Xero terms and definitions
If you've never used accounting software, or you're new to Xero, there might be some terms used in Xero you're not familiar with.
We've listed terms below which are specific to Xero, or used in a particular way in Xero. We haven't listed commonly-used accounting terms - you can find their definitions with an internet search.
- Balance in Xero
- Bank account
- Bank feed
- Bank reconciliation
- Bank statement
- Bank statement line
- Business Edition
- Conversion balances
- Conversion date
- Custom contact link
- Direct bank feed
- Enable payments
- History & Notes
- Inventory items
- Lock date
- My Xero
- Mark as Reconciled
- Partner Edition
- Payment services
- PayPal feed
- Receive money
- Reconciliation adjustment
- Regular earnings
- Remove & Redo
- Report template
- Smart Lists
- Spend money
- Statement balance
- Switch rule
- Tracked inventory
- Untracked inventory
If you have auto-suggest turned on when you're reconciling transactions, Xero will suggest a match based on a previously-reconciled transaction with similar details.
The balance of all transactions entered into a bank account in Xero.
Any account that you have loaded into Xero, especially those you get bank feeds for. This includes your actual operating bank accounts, as well as credit card accounts and PayPal accounts.
Account transactions from your bank or financial institution sent into your organization electronically. This can be as a direct feed, Yodlee feed or PayPal feed.
Bank reconciliation is the process of matching transactions imported into Xero from your bank account, with transactions you've added in Xero.
A bank statement in Xero is created each time you import transactions from your bank account, or mark an account transaction in Xero as reconciled.
A bank statement line is the term we use for each account transaction imported from your bank.
A record of goods or services provided to you by your supplier, including the amount you need to pay. Also known as an accounts payable invoice or purchase invoice.
Xero for businesses (rather than accountants). There's a range of pricing plans in Business Edition. If your accountant set up Xero for you, you may be on a Partner Edition plan.
The closing balances of your accounts on the last business day before you start using Xero. These are the opening balances of your accounts when you start using Xero.
The day you start using Xero for your day to day business. Conversion dates in Xero are always the 1st of a month.
A link from your contact’s record in Xero to their record in your CRM or other system.
Account transactions from your bank or financial institution sent directly into your organization electronically. A direct feed does not use a third party provider, such as Yodlee, but instead comes directly from your bank or financial institution.
A Microsoft Word document which has the .docx file extension. The DOCX file format allows you to customize templates in Xero for invoices, bills and other documents you send from Xero.
Enabling payments lets you make payments to accounts other than bank accounts, for example, to handle shareholder transactions or contra arrangements. The enabled account appears in the list of accounts available for payments when paying invoices, bills, expense claims, batch deposits and batch payments.
Electronic items created outside Xero which you can attach to transactions or records in Xero. Items can be documents, images or zip files.
A list of system actions and notes found on all invoices, bills and transactions, contacts and inventory items. These act as a record or audit trail of changes made to any transaction by any user and cannot be edited or deleted.
The products and services you add as inventory in Xero. Items can be either ‘untracked’ or ‘tracked’.
A record of goods or services you have supplied to a customer, including the amount due to you. Also known as an accounts receivable invoice or sales invoice.
A date you choose to lock your transactions in Xero. You may not be able to enter or edit transactions dated before this date, depending on your user role.
The area in Xero where you can view the organizations you have access to, create a new organization, and use the demo company.
Mark as Reconciled is the action you take to reconcile an account transaction without a bank statement.
When you mark an account transaction as reconciled, we reconcile it with a dummy bank statement line we create for you.
An accidental payment to a supplier in excess of the bill amount, or receipt from a customer in excess of the invoice amount. The overpayment does not attract tax in Xero. Xero treats this differently from a prepayment.
Xero for accountants. If you are on Partner Edition, when you log into Xero you will be able to access multiple clients' organizations from My Xero. There's a range of pricing plans for Partner Edition.
If you use Authorize.Net, DPS, eWAY, GoCardless, PayPal or Stripe, your customer can use the payment button on an online invoice to pay you securely using their credit card details.
An electronic feed of your PayPal account transactions into your organization in Xero.
A payment in advance made to a supplier or received from a customer. Xero treats this differently from an overpayment.
A reconciliation adjustment is an account transaction created when you add a minor adjustment during bank reconciliation. A reconciliation adjustment forms part of a group of transactions to make up a match with a bank statement line.
An employee's base salary or wages in hours. Also called normal earnings, ordinary earnings or standard earnings. Employee pay is calculated on a set hourly rate or an hourly rate based on their annual salary.
Remove & Redo is the action you take to delete account transactions from a bank account in Xero.
You'll find the Remove & Redo button in the Account transactions tab when viewing bank account transactions, and under the Options button in an individual account transaction you've opened.
Remove & Redo is also the way to remove payments recorded to or from other accounts that you've enabled payments to, such as owner funds or drawings.
(Partner Edition) A group of reports created for use in an accounting or bookkeeping practice for clients.
Smart Lists let you create targeted lists from information you've saved in Xero about your customers. Use contact information, transaction history or payment status to chase unpaid invoices, identify who has bought a product from you, create sales campaigns and more.
The balance of all bank statements imported into a bank account in Xero. Bank statements include files imported manually, or automatically as part of a bank feed.
The Xero user in your organization who is responsible for subscription payments to Xero.
On reports, a switch rule automatically moves the position of an account according to whether the account has a debit or credit balance. For example, you can set a bank account to move to Liabilities when it's in overdraft.
Products marked as ‘tracked’ in inventory in Xero. Xero records the quantity and value of these items on hand. Xero also indicates the quantity of tracked items on order and in committed quotes. Your inventory accounting records are automatically updated for tracked items.
A way of categorizing your accounts and transactions to report on different parts of your business.
If you've matched the wrong items in your bank reconciliation, unreconciling removes the link between them. You can then match the bank transaction line with the correct Xero transaction.
Products and services not marked as ‘tracked’ when added to inventory in Xero. Xero does not record the quantity and value on hand of untracked items.