I’m often asked how to reconcile bank feeds in Xero quickly without sacrificing accuracy. Over the years I’ve seen business owners spend hours in the reconciliation screen, getting frustrated by duplicates, bank fees and transfers that don’t quite match. In this post I’ll share the practical, no-nonsense approach I use with clients so reconciling becomes a reliable, even routine, task rather than a weekly stress point.
Why bank feeds matter (and where time gets wasted)
Bank feeds are brilliant: they bring transaction data straight into Xero so you don’t have to type everything manually. But feeds aren’t perfect. Problems typically come from:
Uncategorised bank fees and chargesInternal transfers between your bank accountsPayment processor fees (Stripe, PayPal) and payoutsDuplicate transactions from CSV imports + live feedForeign currency movements and exchange differencesIncorrect opening balances after switching banksIf you don’t tackle those systematically, reconciliation becomes a time sink. The goal is to minimise the number of transactions you have to check manually and to have clear rules for the ones that do need human attention.
Set up the groundwork before you reconcile
Take 20–30 minutes to get the following right and you’ll save hours later:
Connect the feed correctly: Confirm you have the correct bank account in Xero and the feed is mapped to it. For accounts with both a current and a savings account, ensure they’re separate Xero accounts.Disable duplicate imports: If you’ve previously uploaded CSV statements, stop uploading manually once the live feed is working — otherwise you’ll create duplicates.Check opening balances: Especially when you switch banks or open a new Xero organisation. An incorrect opening balance causes continuous discrepancies.Create bank rules: Bank rules are one of Xero’s best time-savers. Set rules for regular transactions like rent, subscriptions, phone bills, and regular supplier payments.Set up tracking or contact defaults: If most purchases are for the same department or contact, use defaults to avoid editing each line.Daily (or weekly) reconciliation routine I recommend
Consistency beats heroics. I tell clients to aim for short, regular sessions rather than long, infrequent catch-ups. Here’s a simple routine that takes 15–30 minutes per session for most small businesses:
Open Xero’s “Reconcile” screen and start at the top — don’t skip around.Apply bank rules first — these should match automatically and remove a large chunk of work.Match payments to invoices/receipts next: use the “Find & Match” tool when transactions aren’t auto-matched.Handle transfers between accounts: use the transfer function to match two sides of the same movement rather than coding them separately.Code the rest to expense or income accounts, being consistent with your chart of accounts.Mark any unresolved items for later (use a note or a specific suspense account) rather than letting them derail the session.How to build effective bank rules
Bank rules are your best efficiency hack for straightforward recurring transactions. When setting them up:
Be specific with match conditions: Match on the reference, amount (or amount range), and description so the rule only catches the intended transactions.Use conditional amounts: For suppliers whose invoices vary a bit month-to-month, set a rule that matches a range rather than a single amount.Assign a contact: This speeds up matching because Xero will suggest that contact when the rule applies.Review rules periodically: Business names and payment references change — review rules quarterly to avoid mis-coding.Handling common tricky scenarios
These are the issues I see most often and how I resolve them.
Payment processor fees (Stripe, PayPal): Don’t code payouts as income. Instead, match the gross income to the invoices and code the processor fee to a specific bank fees expense. Use Xero’s “split” or match to separate gross payout into income and fees.Transfers between accounts: Use the “Transfer” option in reconciliation to match both sides. If the amounts differ due to fees or exchange rates, use a split and code the fee appropriately.Foreign currency differences: Reconcile using the statement balance and record realized FX gains/losses to a designated FX account. For persistent FX exposures consider a specialist FX clearing account.Duplicates from CSV + feed: Investigate before deleting. Check dates and references and remove transactions added by CSV if the feed has the same items.Unidentified items: Put them into an “Unreconciled Suspense” or “Clearing” account temporarily. Keep a short list and resolve within a month to avoid messy year-end reconciliations.Shortcuts that save real time
Use the keyboard: Xero’s reconciliation screen supports keyboard shortcuts — they shave seconds per transaction which adds up.Batch matching: When several transactions relate to the same supplier and invoice pattern, select and match them in bulk.Automate receipts with apps: Use apps like Hubdoc, Dext or Receipt Bank to capture supplier invoices and attach them to transactions — this reduces the need to hunt for supporting docs.Reconciliation reports: Run the Bank Reconciliation Summary regularly. It shows unpresented cheques, outstanding deposits and the difference between Xero and bank statements so you catch issues early.Checklist to run before you close the month
| Task | Why it matters |
| Reconcile to statement date | Ensures bank balance in Xero matches official statement for VAT and tax reporting |
| Clear internal transfers | Prevents duplicate income or expense entries |
| Review suspense accounts | Resolve any items left in suspense to avoid inflating profit or liabilities |
| Check bank rules | Update rules for new suppliers or changed descriptions |
| Confirm FX and fees | Make sure foreign currency gains/losses and fees are coded and not left unmatched |
When to call for help
If you consistently find unexplained differences, large balances in suspense accounts, or you’ve switched bank providers and the opening balance is wrong, it’s worth getting a short professional review. Often a fresh pair of eyes can spot a duplicated import, mis-posted opening balance, or a systemic issue with bank rules that’s causing errors week after week.
Reconciling bank feeds in Xero doesn’t have to be a chore. With a few setup steps, a short regular routine and sensible use of bank rules and apps like Hubdoc or Dext, most small businesses can bring reconciliation down to a manageable, low-effort task that keeps your records clean and VAT/MA returns accurate.
