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Deep Dive: How Expensify Cards Automatically Reconcile in Xero

Matt MooreMatt Moore Expensify Customer, Expensify Team Posts: 105 Expensify Team

This post is for Expensify Card users in the US who are integrated with Xero, and explains how we automatically reconcile Expensify charges with your relevant expense accounts in Xero.

Here’s what to expect when you enable Continuous Reconciliation via your Expensify Inbox, and how it works thereafter. 

Setup:

Using an Expensify Inbox Task, you’ll be asked to select the same Business Bank Account in Xero that you’re using to make payments to the Expensify Card. (Top tip: If no accounts are showing, head to Domains and select a preferred policy first).

During the first sync after enabling Continuous Reconciliation, Expensify will create a Liability Account (Bank Account) on your Xero Dashboard, and a Clearing Account in your General Ledger.

Each cardholder’s bank account for Expensify Card transactions will be fixed to the Liability Account Expensify created. (This will not apply to other cards, or to other Non-Reimbursable expenses, which still follow your policy settings).

Reconciling the Expensify Card Daily Settlement:

Expensify uses entries to the Clearing Account to reconcile the daily settlement. This is because Expensify bills on pending transactions (you can review these transactions via Settings > Domains > [Domain Name] > Company Cards > Reconciliation > Settlements)

  1. At the end of each day, the daily settlement charge posts to your Business Bank Account.
  2. Expensify applies the Clearing Account as a Category to the transaction, so it posts there in your GL. Success! The charge is reconciled.

Reconciling bank transactions:

Expensify will pay off the Liability Account with the Clearing Account balance and reconcile bank transaction entries to the Liability Account with your Expense Accounts.

  1. When transactions are approved and exported from Expensify, bank transactions are added to the Liability Account that are charged against each expense account coded in the Category field. (Seeing a lot of Credit Card Misc. entries? Add commonly used merchants as Contacts in Xero to export with the original merchant name).
  2. The balance of the Clearing Account will be reduced and pays off the entries to the Liability Account created in step 1. Each payment to the Liability Account should have a corresponding bank transaction that references an expense account. Liability Account payments appear with the preface EXPCARD-APPROVAL.
  3. You’ll be able to run a Bank Reconciliation Summary that displays the entries to the Liability Account that reference the individual payments, and entries that reduce the Clearing Account balance to unapproved expenses.
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