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Deep Dive: How Expensify Cards Automatically Reconcile in Xero

Matt MooreMatt Moore Expensify Customer, Expensify Success Coach - Admin, Expensify Team Posts: 111 Expensify Team
edited April 9 in Deep Dive Docs

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:

  1. First, go to your group policy that is connected to Xero. On the Export tab, ensure that the user selected as the Preferred Exporter is a policy admin with an email address that belongs to the domain that you will be using for the Expensify Cards, e.g., if your domain is company.com, your Preferred Exporter's email address would need to be email@company.com.
  2. Next, head to the Advanced tab and ensure that Auto-Sync is enabled.
  3. Now, head to Settings > Domains > Company Cards > Settings. Use the dropdown menu next to "Preferred policy" to select your group policy that is connected to Xero and has Scheduled Submit enabled.
  4. In the dropdown menu next to Expensify Card reconciliation account, select the "Expensify Card Liability Account".
  5. In the dropdown menu next to "Expensify Card settlement account", select your daily settlement business bank account (shown in Expensify under Settings > Account > Payments).

Note: Once you set the preferred policy, you can also use the Expensify Inbox Task below, where 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. We'll also create two Contacts: Expensify and Expensify Card.

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 the Daily Settlement runs, we'll create a Spend Money transaction in your business checking account (the one specified on the card setup) and you can reconcile this with the debit payment in your bank feed.
  2. When transactions are approved and exported from Expensify, bank transactions (Recieve Money) are added to the Liability Account, coded to the Clearing Account. And at the same time, Spend Money transactions are created and coded to 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).
  3. 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 and from the Liability Account should have a corresponding bank transaction that references an expense account. Liability Account Receive Money payments appear with the preface EXPCARD-APPROVAL and the corresponding Report ID from Expensify
  4. 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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