Reconcile Square in Xero — Match Sales to Bank Deposits

Square deposits arrive 1-2 business days after the sale in Australia, so every month-end close had timing mismatches between what Xero showed and what the bank had cleared. I was manually adjusting pending authorizations for each client. The clearing account workflow fixed this completely — individual sales go in as they happen, deposits match when they land, and the clearing account balance tells me exactly what's still in transit.

My bank showed a $2,145 deposit from Square but my daily sales reports said $2,310. The $165 gap was processing fees on 180 card transactions, but Xero lumped it all into one unreconciled line. Splitting fees into separate expense rows finally made the numbers add up. My accountant stopped sending me weekly 'please explain' emails.

Cash sales were the hidden problem. Two of my clients had Square cash transactions flowing into their clearing account even though Square never deposited that money. The exclude-cash filter removed those entries and eliminated a recurring GBP 400-800 discrepancy that had been throwing off their bank reconciliation for months. We went from a 94% match rate to 99.7% overnight.

Each location has its own fee structure and deposit schedule. Reconciling four Square accounts against one bank feed in Xero was a full-day exercise at month-end. Now I export each location's transactions, convert with fee splitting, and import to the Square clearing account with location references in the descriptions. My accountant matches deposits to locations in minutes and our month-end close moved from day 15 to day 5.