Xero bank reconciliation report: how to run it and read it

Short answer: the Bank Reconciliation report in Xero (also called the Reconciliation Report) proves the books agree with the bank on a given date. It starts from the balance in Xero, adds outstanding payments (money you recorded as paid that has not yet matched a bank line), takes off outstanding receipts (money you recorded as received that has not matched a bank line), adjusts for unreconciled statement lines, and lands on the statement balance, which should equal the closing balance on your real bank statement. Run it for each bank account at every month end. Items that are a few days old are normal timing; anything older than about two weeks is usually a mistake, and the worked example below finds two of them.

Menu names move between Xero releases and differ a little by region. If a label below does not match your screen, search Xero Central for “bank reconciliation report”.

How to run it in Xero

1. Go to Accounting > Reports and open Bank Reconciliation (in some versions you can also reach it from the bank account’s menu as Reconciliation Report).
2. Choose the bank account and set the date to the end of the last bank statement, usually the last day of the month.
3. Update the report. The summary view shows the calculation from the balance in Xero to the statement balance.
4. Open the other views if your version has them: the bank statement view lists every line the feed has brought in, and statement exceptions lists lines that were reconciled by hand without matching a bank line, deleted, or imported twice.
5. Export it as PDF and keep it with the month’s bank statement. Your accountant will ask for both at the year end.

Reconcile the account as far as you can first. The report is most useful when the only items left on it are the ones you cannot explain yet.

What each line means

Line	What it is	Normal?
Balance in Xero	What your books say is in the account: every payment and receipt entered in Xero, matched or not	The starting point
Plus outstanding payments	Payments entered in Xero (bill payments, Spend Money, transfers out) that no bank line has been matched to yet	Yes, if dated in the last few days of the period and they clear soon after
Less outstanding receipts	Receipts entered in Xero (invoice payments, Receive Money, transfers in) that no bank line has been matched to yet	Yes, if dated in the last few days and they arrive soon after
Plus or minus unreconciled statement lines	Lines the bank feed has brought in that you have not reconciled yet	Should be zero after you reconcile to the date
Statement balance	The total of the bank feed lines to the date	Must equal the closing balance on the real bank statement

The sign logic is easier than it looks. An outstanding payment has already left your books but not your bank, so the bank is higher than Xero by that amount; it is added back. An outstanding receipt is in your books but not yet in the bank, so it is taken off.

If the statement balance on the report does not equal the closing balance on the bank’s own statement, the problem is the feed (a missing day, a duplicate line), not your bookkeeping. The bank balance guide covers how to fix feed problems.

A worked example: a plumbing firm’s August month end

These figures are made up. Severn Plumbing Ltd in Bristol runs the Bank Reconciliation report for its current account at 31 August 2026, before reconciling the last few days:

Bank Reconciliation, 31 August 2026	£
Balance in Xero	18,420
Plus outstanding payments:
30 Aug, bill payment to a merchant	2,150
12 Jun, bill payment to a pipe supplier	640
Less outstanding receipts:
31 Aug, card takings	(980)
18 Jul, payment on invoice INV-0412	(1,150)
Plus unreconciled statement lines (a customer receipt of 2,400, van insurance of 310 and a bank fee of 45)	2,045
Statement balance	21,125

The statement balance agrees with the bank’s PDF statement, so the feed is fine. The report says the books are £2,705 behind the bank (21,125 − 18,420). Reconciling the three statement lines covers 2,045 of that. The rest is in the four outstanding items, and their dates tell you which ones to worry about.

The two recent items are timing. The £2,150 payment was sent on 30 August and cleared on 2 September; the £980 of card takings was paid out on 1 September. Both match a September bank line. Leave them.

The £640 payment from 12 June is a duplicate. The owner marked the supplier’s bill as paid in Xero on the day. When the real payment came through the feed, someone reconciled it as a new Spend Money coded to materials instead of matching it to the bill payment. The supplier was paid once, but Xero recorded it twice: materials are overstated by £640 and the bank in Xero is £640 too low. Fix: remove the reconciliation on the Spend Money line, delete that Spend Money, and match the bank line to the bill payment. Profit for the year goes up by £640.

The £1,150 receipt from 18 July never arrived. The customer said they had paid, and the payment was entered against the invoice that day. No bank line ever matched it. The money is not in the bank and the invoice wrongly shows as paid, so it is missing from the aged debtors list and nobody has chased it for six weeks. Fix: remove the payment from INV-0412, which puts the invoice back to overdue, and chase it.

After the fixes and reconciling the three statement lines:

After the clean-up	£
Balance in Xero (18,420 + 640 − 1,150 + 2,045)	19,955
Plus outstanding payment, 30 Aug	2,150
Less outstanding receipt, 31 Aug	(980)
Statement balance	21,125

The statement balance has not moved, because the bank did not change; only the books did. Now the only outstanding items are three days old or less, which is what a clean report looks like. The balance in Xero, £19,955, is also the cash the business really has once the two timing items clear (21,125 − 2,150 + 980). Customers owe £1,150 more than Xero said, and profit is £640 higher.

Which outstanding items are normal

Age of the outstanding item	Usually means	What to do
Dated in the last 3 to 5 working days	Timing: a payment or deposit still clearing	Nothing; check it clears next month
A week or two old	A cheque not banked yet, or a payment entered on the wrong date	Check the bank for it; fix the date if needed
Older than the last statement	A duplicate, a payment that never happened, or a receipt entered in the wrong bank account	Investigate and correct it this month
The same item on three month-end reports in a row	A problem nobody has owned	Treat it as an error, not timing

A good rule for owners: if the report still lists anything older than the previous month end, the books are not finished, however many green ticks the reconcile screen shows.

The month-end routine

1. Reconcile every bank, card and loan account to the last day of the month.
2. Run the Bank Reconciliation report for each account at that date and check the statement balance against each bank’s own statement.
3. Read the outstanding items by date and clear anything older than the previous month end.
4. Look at statement exceptions for lines reconciled by hand, deleted or imported twice.
5. Save the PDF with the bank statement, then run the month’s reports. The Trial Balance and Balance Sheet are only as right as this step, and the Xero month end checklist covers the rest of the close.

If a bookkeeper does the books, this report is the one page that shows whether the bank side of the month is finished. Ask for it with the monthly management pack. Before a VAT or GST return, run it to the period end too; checking the return in the BAS report guide, the VAT return guide and the NZ GST return guide starts with the same step.

Common mistakes

• Running it at today’s date. Run it at the bank statement date, or the latest feed lines will appear as unreconciled and the total will not match any statement you hold.
• Treating “reconciled” as “right”. In the example above the bank lines up to late August were all reconciled, and the books still held two old mistakes worth £1,790 between them. The outstanding list is where duplicates hide.
• Adding a balancing transaction. A made-up adjustment to force the totals hides the real problem and makes next month’s gap harder to find.
• Ignoring the other accounts. Card accounts, PayPal, Stripe and clearing accounts each need their own report. A payout clearing account that does not come back to zero has the same problems as a bank.
• Deleting an old outstanding item without finding out what it was. An old receipt that never arrived is usually a customer who still owes you. Put the invoice back to unpaid, then chase it; who owes me money shows how to find and chase overdue invoices.

Common questions

Where is the bank reconciliation report in Xero? In Accounting > Reports, called Bank Reconciliation. Some versions also open it from the bank account’s menu on the dashboard or the bank accounts page as Reconciliation Report. Choose the account and the date, then update.

What are outstanding payments in Xero? Payments recorded in Xero, such as bill payments, Spend Money or transfers out, that have not been matched to a line from the bank. A few days old is normal timing. Older ones are usually duplicates or payments that never went out.

What are outstanding receipts in Xero? Receipts recorded in Xero, such as invoice payments or Receive Money, that have not been matched to a bank line. If one is weeks old, the money probably never arrived and the invoice should go back to unpaid.

Why does the statement balance not match my bank statement? The statement balance is the total of the bank feed lines. If it differs from the bank’s own closing balance, the feed is missing lines or has duplicates. Compare month by month to find the first month that disagrees, then import the missing lines or delete the duplicates.

How often should I run the bank reconciliation report? At every month end for every bank and card account, and before each VAT, GST or BAS return. Reconciling daily or weekly makes the month-end report short.

Does the bank reconciliation report affect my profit? The report does not change anything. The fixes it leads to often do: removing a duplicate expense raises profit, and removing a receipt that never arrived puts the money back into debtors.

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