…when there is a bank feed in Xero?
We sometimes, especially when it is your year end, ask you for your bank statements. So why do we need this when there is a bank feed which imports the bank transactions into Xero? Well, let me explain!
How do bank feeds work?
First, let me briefly explain how the bank feed works. At the end of the business day, usually around midnight, all the transactions from that day are collated. These are then collated and transmitted to the accounting software, Xero in our case. Therefore, each morning, the transactions and balance in Xero should match the bank account.
So why do we need your bank statements?
However, as this is not a perfect world, there can sometimes be a problem. If there is a system error or issue when the bank systems are transferring the transactions, they sometimes do not transfer or, on occasion, have been known to transfer twice!
Duplicate transactions where the same transactions have been fed into Xero more than once but have actually only taken place once are usually fairly easy to spot. Same transaction dates, same supplier or customer, and same amounts are giveaways.
However, more difficult to spot are missing transactions. Sometimes, when there is a problem during the transfer, the transactions don’t feed into Xero at all. This means that some expenses or income have not appeared in your bank account in Xero, which will either understate your income or expenses. Usually, one of the only ways to spot this is when we compare the balance on your bank statement, which you have provided directly from your bank account, to the balance in Xero, and the two are different. We would then do a comparison to find the missing transactions and manually import these into Xero to once again ensure your Xero bank balance matches the actual bank balance.
Fortunately, this does not happen that often anymore, but it does still occasionally happen, so it is good to check. Needless to say, some bank feeds are more stable than others. This varies from bank to bank and is reliant on the bank’s systems; it doesn’t have anything to do with Xero.