The Bank Reconcile screen is one of my favourite places in Xero.
It was, and still is, what makes Xero a clear leader over the other cloudbased accounting systems (in my mind, at least). Xero were one of the first to not only create a truly cloud-based accounting platform, but substantially changed the way that business owners interacted with their bank statements – forever!
By bringing the data to the business owner and allowing that data to create transactions, Xero has not only changed the software-bank-owner relationship, it has fundamentally changed the way that a business owner or bookkeeper reconciles the bank account.
I (and many of my clients) actually get a buzz out of logging into Xero in the morning and reconciling the dozen or so new transactions that came in overnight. Knowing that my bank reconciliation is balanced, and that my accounting system reflects real-time balances and that my automated receivables follow-up is going to be accurate makes me feel good (I know – small things, but it works for me!).
In the ‘old days’ you would reconcile your bank account each month (or week) based on the physical bank statement. You might log into your online banking to see what has happened in the last few days, and you may even have downloaded the bank data to import into your accounting system’s reconciliation process, but you were still essentially reliant on the statement to ensure that everything was working (I still have nightmares of trying to complete the bank reconciliation of some accounts in MYOB trying to fix errors, dropping transactions, and chasing down missing lines).
The worst of it was that if you were out of balance, or needed more information on a few statement lines you had to put the whole thing on hold until you had sorted out those issues, and could not move on to the next statement (a pain if you were reconciling weekly).
The BIG difference with Xero is that you are not actually reconciling at the statement level – you are reconciling at the transaction level.