How to run a Xero file health check (10 checks in 30 minutes)

The 10 checks

1. Bank accounts actually reconcile

For each bank account, compare the statement balance to what Xero shows on the same date. If they don't match, the file's out of sync with reality, and every report built on top of it inherits that error.

2. No stale unreconciled lines

A handful of recent unreconciled lines is completely normal. Lines that have sat there for months usually mean something's unrecorded, or duplicated somewhere else in the file.

3. The suspense account is empty

Whatever yours is called, suspense, ask my accountant, unknown, it should trend toward zero. A balance that keeps growing is really just a pile of decisions nobody's made.

4. GST settings match your registration

The accounting basis (cash or accruals) and reporting frequency set in Xero need to match your actual ATO registration. Get this wrong and you'll produce incorrect BAS figures with complete, unearned confidence.

5. Aged receivables are real

Scan the aged receivables report. Invoices that will never be paid, duplicates, test invoices: they all inflate your revenue and your debtors. A clean list gets chased. A fantasy list gets ignored.

6. Aged payables are real

Run the same test on bills. Anything old and unrecognisable is usually a duplicate or an entry error, and it distorts what you appear to owe.

7. Payroll matches the ledger

Compare a payroll activity summary against the wages, PAYG withholding and super accounts in the profit and loss and balance sheet. Any difference means a pay run got edited or posted somewhere outside payroll.

8. Super is paid, not just recorded

The super payable account should clear to close to zero shortly after each payment deadline. A balance that only ever grows is one of the most expensive problems in Australian small business, full stop.

9. Loan balances match statements

Every loan and finance balance on the balance sheet should match the lender's statement. Drift here usually means repayments are coded to the wrong place, which quietly misstates profit.

10. Users and access make sense

Check who has access to the file, and at what level. Former staff and old advisers should be gone, and payroll admin should be limited to the people who genuinely need it.

When it's time to call someone in

If the checks turned up problems you can't explain, a proper file review goes deeper: chart of accounts structure, tracking categories, historical corrections, and the process gaps that let the drift happen in the first place. NextEra runs this as part of every new engagement, and a standalone Xero health check is also available.