Sometimes the transaction details may vary between the Xero statement and the bank's statement of transactions. These variations in transaction details among Xero and bank is termed as Balance Errors. These errors are very common whether you are the first timers or even if you are very keen to it then also these errors can occur.
The most common reasons/causes for Out Of Balance errors are:
- Incorrect Conversion Balance – When you are setting up your Xero ledger for the first time you have to enter an opening balance for the bank account. If you entered a number that is different from your bank statement balance at conversion date then you will face many problems. The most common reason to enter a different balance is that you entered your ledger balance in which there are an outstanding payments/receipts details that hadn’t yet hit the bank statement. If this is the case then you will need to follow the steps given below:
- Change the Conversion Balances and post only the actual bank statement balance to the bank account,
- In Conversion, Balances post the total of the reconciling items to Suspense, and
- In the Bank account, enter the reconciling items as Spend/Receive Money transactions coded against Suspense and dated prior to the conversion date. You have probably already coded the incoming statement lines for these reconciling items so you may need to remove these and re-match the bank statement lines to the pre-conversion transactions you have just entered.
- Manually Reconciled Transactions – Using the “Mark as Reconciled” function should be rare. It should never be used when you have reliable bank feeds coming in as it is the most common cause of problems created by the clients. These can easily be found by looking at the Statement Exceptions tab on the Reconciliation Report or by sorting the Transactions tab of the Bank Account screen by reconciliation status. You may need to investigate each manually reconciled transaction to determine whether it is valid and, if not, ‘remove and redo’ it.
- Duplicate Bank Statement Lines – These are much more common especially in Yodlee feeds. Xero does attempt to identify them but is not much reliable as they are very hard to identify. You could troll through the bank statement import logs which are in a bank statements tab in the bank account screen. The next step is to compare your Xero generated statement to the physical statement.
- Missing Bank Statement Lines – Before bank feed starts – When you set up a bank account in Xero the bank feed data might be missing for the first few weeks. You can see when your feeds started by looking at the Bank Statements tab in the bank account screen and sort it according to start date. The easiest way to solve this is to import the missing data from your bank account and then reconcile these transactions. If you have already manually reconciled then check whether you had done it correctly.
- Missing Bank Statement Lines – after bank feed starts – This is somewhat common with Yodlee feeds and is very hard to find. The only option is to compare your Xero generated statement to the physical statement.
- Deleted Bank Statement Lines – Users usually delete the bank statement line from the reconciliation screen and thereby throw your reconciliation out of balance. The easiest place to see if this has happened is by looking on the Statement Exceptions page of the Reconciliation Report.
Ved Paliwal
Owner of GD Outsourcing Services
