo. The full method is on how to undo a bank reconciliation.
A DIFFERENT APPROACH
ZeraBooks doesn’t connect to Xero and has no bank feed. It is its own ledger, and it reconciles against the statement itself rather than line by line.
THREE CHECKS, ON UPLOAD
Upload the month’s PDF statement and ZeraBooks runs three checks: the statement’s opening balance plus every line equals its printed closing balance; this opening balance matches last month’s closing; and the ledger balance equals the printed closing balance. When all three agree, the month ties. There are no lines to tick; you review it and click Finalize.
How reconciliation works
WHEN IT DOESN’T TIE
A month that doesn’t tie shows the difference. Verify against the document reads the statement again and proposes only the changes that make it tie, each quoting the line it came from. Nothing changes until you apply it, and every change can be undone.
Verify a statement with AIOpen the bank account, go to the Reconcile tab, and for each statement line on the left either match the suggested transaction, create a new one, or record a transfer. Use Find & match when one line covers several items. Then run the Bank Reconciliation Summary for the statement date. A foreign-currency account is reconciled in its own currency; see multi-currency bank reconciliation.
A report for one bank account on one date. It starts with the Balance in Xero, adds outstanding payments, takes off outstanding receipts, allows for unreconciled statement lines, and arrives at a calculated statement balance that should equal the bank’s.
Usually because of items recorded in Xero that haven’t reached the bank, duplicated statement lines, or transactions created instead of matched. The Bank Reconciliation Summary separates the timing items so what is left is a real error.
Yes. Import statement lines from a CSV, OFX or similar file and reconcile them the same way. When a line can’t be imported at all, Xero lets you manually mark a transaction as reconciled. FreshBooks works the same way with CSV statements; see FreshBooks bank reconciliation.
Open the reconciled transaction and unreconcile it. The transaction stays and the statement line goes back to the Reconcile tab. A padlock means the period is locked, so the lock date has to be moved first.
No. ZeraBooks is a separate general ledger with no Xero connection and no bank feed. It reconciles each month against the uploaded statement. It is $79 a month billed annually after a 7-day trial. Comparing the two? See the Xero alternative page.
FREE SETUP + CATCH-UP
ZeraBooks proves every month against the bank’s own statement. $79 a month billed annually after a 7-day trial; see ZeraBooks pricing. Prefer someone else did it? See bookkeeping services.