Reconcile Payroll Bank Transactions
How to reconcile wages, PAYG, and superannuation bank statement lines to the correct payroll liability accounts in Xero.
When you post a pay run, Xero automatically creates the journal entries that record what you owe — to employees, the tax office, and your super fund. Once you've actually made those payments, you need to reconcile the bank statement lines to close the loop.
What Happens When You Post a Pay Run
Posting a pay run creates journals that record amounts owing in liability accounts:
- Wages payable — the net wages owed to employees
- PAYG withholding payable — the tax withheld, owed to the ATO
- Superannuation payable — the super contributions owed to employees' funds
How to Reconcile Each Payment Type
Navigate to your bank account in Xero and find the statement lines waiting to be reconciled.
Wages Paid to Employees
Using the Create tab, enter the payment details and select the wages payable liability account set up in your payroll settings. This clears the amount owed to employees.
PAYG Paid to the ATO
Reconcile PAYG payments to the PAYG withholding liability account. This records that your tax obligation to the ATO has been met.
Superannuation Payments
Reconcile super payments to your organisation's superannuation payable account. This confirms that the super obligation has been discharged.
Why This Matters
Reconciling payroll statement lines correctly keeps your payroll liability accounts balanced. If these accounts aren't cleared, they'll carry forward as outstanding balances — making your reports inaccurate and creating extra work at year end.
Staying on top of payroll reconciliation after each pay run makes your job as payroll admin significantly easier over time.
How to Reconcile Batch Deposit Payments for Invoices in Xero
Three ways to reconcile a batch deposit payment against multiple invoices in Xero — using Find & Match, creating a batch deposit manually, or automating the process with Remittance Go.