Xero Bank Accounts – How to Unreconcile a Transaction

Author: Mark Cunningham

Published: June 6, 2018

Categories: Bank Accounts

Free-Xero-eBook-550x623

If you have incorrectly reconciled an account transaction to a bank statement line in Xero, you can correct it in one of two ways. The first way is to use the Unreconcile function and the second way is to use the Remove and Redo function. In this tutorial, we will unreconcile a bill payment in Xero’s demo company and take a look at the effect is has on the transaction.

Before we get started, it is important to know that the unreconcile function and the remove and redo function have different outcomes. To learn more about these differences, please see our guide on remove and redo versus unreconcile in Xero.

Bank Accounts Section in Xero

To get to the right area of Xero, go to Accounting → Bank accounts from the main menu:

0079-xero-bank-accounts-unreconcile-01

Next, click on the name of the Business Bank Account:

0079-xero-bank-accounts-unreconcile-02

Then click on the Account Transactions tab to find a list of the bank lines that have been reconciled to account transactions in this bank account:

0079-xero-bank-accounts-unreconcile-03

How to Unreconcile a Bank Transaction in Xero

From here, we can unreconcile any transactions we like. You can see whether a transaction has already been reconciled by checking the Status column on the right-hand side.

For this exercise, we will unreconcile the $75.90 bill payment to Swanson Security. To do this, click on the Payment: Swanson Security link to see the details of the payment:

0079-xero-bank-accounts-unreconcile-04

On the Transaction: Payment screen, a message on the left-hand side will tell you the reconciliation status of the transaction and the date it was reconciled:

0079-xero-bank-accounts-unreconcile-05

To unreconcile the transaction, click on Options → Unreconcile from the menu on the right-hand side:

0079-xero-bank-accounts-unreconcile-06

A pop-up box will appear, letting you know the consequences of unreconciling the transaction. When ready, click on OK to continue:

0079-xero-bank-accounts-unreconcile-07

You should now see a message telling you that the transaction has been unreconciled. You should also see that the reconciliation status has changed to Unreconciled:

0079-xero-bank-accounts-unreconcile-08

If you return to the Account Transactions screen of the bank account, you will see that the Status of the transaction has changed to Unreconciled:

0079-xero-bank-accounts-unreconcile-09

Effect of Unreconciling the Transaction

Unreconciling a transaction in Xero leaves the bank line and the account transaction – such as a bill payment or spend money transaction – intact. The unreconcile function simply unlinks the two transactions in the bank account.

This means that the bill from Swanson Security that we just unreconciled is still treated by Xero as having been paid. To check this, navigate to the bill in the demo company and you will see that it has been paid despite the fact we unreconciled it from a bank line:

0079-xero-bank-accounts-unreconcile-10

What this means is Xero recognises that the bill has been paid but not by the bank line we unreconciled. Therefore, it must have been paid by a different bank line. The next step would be to find the correct bank line – which would be a different payment for $75.90 to Swanson Security – and reconcile it to the bill.

Unreconcile versus Remove and Redo

If you would like to learn about the remove and redo function, please see our tutorial on how to remove and redo a transaction in Xero. To learn about the differences between the two functions, please see our guide on remove and redo versus unreconcile in Xero.

Recent Posts

What is the Cloud?

What is the Cloud?

The cloud is the Internet; a worldwide system of computer networks. Cloud computing means delivering computer services over the Internet, including...

read more
What is GST?

What is GST?

If you were asked to explain GST, what would you say? Would it go something like this: “It’s a tax you pay on things you buy.” If so, you're not...

read more