Bank reconciliation in Xero at month-end (it’s not just the green button)

Written by an ACA-qualified finance manager · about the author · Last reviewed 1 July 2026

Xero’s “reconcile” button matches the bank feed to transactions - useful, but not the same as a month-end bank reconciliation. Here’s the difference, and how to do the real thing.

Two different jobs with the same name

In Xero, “reconciling” usually means matching each line on the bank feed to a transaction so the feed is clear. That’s daily housekeeping. A bank reconciliation at month-end is different: it proves that the bank balance in your ledger equals the actual balance on the bank statement - and explains any difference. You can have a fully “reconciled” feed in Xero and still have a wrong ledger balance if something was coded straight to the bank account by journal.

How to do the month-end bank rec

• Get the real balance. Take the closing balance from the bank statement (or the bank’s own portal) at the period-end date - not Xero’s figure.
• Compare to the ledger. Run Xero’s bank reconciliation summary or the account’s balance at period end and compare it to the statement.
• Explain the difference. Timing items (unpresented payments, deposits not yet cleared) are legitimate reconciling items. Anything else needs investigating.
• Do it for every account. Include PayPal, Stripe, Wise and any card accounts - each is a bank line on the balance sheet.

When it won’t tie

The usual culprits: a manual journal posted directly to the bank account, a duplicated or deleted feed line, a payment matched to the wrong transaction, or a feed that’s stopped importing. A bank line should be one of the cleanest on the balance sheet - if it won’t tie, treat it as a priority before sign-off. See reconciling the balance sheet for the full month-end method.

Frequently asked questions

Is reconciling the bank feed in Xero the same as a bank reconciliation?

No. Clearing the bank feed matches imported lines to transactions. A bank reconciliation proves the ledger’s bank balance equals the actual statement balance and explains any difference. You can have a clear feed and still have a wrong balance if something was journalled straight to the account.

What are valid reconciling items?

Timing differences - payments you’ve issued that haven’t cleared the bank yet (unpresented), or receipts recorded but not yet showing on the statement. These explain a genuine gap between ledger and statement. Anything that isn’t a timing difference needs investigating.

Why doesn’t my Xero bank balance match the statement?

Common causes are a manual journal posted directly to the bank account, a duplicate or deleted feed line, a mis-matched payment, or a bank feed that stopped importing. Work from the size of the difference to find the entry.