Xero is a powerful and intuitive accounting platform designed to streamline financial management for businesses of all sizes, and comes with a wealth of features including invoicing, expense tracking, payroll, and integrated banking. For time strapped SMEs, integrated banking is an especially valuable feature, saving countless hours each month compared to manual data entry and reconciliation methods.
Integrating your bank with your Xero account gives you real-time updates on your financial transactions, and drastically reduces your manual workload, as well as minimising the chance of accounting errors. And the best thing about connecting your bank to Xero? It’s quick and easy. Here’s a step-by-step guide to get started.
Signing Up For A New Xero Account
If you haven’t already, navigate to Xero.com and click ‘try Xero for free’ to take advantage of their free 30 day trial. Xero is a cloud-based platform that you can use from any device, giving you access to your financial data at home, in the office, and on the road.
Set Up Your Bank Account In Xero
Once you’ve signed up for Xero and activated the right subscription level for your needs, we recommend integrating your bank account straightaway.
- Step one: Go to the ‘Accounting tab’ at the top of your Xero dashboard.
- Step two: Click on ‘bank accounts’ in the drop-down menu.
- Step three: Select the ‘add bank account’ button, and then start typing your bank’s name or select it from the list of popular banks. All the major business banks are supported on Xero, including HSBC, Barclays, NatWest etc. Credit cards, savings accounts, and current accounts are covered, and you can also set up accounts for your PayPal and Director’s Loan transactions.
- Step four: Complete the steps as prompted by Xero to connect your bank account. You will need to enter your bank login details using your key fob or phone app. Most banks require you to refresh this consent every 90 days, but during this period, Xero will automatically import transactions from your bank, saving you the trouble of entering them manually.
- Step five: Once you’ve entered your information, confirm the connection to verify your bank account is linked successfully to Xero.
Importing Bank Data And Matching Transactions
Depending on your bank, you may have the option to automatically import past transactions, or you may need to upload previous statements in CSV format. Check with your bank or accountant if you’re unsure. Once your data is online, Xero will automatically try to match imported transactions with existing records in your account, but you can adjust these manually if necessary. The first time you make a transaction, you normally have to specify who it is from or for, and the account to be applied to (e.g. 301 – cost of sales, 500 – corporation tax, 800 – wages payable and so on) After this, the platform is pretty good at recognising subsequent transactions and assigning them correctly.
When payments are made between two of your bank accounts, e.g. from a current account to business savings, this can be logged as a transfer on Xero, and if both accounts are integrated with Xero, records will be updated for both for each transaction.
Find Out More
Get the most out of your Xero subscription and save time and money through a managed service with Vanilla Accounting. To find out more or to book a meeting with one of our experienced accountants, please click here.
