SETTING UP A BANK ACCOUNT

Once you’ve signed up to Xero, one of the first things you will want to do is set up your bank accounts.

It is very simple to add a bank account in Xero. You can then either manually import your bank statements or you can set up bank feeds so that Xero automatically updates daily.

In this blog we will go through how to set up a bank account, import a statement, and set up a bank feed. In the next blog post we will discuss how to reconcile the bank statement.

As I said above, setting up bank accounts on Xero is fast and simple. All you need to do is click Accounts – Bank Accounts and then click the box that says Add Bank Account.

From here Xero will guide you through the steps – firstly start typing in the bank’s name and then select from the options that appear.  Next choose a name for the account – this can be anything but choose something that makes it obvious which account it is – e.g. Business Accounts, Savings, Credit Card etc. Then choose the type from the drop down menu. A box will appear asking you to enter the BSB number. Fill this in and press Save. Your account has now been created.

 

If you made any mistakes in the set up or want to change any of the details, you can click Manage and then Edit Account Details.

You now will want to import bank statements from your online banking account or, depending on who you bank with, you may be able to set up bank feeds.

If bank feeds are available, you will see a green box that says, ‘Get Bank Feeds’. If you click the green box then you will be instructed on what you need to do. Each bank has different stipulations – some banks allow you to enter your PIN directly into Xero, others require written authorisation, which can take a couple of weeks to be processed. The best thing to do is click the green box and see what it says for your bank.

Another option for bank feeds is using Yodlee.Yodlee is a third party app that will act as an intermediary between your bank and Xero. The benefit of Yodlee is that some banks won’t allow bank feeds and with some banks using the direct feed incurs monthly fees, whereas Yodlee is free. The drawback of using Yodlee is it is a third party app and some people may not want to give their bank details to a third party. There’s lots of discussions around this online so it’s best to do your own research and make up your own mind whether Yodlee is something you would use.

An alternative to bank feeds is to import statements manually. This can work if you don’t need daily updates to your bank or for importing historical statements.

I find the easiest way to import is to import CSV files, although Xero also accepts OFX and QIF files.

Importing a CSV file is a great way to import a huge amount of transactions quickly. You can import up to 1,000 transactions at a time. If your statement contains more than 1,000 transactions just split the statement and import 2 files.

It is important to prepare the CSV file before you import it. If you try to directly import the file from your online banking account into Xero you will probably get an error message and the file won’t be accepted.

To prepare the CSV file here’s what you’ve got to do.

1. In Excel or your spreadsheet software give each column a heading. Each heading should be in row 1 and each heading should be unique. Make sure you have a column for Date and another for Amount. Other recommend columns are Payee, Description, Reference. This will make reconciliation a whole lot easier once the statement has been imported.

2. You should delete the unwanted columns from your CSV file. These would be things like Bank Account Number, Balance, etc.

3. Be sure to delete empty rows and columns. To delete empty rows quickly simply select all transactions and then sort by date. The empty rows will now be at the bottom.

The other main issue that stops imports being accepted by Xero is if there are any commas in the file (for example in a reference or description).

To search for and replace commas quickly use the Search and Replace tool in Excel. Replace all the commas with spaces or hyphens  so that the import will be accepted.

Another quick tip – CSV files can only have one sheet (whereas XLS files can be on multiple sheets) so make sure you only have one sheet in the file.

Lastly, make sure you save the file as a CSV and not an XLS file.

Now to import: we need to go back into Xero – Accounts – Bank Accounts – Manage Account– Import a Statement.

Xero gives a three step process to import, but we’ve already done steps 1 and 2, so in step 3 click Browse and find the CSV file in your browser. Next click Import.

All being well your CSV file should have been accepted. If not try these trouble shooting tips:

https://help.xero.com/uk/BankImportCSVError

Make sure the box is ticked that says ‘Don’t import the first line because they are column headings’. Also make sure the Statement Data columns are aligned to the correct headings in Xero. If you imported additional columns that don’t match with Xero’s columns, check them as Unassigned and Xero will ignore them.

Also check the date format in Xero matches the date format in the CSV you imported.

Once you’re happy that the statement has the correct headings click save. Your statement will now be imported into Xero.

Xero will now direct you to the reconciliation page. We will cover reconciliation in the next blog.

If you have any questions about setting up a bank account on Xero please send us a message or give us a call.

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