How a bookkeeping firm preps Xero bank reconciliation so the click of OK is the last step

Xero's own order is: understand how recon works, enter the invoices, bills, credit notes, expense claims and cash transactions, then check that the opening balance is right and that the statement balance in Xero matches the bank. Only then do you sit on the Reconcile tab. (Reconcile your bank account)

Firms skip the middle. They open Reconcile, accept every suggestion, and call it done. Then Find and match is full of invoices that should have been entered last week, and the Discuss tab is a graveyard.

• Bills and invoices in first. A bank line that is a customer payment should match an invoice, not a receive money you invented.
• Transfers created in one account only. Xero creates the other side. Click OK on the second account.
• Bank rules are for cash lines you will not raise a bill or invoice for. Xero says so. Fees, interest, parking, a regular transfer to savings.

Bank feeds import statement lines into the Xero organization. Direct feeds, where Xero has an agreement with the bank, send lines on a regular basis. The bank provides one direct feed per bank account, so that feed can connect to only one Xero bank account. Xero does not guarantee that a line will appear as soon as it shows in online banking. You do not manually refresh a connected direct feed. Xero says most Yodlee credential shared feeds do need a manual refresh, and a PayPal feed can be refreshed. Confirm which feed type the client has before you treat a quiet Reconcile tab as nothing happened. (About bank feeds)

If Reconcile [number] items does not show, Xero says there are no lines waiting, or the lines sit before the feed start date, or the feed is delayed. Import a statement in that case. (Reconcile your bank account)

Prep for a bookkeeper: open Bank accounts, confirm every in scope account has recent lines, and park a stale feed as a client task before anyone codes. Do not mark as reconciled by hand to hide a missing line. Xero creates a new statement line when you do that, sourced as User. If the real line later imports, you have a duplicate. Xero tells you to use Mark as Reconciled only when you cannot import the original bank data. (Manually mark a transaction as reconciled)

On the Reconcile tab, statement lines sit on the left. Xero offers a suggested match by comparing the line to existing transactions, and if several match, it prefers the closest due date. If the suggestion is right, click OK. If not, open the other possible matches. If you know the invoice exists and it is not offered, use Find and match and search for the contact, invoice number, amount or reference. (Reconcile your bank account)

If nothing exists in Xero, Xero looks next at:

You can turn memory and predictions off with the Suggest previous entries checkbox at the bottom of the screen. Do that on a new file until the chart of accounts is stable. A prediction that creates a new contact named SQ Caf is how you get twelve versions of Square.

Unsure what a line is? Xero documents the Discuss tab for a comment to your advisor or other users. That is the right parking place. Creating a spend money to "ask later" is how the P&L lies.

Xero has three rule types: spend money, receive money and transfer money. Use them for recurring cash lines you will not raise a bill or invoice for. You can create a rule from Options on a statement line, from the Bank rules screen, or while cash coding. Conditions can look at payee, description, amount, reference, analysis code or bank account. Choose whether all conditions must match or any condition may match. You can apply a rule to one bank account or to all accounts in the organization. (About bank rules)

Order matters. Xero checks rules in the list order and stops at the first match. Put the restrictive rule above the loose one. Xero's own example: a generic vehicle lease rule sitting above a rule for ABC vehicle leasing will steal the ABC lines. After you save a rule, drag the list. Conditions and titles can only contain letters and numbers. You need the administrator or standard plus bank accounts role to create a rule. (Create a bank rule)

• Spend money: bank fees, parking, a known fuel payee you will not bill.
• Receive money: bank interest, a regular cash taking you do not invoice.
• Transfer money: the monthly sweep to savings. Create it once as a rule so nobody books it as drawings.
• Do not build a spend money rule for a supplier you raise bills for. Find and match the bill.

Xero documents cash coding as a spreadsheet style view of statement lines on the bank account, under Accounting, Bank accounts, the account, then the Cash coding tab. Plan names and whether the tab appears change by region and subscription. Check the client plan before you treat cash coding as part of the close. You can create a bank rule from a cash coding line. After you save the rule, Xero updates matching lines still on the sheet. (Create a bank rule)

Use cash coding for a week of Square fees or a stack of the same fuel payee. Do not use it to blast a code onto mixed lines because Friday is close day. Sort first. Code the obvious block. Leave the odd amount on Reconcile so a person sees it.

Matching lines is not the same as reconciling the period. On Reconcile period, you enter the date range and the opening and closing balances from the bank statement. For cards, Xero wants those balances entered as negative amounts. Xero then compares those balances to payments and deposits in Xero. If they match and every included transaction is reconciled, you can close the period. Closing stops those transactions being deleted or unreconciled. You can still edit account codes. Xero recommends closing periods in date order. You cannot close until the balances match. (Reconcile and close a period)

Prep for the firm: the bookkeeper finishes the Reconcile tab. The reviewer enters the statement balances on Reconcile period and closes it. If the difference is not zero, nobody closes. The difference is a list, not a journal to "reconciling adjustments" unless the reviewer wrote that journal.

After a first pass, the only email the client should get is the leftover lines. Name them.

Put those questions on Discuss for your own file, and in one email to the client. Then stop coding that file until the answers land or you park the line with a date. The AI assistant is a fit if drafting those named questions is what eats the afternoon. You still approve what goes out.