Fix Xero Bank Reconciliation Discrepancy

Quick Answer:

Reconciliation discrepancies occur when Xero records don't match bank statements. Common causes include missing transactions, timing differences, and data entry errors. Fix by identifying unrecorded items and creating adjusting entries.

Quick Fix (10 Minutes)

Fastest Solution

  1. Go to Accounting → Reconcile → Select bank account
  2. Note the discrepancy amount
  3. Review unmatched transactions for that exact amount
  4. Check for missing bank fees or interest
  5. Look for timing differences (outstanding checks/deposits)
  6. Create adjustment entry if legitimate discrepancy found

Detailed Steps

  • 1
    Identify Unrecorded Transactions
    1. Compare bank statement line by line to Xero
    2. Mark items on bank statement not in Xero
    3. Common missing items: bank fees, interest, transfers
    4. Enter missing transactions via Bank → Add Transaction
    5. Assign to appropriate accounts
  • 2
    Check Timing Differences
    1. Outstanding checks: issued but not yet cleared
    2. Deposits in transit: recorded but not on statement yet
    3. These are normal and will reconcile next period
    4. Do NOT create adjusting entries for timing differences
  • 3
    Create Reconciliation Adjustment
    1. If true discrepancy found, create adjustment
    2. Go to Bank → Add Transaction
    3. Enter adjustment amount (+ or -)
    4. Assign to "Reconciliation Adjustments" account
    5. Add detailed notes explaining the adjustment
    6. Save and rerun reconciliation

    • Need Professional Help?

    For complex reconciliation issues or if discrepancies persist, our Xero experts can help identify and resolve accounting errors.

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