Fixing Xero Mistakes: What to Do When Your Reports Don’t Add Up
If you’ve ever looked at your Xero profit & loss and thought, “Hang on, I didn’t make that much money…” or “Why does it look like I spent double on that Telstra bill?” — this post is for you.
This is one of the most common bookkeeping errors we see where clients come to us for help. And it can result in:
- Inflated income
- Doubled-up expenses
- Incorrect bank balances
- Big headaches at BAS time
- And unwanted accounting fees to clean up the mess
You might not even realise you’re doing it. But the good news? It’s easy to avoid once you know what to look for.
Understanding Xero and Double-Up Transactions
Xero is a fantastic tool for small business owners. It keeps things simple, syncs with your bank, and helps you stay on top of your finances.
But… it’s only as accurate as the data you feed it.
Here’s what happens:
Let’s say you upload a supplier invoice via Hubdoc or email it to your Xero file. That creates a bill in Xero.
Then, a few days later, the bank feed picks up the actual payment. Great, right?
But if you don’t match those two together in the reconciliation screen—and instead click “Add” or “OK” on both—you’ve now recorded the same expense twice.
And you guessed it: the same problem happens on the income side too.
Why You Should Care About These Bookkeeping Errors
You might be thinking: “It’s only a few transactions… what’s the big deal?”
But over a quarter or a year, these bookkeeping errors can snowball. Suddenly your profit is way off, your GST is wrong, and your accountant needs to spend hours fixing it. Your Accountant cannot lodge a tax return with the ATO with even a small error in the file.
That means:
- Time and money spent on corrections
- And worse—making decisions based on the wrong numbers
A client of ours—let’s call her Julie—ran into this exact issue. She’s a brilliant tradie with a growing team. But her BAS always seemed out of whack. Her Xero file was showing double on some expenses, and the ATO actually issued a review.
Why? Hubdoc had created the bill, then she’d clicked ‘OK’ on the bank feed transaction too. Every time. The poor woman had no idea she was doing anything wrong.
We cleaned it up—but not before it cost her over $1,000 in cleanup work.
How to Fix and Prevent Double-Up Errors in Xero
Let’s walk through the step-by-step fixes and prevention tactics to keep your Xero file clean.
Match Transactions in Xero to Avoid Bookkeeping Errors
Matching Bills with Bank Feeds
If you’re using Hubdoc or forwarding invoices to your Xero file, those bills will sit in Xero waiting to be paid.
Once the payment hits your bank feed, go to your Bank Reconciliation screen.
- If Xero suggests a match—great. Check it thoroughly and then Click “Match.”
- If it doesn’t match, click “Find & Match” and manually select the correct bill.
Never click “OK” unless you’re creating a new transaction that doesn’t already exist in Xero. Clicking “OK” without matching = double-up expense.
Matching Customer Payments to Invoices
If you invoice a customer and then receive payment, you must match that payment to the invoice.
- Xero will often auto-suggest the invoice—again Check it thoroughly and click Match.
- If it doesn’t match, click Find & Match and select the invoice or invoices manually.
Otherwise, if you just click “OK” Xero thinks it’s a new income transaction—and now you’ve overstated your revenue and your bank balance is out.
Don’t Trust Xero’s Coding Suggestions Automatically
Xero learns from past coding behaviour, which can be helpful… or dangerous.
It might suggest coding a fuel bill to “Office Expenses,” or a subcontractor payment to “Repairs & Maintenance.”
Always check:
- Supplier name
- Description
- What it was actually for
Open the transaction, under the create tab and the right account code. It keeps your reports meaningful, especially when tax planning or applying for loans.
Add Payment Details in Online Banking
You know those reference fields when paying bills through internet banking?
Use them. They’re not just for your supplier—they help you too.
When that payment shows up in your bank feed, the reference helps identify what the payment was for.
Without it, Xero will show a vague “Payment” entry—and that leads to… you guessed it, errors.
Check Your Bank Reconciliation Often
Here’s a simple rule:
If your reconciliation screen shows unmatched transactions older than 3 days, something’s off.
Investigate those entries. They could be:
- Unmatched payments
- Double-ups
- Or incorrectly entered manual transactions
If you find a double-up:
- Delete the manually added transaction, not the bank feed
- Save any attached documents first, then reattach them to the correct transaction
Not Loving Hubdoc? Here Are Your Options
Some clients choose to turn off Hubdoc to avoid duplication altogether.
That’s totally fine.
You can still:
- Forward invoices to your unique Xero file email
- Use the Adobe Scan app to snap a photo and upload bills or
- Manually create bills in Xero and attach receipts
Want to keep using Hubdoc? Just make sure you match it with the bank feed every time.
Bonus Tip: Don’t Delete Bank Feed Transactions
Seriously—don’t do it.
The bank feed is your source of truth. If something’s wrong, delete the manual entry—not the feed.
This keeps your bank balance accurate and audit trail intact.
Want to know more about Accounting? Checkout our Blog Post Accounting Basic Every Business Owner Should Know
Conclusion: Keep Your Xero File Clean and Compliant
Let’s recap:
✅ Match bank feed items to bills and invoices
✅ Avoid hitting “Add” or “OK” when a transaction already exists
✅ Don’t trust suggested codes—check manually
✅ Use payment references wisely
✅ Investigate unmatched transactions older than 3 days
✅ Never delete bank feed transactions
Clean bookkeeping saves you time, tax, and accounting costs—and gives you accurate reports you can rely on.
Need a Hand with Your Xero File?
Whether you’re tangled in errors or just want a second set of eyes—we’re here to help.
👉 Book a free meeting with Janelle Bartlett
Also, grab our free tax guides right here:
👉 Download our guides
Tags: #Xero #BookkeepingErrors #AustralianSmallBusiness #BusinessAccounting #AvoidTaxMistakes #SmallBusinessTips #Hubdoc #AccountingHelp
