The beauty of Xero is the bank feed concept. Running Xero without bank feeds is like driving a race car on city streets. Without bank feeds your Xero file will never be able to reach its full potential.
So what exactly is a bank feed? It’s a live connection to your bank’s online system that brings in transactions to Xero on a daily basis.
If you have not yet set up bank feeds, here are step-by-step instructions. Setting up Credit Card feeds is very similar to setting up a bank account. Check out this short video for more guidance.
Not all banks and credit cards have feeds available yet, but many do. Your Xero Advisor can guide you regarding which bank feeds work well with Xero in your local area and help you get up and running. Even if your bank doesn’t offer a live feed yet, there are several ways to upload statements manually into Xero. It won’t be as sweet as a live feed, but you will still benefit from many of the great reconciliation features Xero offers.
Using bank feeds is an easy process. Check out this handy video for complete instructions.
You can find your bank feeds either on the main Dashboard screen (left hand column) or under Bank Accounts in the Accounting tab in the top heading. You can control which bank accounts will show up on your dashboard, and in what order, using this menu. In either place, you will see a frame for each account containing basic information, and a blue button that says “Reconcile # items”. Just click that button and you’ll be taken to the bank detail page.
Reconciling in Xero is a unique experience
Because of the live feed, the reconciliation process is a little different in Xero than other accounting systems. Instead of waiting for a formal month end statement to reconcile everything against, the live feed allows transactions to be matched and reconciled on a daily basis. This may feel strange at first, but once you get used to the concept, it really works quite well.
You can even reconcile your bank and credit card transactions from the Xero Mobile App. Most transactions can be matched from the App, and it really feels more like playing a card game than doing work. The App also contains a notification alert that will let you know each day when your feeds have been updated, what your current account balance is, and the number of transactions synced. If you use an iOS device, this feature will work on a synced Apple watch.
Technology can still have glitches, and so do humans. Occasionally a feed fails or is incorrectly updated. Transactions may be entered manually in the system and never properly matched to the feed. You will still want to regularly check your Xero balances against your bank balances. We suggest uploading PDF copies of your bank and credit card statements to Xero Files, so you can reference them at any time during reconciliation.
The Reconciliation report, which is found next to the Manage Account tab on the bank detail page, is a good troubleshooting tool. If you’ve reconciled your bank account and Xero doesn’t have the correct account balance, this report will show you all outstanding transactions and unreconciled statement lines that are affecting the balance. By publishing your report, you create a snapshot moment that cannot be changed and will be a reference for future reconciliations.
Maintaining Your Bank Feed
Once you have a general understanding of Xero’s bank feed and reconciliation, here are some final bits of advice:
Reconcile regularly. Reconciling your bank accounts on a consistent basis keeps you from getting too far behind, and forgetting important details. It’s easier to see issues and be proactive when there’s only a few transactions to deal with. It also helps keep your bank balance in Xero up-to-date.
Pay attention! Although Xero has many useful automation features, they will never replace the person behind the wheel. There are certain details that only you know about your business. Software also can’t account for human error. If you select the wrong account for a bank rule, Xero will run it just as you have instructed. Left unchecked, those little details will create inaccurate financial records.
Don’t panic! Xero Advisors are certified experts in all things Xero. Xero is a very robust accounting system and has provided their Advisors with the tools needed to easily fix almost anything you can do to your file. While it is best to do things right the first time, if you make a mistake, it won’t be the end of the world.
If you need a little guidance getting back on track, we can help.
We’ve just covered the basics, but there are many other banking features in Xero that we love to use, so this is just the first article in a four part series. Our next article will focus on the four main features of the Reconcile tab.
Live bank feeds in Xero are like the open road – they can take you wherever you need to go, but even faster with a little automation innovation.
– By Jennifer Rivera, Assistant at Level & True Accounting Services LLC