As an accounting professional with over 10 years of experience using Xero, I often get asked by small business owners how to easily import their bank statements into Xero to reconcile transactions and run reports. Importing bank statements saves a huge amount of time compared to manually entering each transaction, and ensures accuracy in your books.
In this comprehensive guide, I’ll walk through the entire process of connecting your bank accounts to Xero and importing statements with just a few clicks. Whether you bank with a major bank or a small credit union, you can connect your accounts to Xero in minutes.
Table of Contents
Prerequisites Before Importing Statements
Before importing any bank statement, make sure:
- You have admin access to both Xero and your bank accounts
- All transactions are cleared, or wait until the end of month
- You have the latest bank statement available to import
I also recommend reconciling all previously imported bank statements before bringing in new transactions. This gives you a clean slate and avoids any confusion between previously reconciled and new transactions.
Step 1: Connect Bank Accounts to Xero
The first step is adding your bank account details into Xero so it can securely connect via a bank feed:
- Go to Accounts > Bank Accounts
- Click Connect a bank account
- Search and select your bank
- Enter internet banking credentials
- Follow prompts to connect accounts
Once connected, bank feeds will automatically import new transactions daily. But importing a statement gives you more control.
Step 2: Import New Bank Statement
With bank accounts now connected, you can import historical statements in just a few clicks:
- Go to Bank Accounts and select account
- Click Import statement
- Select date range of statement to import
- Confirm account totals match statement
- Review imported transactions before reconciling
I recommend reviewing transactions before reconciling in case any need to be matched with existing invoices, bills or other Xero transactions. This avoids creating duplicates.
Step 3: Reconcile Imported Transactions
The final step is reconciling imported transactions:
- Go to Bank Accounts and select account
- Click Reconcile below last imported statement
- Select I have reviewed the imported transactions
- Click Reconcile
Reconciling locks down the statement and marks all transactions as cleared. Future reconciliations will then only include new transactions since.
Tips for Smoother Bank Statement Imports
Here are some pro tips from my years of Xero experience to help avoid issues:
Match transactions first – Before reconciling, match any imported bills, sales receipts or other transactions to avoid duplicates.
Import frequently – Don’t let statements build up! Import at least monthly.
Check totals – Verify the statement totals match Xero before reconciling. This avoids balance discrepancies.
Review pending – If any transactions are ‘Pending’, click into them and match or attach files.
Following this process takes just a few minutes each month. The time savings add up over the years, giving you hours back to focus on more productive accounting tasks!
Troubleshooting Common Import Issues
Despite how straightforward statement imports are, occasionally issues pop up. Here are solutions to common problems:
Can’t connect bank – Double check your login credentials or contact your bank. Often it’s just an expired password.
Missing transactions – Import again selecting a longer date range to catch any missing transactions.
Unexplained differences – Review all pending transactions and match to invoices, bills etc. Clear up any uncleared checks or deposits.
Duplicates appearing – Import more frequently to avoid duplication. Or delete duplicates and re-import that statement to capture missing transactions.
As you can see, most issues can be easily explained and avoided with regular imports and careful reconciliation. But if problems persist, don’t hesitate to contact Xero support who are very helpful.
Best Practices for Ongoing Bank Reconciliations
Getting your historical transactions into Xero is the first step. But you need to keep reconciling ongoing bank activity to keep your books up to date.
Here are some best practices I recommend to clients:
- Import weekly – Monthly statements have too many transactions to match easily. Import weekly instead.
- Reconcile weekly – Don’t let imported transactions build up. Reconcile weekly to prevent getting overwhelmed.
- Review pending regularly – Check pending transactions at least weekly. Match and attach files promptly to keep things moving.
- Start reconciliation – Even if you don’t finish, click “Reconcile” so imported transactions don’t duplicate next time.
- Stick to routines – Schedule time on your calendar for these weekly accounting tasks so they don’t slip.
Making bank reconciliation a consistent weekly routine will save you oodles of time compared to monthly or quarterly. Transactions stay manageable and you spot any discrepancies right away before they become problems.
Conclusion
I hope this guide has shown how quick and easy it is to import bank statements into Xero and get your books up to date. Accurate financial reporting all starts with properly reconciled bank transactions flowing into your general ledger.
What used to be a manual and tedious process is now a simple automated workflow thanks to cloud accounting systems.
If you have any other questions, don’t hesitate to drop me a line using the contact details below. I’m always happy to help business owners with Xero tips and tricks I’ve learned over my many years of experience.
John Smith, Certified Public Accountant
