Bank Reconciliations with Vend & Xero: How to Integrate Properly, Get Organized, and Prevent Fraud

Reconciliation is hands-down, one of the “must-do” jobs that every retailer should stay on top of. Known as the accounting task of comparing two sets of records to see if the figures all match up, reconciliation ensures that your financial activity is properly recorded and the amounts are all accounted for. And as Investopedia puts it, this action “confirms whether the amount leaving an account is the same amount that is spent.”

The old school process of reconciliation involves entrepreneurs manually entering transactions from their bank statements into their accounting system, and checking each one to make sure both records agree. It’s a pretty tedious process that takes time and opens up room for error.

Fortunately, retailers these days don’t have to go through such a cumbersome process. Thanks to cloud-based software and tech advancements, retailers can now automate parts of the reconciliation process, thus reducing data entry while increasing accuracy at the same time.

In the succeeding paragraphs, we’ll be talking about how you can do just that through Vend and Xero. If you’re using these two programs (or are planning to do so) check out the steps and tips below so you can learn about the best ways to handle reconciliations in your store.

 

Set up the integration correctly

Getting reconciliations right starts with integrating Vend and Xero correctly. To ensure that you’re able to do this task properly, be sure to enable payments to your Xero accounts when you’re setting up your integration, and see to it that your accounts are mapped correctly.

If you haven’t done so yet, follow the steps below to set up the Vend and Xero integration:

 

Map your accounts properly

Depending on how you process sales in your store, you have two options when it comes to account mapping:

1. Map it straight to a bank account – When you choose this option, the payment information from Vend is sent directly to your bank account feed in Xero. In some cases, Xero can even match items in your bank statement with your imported transactions, and all you have to do is click OK. “This works perfectly for EFTPOS and credit cards transactions, as the total for these is usually deposited in to your account daily, so they match up easily,” says Lauren Taylor, Manager of Customer Success at Vend.

There are however, a few exceptions, such as if you received “bank deposits” separately from sales, or if you have banked your end of day totals separately (ex: the cash for three days is banked all at once in one transaction). In these cases, Lauren recommends that you go with the second option, which is mapping to a clearing account.

2. Map to a clearing account – For this option, you’ll have to create a new account in Xero (usually a current asset account). When you do this, make sure you select “enable payments” for it, and map your payment types in Vend to this account.

“When the bank transactions come through in your Bank Feed, you want to send these to the same exact account to balance this. You can actually set up a “Bank Rule” in Xero to suggest this for you automatically, so you can just hit OK (as you do with option 1) to make it easy,” adds Lauren.

Feel free to use a combination of these two options, depending on the payment types you’re using and what fits best with your store processes.

 

Observe reconciliation best practices

Now that you’ve set up your integration and mapped your accounts, it’s time to make sure that you reconcile properly and no data falls through the cracks.

One of the best ways to accomplish this is to reconcile as often as you can. Regan Ashworth, Developer Relations Manager at Xero, says that the number one tip for staying on top of reconciliations is to do it as often as possible. “Transactions from Vend are entered on a daily basis so bank reconciliations can be done daily too.”

Lauren agrees, and adds that users should reconcile whenever they can. “If you’re using Xero, reconcile every time you’re in there! It is so easy with Xero, and you can literally even just do it a couple of times a day. It takes you less than 5-10 mins if you do it regularly, and reconciling while transactions are fresh in your mind is the best time to do it!”

Issues arise when retailers do it in bulk later on (i.e. once a month). “You can struggle with remembering what each of the transactions were, and it ends up taking more time to do.”

“Its also strangely satisfying to see the green ‘Reconciled!’ button when you’re done,” she says. “It’s like a gold star, and you know you’re on top of things and up to date – who wouldn’t like to feel like that every time they log in?”

 

Be more systematic with register closures and deposits

Kirsten Barrie, CEO of Verte Consulting and a Xero Gold Partner, recommends that merchants be systematic and consistent when they close their registers and make deposits. “Retailers have to close out their registers regularly. If you’re a brick-and-mortar store, you should do this daily, as well as deposit each day’s cash separately, matching up to the close out report for that day,” she says.

Kirsten explains, “The closed-out transaction amounts are transferred into Xero and will sit in the system as open receivables, then the deposit  appears from the bank feed and matches up with the receivables in the system.”

 

Be vigilant against fraud

If you encounter fraudulent activities in your bank reconciliations, Regan recommends that you take the following steps to prevent or address them:

Separate duties

This is the most common attribute with fraud. It’s not a good idea for the same person to do everything e.g: count the takings, match them to the till receipts, bank the money, reconcile the bank etc.

Bank reconciliations should not be performed by the person who processes the sales or writes out the cheques so that no single person has control over the entire process. More often than not fraud is carried out by someone trusted, who does everything.

Check daily till reconciliations

Does the cash received in the till match what the till register shows? Can you reconcile the amounts banked to takings received?

Ensure the right User Role is selected for each user

See to it that only the appropriate users have the  “Contact Bank Account Admin” tick box ticked in the user permissions area. Only Standard Users or Advisers who have this box ticked can add or edit bank account details for customers and suppliers.

Kirsten echoes this advice and says it’s extremely important for retailers to provide only admin access to store managers and trusted employees. “People with admin access can do a number of tasks, including modify stock levels.” In the wrong hands, such capabilities can create discrepancies for the retailer and pave the way for theft or fraud.

 

Resources

We hope this post helps you stay on top reconciliation in your business. If you need more details on how reconciliation works with Vend and Xero, check out our help article, What is the Xero integration and how does it work?

Need additional help? Feel free to get in touch with our support team here.