Guide · QuickBooks, Xero and Sage
Bank rules: reconcile in minutes, not evenings
Most small-business bank statements are the same twenty payees every month. A bank rule codes each of them once and for ever, so reconciling becomes checking rather than typing. If yours has none, it is the quickest win in your books.
Written by Dave O’Mahony, who does this work himself ·
What a bank rule does
A rule says: when a bank line looks like this, code it to that. “Contains CIRCLE K” goes to fuel; “contains VODAFONE” goes to telephone. Next time the line arrives on the bank feed, it is already coded and waiting for you to confirm.
That is the whole trick, and it matters for two reasons. It is faster, because you stop typing the same choice every month. And it is more consistent, because the same payee is coded the same way every time — not to fuel in March and to travel in April depending on who did it and how tired they were.
Where to find them
- QuickBooks Online: in the banking area, on the Rules tab. A rule can match on description, amount and bank account, and can either suggest the coding or add the line automatically.
- Xero: each bank account has Bank Rules under its options. Xero has separate rules for spend money, receive money and transfers, and shows the rule’s suggestion on the reconcile screen for you to accept.
- Sage Accounting and Sage 50: rules sit with the bank feed — in Sage Accounting under banking, in Sage 50 inside Bank Feeds — and apply to lines as they come in from the bank.
Menus move between versions. If it is not where we say, your software’s help search for “bank rules” will have the current route.
Start with these
Go through last month’s statement and tick every payee that appears every month — or drop the statement into our free bank statement check and it builds the list for you, in your browser, ready to download. For most trades, they look like this:
| Payee | Usually coded to |
|---|---|
| Builders' merchants and wholesalers you buy materials fromOnly if you never buy personal or mixed items there. | Materials / Cost of sales |
| Fuel: Circle K, Applegreen, Maxol, TexacoLeave out the forecourt shop if you buy lunch on the same card. | Motor — fuel |
| Mobile and broadband provider | Telephone and internet |
| Van insurer | Motor — insurance |
| eFlow, M50 and other tolls | Motor — tolls |
| Software: your accounting package, job app, Microsoft or Google | Software and subscriptions |
| Your bank's own fees | Bank charges |
| Tool and plant hire companies | Equipment hire |
| Transfers between your own accountsThe commonest double count when this is coded as income. | A transfer, not income or expense |
Your file may call the accounts something slightly different — use whatever it already has, rather than creating new ones to match this list. Rules can also set a VAT rate; only do that where every purchase from that payee is treated the same way, and check with your accountant which treatment applies to you.
Three mistakes that make rules do damage
- Rules for mixed payees. A shop where you buy both materials and personal items, or a card used for both, should not have an automatic rule. The rule will be confidently wrong some of the time, and nobody will notice.
- Matching on too little. “Contains SHELL” can match more than a fuel station. Match on the distinctive part of the description, and add the bank account if you have more than one.
- Letting rules post without looking. Have rules suggest, and confirm each line as you reconcile. Confirming twenty correct suggestions takes a minute; finding one wrong automatic posting six months later takes much longer.
The weekly ten minutes
- Open the bank feed for each account and card.
- Confirm everything a rule has coded, correcting anything that looks wrong.
- Code the few lines with no rule, and add a rule if the payee will come back.
- Match customer payments to their invoices.
- Check the software’s balance matches the bank’s.
Ten minutes is the goal, not a promise: the first few weeks are slower while the rules are being built. What changes is that the work stops piling up, so the month end and the year end stop being an event.
Want someone to look first?
Our free health check counts your bank rules, along with nine other things your books commonly get wrong, and tells you what to fix first. We identify; fixing it is yours to do, or ours if you would rather.
Then read where your books hide their mess.
Would rather it was just kept clean?
We keep the books for Irish trades and small businesses in their own QuickBooks, Xero or Sage, and hand your accountant a clean file. One dedicated lead, from first call onwards.