Reconciling orders in Xero
Reconciling orders in Xero
Overview
Understand the different ways to reconcile invoices and payments in Xero.
Steps
When using Xero to manage your eCommerce accounts, Xero receives details of the following:
1. Payments received from your sales channels (from your bank feed)
2. The invoices behind these payments (from Expandly).
Reconciliation is the process of matching the payments received from your sales channels with the invoices raised from your sales channel orders.
There are two ways to reconcile payments received from your sales channels and your sales channel invoices in Xero.
The matching method
The matching method involves matching sales channel payments with invoices by finding and selecting each associated invoice in Xero.
This is the most time-consuming method of reconciliation, however it is also the most accurate method and, accordingly, is the preferred method by low volume sellers managing their accounting in-house.
The control method
The control method involves using a control account to push both sales channel payments and invoices to offset, without matching individual invoices to payment methods.
This is the quickest method of reconciliation, however, it can lead to inaccuracies that require fixing or that you need to write off. This method is preferred by accountants and large-volume sellers.
1. Log into Xero and, using the tabs at the top, click Accounting > Bank accounts > the account you want to reconcile
2. On the bank account page, click the Reconcile tab - this will have a figure in brackets indicating how many payments need reconciling
3. To the right of each payment is a table of reconciliation options - click the Match tab next to the payment you want to reconcile
4. A box of unallocated invoices will open - use the tick boxes to select the invoices to be associated with this payment
*Note* You will need to create and select a bill for the sales channel fee if applicable - to create a bill, click on the plus icon (top right) > bill and enter in the required information.
5. Once the total outstanding figure (bottom right) is zero, click Reconcile to finish.
Things to note when using the matching method
- Invoices must be in draft or approved - not paid
- You must create a bill for sales channel fees - not a journal entry
- It's inadvisable to use the batching method in Expandly when matching because the sales channels may send through payments in a different time period.
1. Log into Xero and, using the tabs at the top, click Accounting > Bank accounts > the account you want to reconcile
2. On the bank account page, click the Reconcile tab - this will have a figure in brackets indicating how many payments need reconciling
3. To the right of each payment is a table of reconciliation options - click the Create tab next to the payment you want to reconcile
4. Complete the following information:
Who - the name of the sales channel
What - the control account
Why - a description (e.g. payment from 1 December 2019).
*Note* You will need to create and select a bill or journal entry for the sales channel fee if applicable - to create a bill, click on the plus icon (top right) > bill and enter in the required information.
Things to note when using the control method
- Invoices must be marked as paid - not draft or approved
- You will need to create a control account and allocate orders to it
If you've issued a customer refund on your sales channel, then you'll need to reconcile this in Xero too.
1. Find the order in Xero and note the Contact details
2. Using the top tabs, click Business > Invoices > New credit note
3. Find the contact by entering in their details and then fill in the remaining the information and click Approve
2. Complete the 'Make a payment' details that now appear at the bottom:
Amount - the amount of the refund
Date - the date of the refund
Bank account - the account to reconcile the refund (note if you're using the control method, select your control account here).
Using Expandly to help
Reconciliation is a little fiddly, but it's also a must. However, Expandly can help you make the process a little easier by:
- Auto-marking orders as draft, approved or paid (depending on which method you're using)
- Auto-sending orders to the correct bank account or control account.
Next Steps
Now you've reconciled your payments in Xero, you might want to:
Need more help?
If you need a little extra help, no problem. Contact us, and we'll talk you through the steps.
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