The profit and loss gets all the attention, but the balance sheet is where mistakes hide: a bank account that doesn't match the statement, a debtors balance nobody can explain, a suspense account that keeps growing. A monthly balance sheet reconciliation in Xero means checking that each balance agrees with something outside the ledger. Here's a checklist, line by line, with the Xero report that helps for each. We checked the report names in Xero's Demo Company in October 2026; some names differ by region.
Quick checklist
| Balance sheet line | Agree it to | Xero report |
|---|---|---|
| Bank accounts | The bank statement balance on the last day of the month | Bank Reconciliation |
| Accounts receivable | The aged receivables total at the same date | Aged Receivables Summary or Detail |
| Accounts payable | The aged payables total at the same date | Aged Payables Summary or Detail |
| Sales tax (GST/VAT) | What the tax report says you owe | Sales Tax Report |
| Fixed assets | The fixed asset register | Fixed Asset Reconciliation |
| Loans, payroll and other liabilities | Lender statements, payroll reports | Account Transactions |
| Everything at once | The movements in each account | Trial Balance |
All of these are under Reporting > All reports.
1. Bank accounts
Start here, because everything else depends on the bank being right. Finish the bank reconciliation for the month, then run the Bank Reconciliation report for each account at the month end. Check that it agrees with the closing balance on the bank statement for that date, and that anything still unreconciled is something you expect, such as a payment that hasn't cleared yet. If it doesn't agree, look for duplicated or deleted statement lines and payments entered twice.
2. Accounts receivable and payable
Run the Aged Receivables Summary at the same date as the balance sheet and compare its total with the Accounts Receivable balance. Do the same for payables. When they don't match, the usual causes are:
- Different dates. Both reports have to be as at the same day.
- Unallocated credits. Credit notes, overpayments and prepayments that haven't been allocated to an invoice are a common source of differences. Allocate what you can, then compare again.
- Entries that aren't invoices. Run Account Transactions for Accounts Receivable and look for anything that isn't an invoice, credit note or payment.
While you're there, look down the list: very old balances and customers in credit are worth chasing or clearing. Our debtors report guide covers that in more detail.
3. Sales tax
The GST or VAT liability on the balance sheet should equal the tax on any returns not yet paid plus the tax building up in the current period. Compare it with the Sales Tax Report for those periods. If it's out, look for tax payments coded to the wrong account and transactions dated in a period you've already filed.
4. Fixed assets
If you use Xero's fixed asset register, the Fixed Asset Reconciliation report is for checking the register against the asset and accumulated depreciation accounts on the balance sheet. Common causes of a difference are an asset still in draft in the register, or a bill, credit note or manual journal coded to an asset or depreciation account without a matching change in the register.
5. Loans, payroll and everything else
For each remaining balance, agree it to an outside document: the lender's statement for a loan, the payroll reports for wages and tax payable, the credit card statement for a card account. Account Transactions filtered to one account shows exactly what makes up its balance. Prepayments and accruals should agree to a schedule of what's left to release, and retained earnings should only change at year end.
Two accounts deserve special attention. A suspense or clearing account, if you use one, should be empty at month end: anything parked there needs a proper home. Xero posts to its Historical Adjustment account when the conversion (opening) balances entered don't balance. A balance there usually means something in the opening figures was never explained, so ask your accountant to look at it.
6. Review the whole picture
Run the Trial Balance and look for anything odd: balances on the wrong side, accounts that should be empty, big swings against last month. Then compare the balance sheet with last month and make sure every change has a reason.
7. Lock the period
Once everything agrees, set a lock date so nobody changes the month by accident. Lock dates are under Settings > Accounting > Financial settings, and you need the Adviser role to set them. Changes made after a period is reported are a common reason why figures in last month's pack no longer match Xero.
Getting the month-end reports to the right people
Most of this is checking, which needs a person. What can be automated is sending the results. Reportpost can email the Balance Sheet, Trial Balance and Aged Receivables Summary on a schedule, for example on the 5th of each month after you've closed, as PDF or Excel. You can try the demo with sample data.
Related: Xero month-end checklist, emailing the trial balance at month end and Xero year-end checklist.