Why your Xero bank balance doesn’t match your real statement balance

If you’ve logged into Xero and noticed that your bank account balance doesn’t match what’s on your actual bank statement, you’re not alone. It’s one of the most common issues for new users and also one of the most frustrating.

This post explains the typical causes of a bank balance mismatch in Xero and helps you understand where to look before calling in help.

First, what are the two balances in Xero?

When you open your bank account in Xero, you’ll usually see two balances:

• Statement Balance – this is what Xero has received via your bank feed or a manual bank statement import

• Balance in Xero – this reflects the transactions you’ve entered or coded in Xero (spend/receive money, invoice payments, transfers, and so on)

When these two don’t match and you’ve already finished allocating all the bank transactions, especially if neither one lines up with your actual bank statement, it’s time to investigate.

How to spot the problem

First check to make sure there are no unreconciled transactions for the period you are wanting to reconcile. 

Download your most recent bank statement from online banking, then run the Bank Reconciliation Report in Xero for that same period.

This report helps you compare three key figures:

• The Statement Balance (calculated) in Xero, which is based on what has come in via the bank feed or manual statement import

• The Balance in Xero, which reflects just the transactions you’ve entered into Xero

• The Bank Statement Ending Balance, a field you can type in to match the closing balance shown on your actual bank statement

These three balances should ideally match. If they don’t, the report will give you clues about what might be wrong.

What the Bank Reconciliation Report can reveal:

• Transactions that are sitting unreconciled from the bank feed

• Payments or receipts that have been entered in Xero but haven’t been matched to anything

• A balance discrepancy, which may indicate an incorrect opening balance or a deleted feed line

• A difference caused by future-dated transactions that fall outside the reconciliation period

Also consider:

• Have you ever successfully reconciled this account to your real bank statement?

• Is this a new issue, or has the account never balanced properly?

What causes Xero bank balances to be incorrect?

There are many reasons why your Xero bank balance might not match. Some go back to how the bank account was originally set up. Others happen later, when things get coded incorrectly, edited, or missed altogether.

Here are the most common causes, in plain English:

1. The opening bank balance was never entered (or was wrong)

If your bank account had money in it when you started using Xero, Xero needs to know about it. Otherwise, your balance will be out from day one.

2. There are missing transactions in the bank feed

Sometimes the feed skips a day or fails to pull in certain transactions. There is usually a time delay between when you first connect your bank feed and when transactions start coming in. That missing history doesn’t always import automatically, so it needs to be uploaded manually. If you haven’t checked your Xero balances against a real bank statement recently, this can go unnoticed.

3. You’ve marked a supplier bill or invoice as paid from the wrong account

If you record payments against supplier bills in the Bills to Pay section, it’s easy to accidentally select the wrong account. For example, you might say the bill was paid from your main bank account when it was actually paid from a credit card or a different account entirely. Xero will adjust the balance based on what you selected, even if it’s not what happened in real life.

4. You’ve marked a sales invoice as received to the wrong account

Just like with bills, it’s easy to accidentally select the wrong account when marking a sales invoice as paid. If you tell Xero the payment came into your main business account when it actually went to PayPal, a personal account, or somewhere else, the balance in Xero will be off. Xero will treat it as if the money landed in that account, even if it didn’t.

5. You’ve manually ‘created’ a transaction that was accounted for

Double-ups happen when someone manually marks a bill or invoice as paid, and then also creates a ‘spend money’ or ‘receive money’ transaction on the bank feed line for the same payment. This causes the payment to be recorded twice in Xero, which incorrectly affects your bank balance and double-counts the sale or expense.

6. A previously reconciled transaction has been changed or deleted

If you or someone else edits a transaction that was already reconciled, it can cause that bank feed line to sit unreconciled again without you realising.

7. A bank transfer was only entered on one side

Transfers in Xero can sometimes cause confusion, not because they affect the bank balance directly, but because of how they’re entered or matched. For example, someone might enter a spend money transaction instead of using the transfer function, then create a second transaction in the receiving account manually. Or, they might create a transfer in one account, but it doesn’t appear in the other due to a syncing glitch, so they enter it again, resulting in a duplicate. These issues don’t always affect the balance, but they can make reconciliation difficult and cause the same transaction to appear twice.

8. You’ve got transactions dated in the future

If a payment is inadvertently dated after your bank statement end date, it won’t appear on the Bank Reconciliation Report, even though it shows up in your bank account list in Xero. This can make it look like something is missing or cause you to think your account isn’t reconciled when it actually is. This usually happens when a bill or invoice is paid but accidentally dated into the future. It doesn’t affect your actual bank balance in Xero, but it can create confusion if you’re trying to match things to a specific statement date.

9. You imported a statement manually and it overlapped with the feed

This is common if the bank feed was missing some days and you tried to fill the gap.  Unfortunately, if you don’t trim the import dates exactly right, you’ll get duplicates.

Final tip: Trust your real bank statement

When in doubt, your actual bank statement (PDF from the bank) is the source of truth. Xero is only as accurate as the data it receives and what’s been entered. If something feels off, it’s worth taking the time to investigate.

Why this matters

A mismatch between your Xero bank balance and your real bank statement isn’t just an annoyance. It means your financial records are out of sync, and that affects everything that flows from them. Your BAS/VAT reporting, your profit reports, and your end-of-year tax all rely on accurate data.

These issues won’t fix themselves over time. If your balances aren’t correct, the data in your reports can’t be relied on. That can lead to incorrect tax calculations, missed deductions, or decisions based on the wrong numbers.

It’s worth taking the time to fix it properly, even if the cause turns out to be small. And if you’re not sure where the problem lies, getting a clear diagnosis now can save you much bigger headaches later.