Bank Feeds and Bank Reconciliation in Zoho Books: A Step-by-Step Guide

Why bank reconciliation matters

Bank reconciliation is the monthly check that your books and your bank statement agree. It catches missed receipts, duplicate entries, bank charges nobody recorded, and payments sent to the wrong party.

It also matters for GST. If sales receipts or supplier payments are missing from the books, your GST returns and input tax credit will not match your records. A business that reconciles every month files cleaner returns and closes the year much faster.

Step 1: Bring bank transactions into Zoho Books

Zoho Books can bring in your bank transactions in two ways. Add each bank account under Banking first, then choose the method that suits it.

• Automatic bank feeds: connect the account and Zoho Books fetches new transactions regularly. Many Indian banks are supported; search for your bank when you add the account.
• Statement import: download the statement from net banking as CSV, XLS, OFX or QIF, then import it and map the columns (date, description, debit, credit).
• Keep each account separate: current accounts, overdraft or cash credit accounts, and credit cards should each be their own account in Zoho Books.

Step 2: Match or categorise each transaction

New bank lines arrive as uncategorised transactions. Work through them one by one.

If an invoice payment, bill payment or expense is already recorded, match the bank line to it. Zoho Books suggests likely matches based on amount and date. If nothing is recorded yet, categorise the line, for example as a customer payment, a supplier payment, an expense or a transfer between your own accounts.

Use Transfer Funds for money moved between your own accounts, not an expense. Record bank charges with the GST shown on the bank's invoice, so you can claim input tax credit where eligible.

Step 3: Set up bank rules for repeat items

Bank rules tell Zoho Books how to handle transactions that look the same every month. Create them under the bank account's settings. Good candidates for rules include:

• Bank charges and SMS charges
• Payment gateway settlements, such as Razorpay or Paytm payouts
• Monthly rent, loan EMIs and software subscriptions
• GST and TDS payments made from the account
• Interest credited by the bank

Step 4: Reconcile the account

Once every transaction for the month is matched or categorised, reconcile.

• Go to Banking and open the bank account
• Click the gear icon and choose Reconcile Account
• Click Initiate Reconciliation
• Enter the start date, end date and closing balance exactly as shown on the bank statement
• Tick the transactions that appear on the statement
• Add any missing bank items, such as charges or interest, with Add Transaction
• When the difference is zero, click Reconcile and attach the statement for your records

When the difference is not zero

Only matched, categorised or manually added transactions appear in the reconciliation screen. If the difference will not reach zero, check these first.

• A bank line is still uncategorised, so it is missing from the reconciliation
• The closing balance was typed incorrectly
• A transaction was recorded twice, once by hand and once from the feed
• A cheque was issued but has not yet cleared the bank (leave it for next month)
• The opening balance in Zoho Books does not match the bank on the start date

Common mistakes to avoid

Check the opening balance before your first reconciliation, because it cannot be edited once transactions are reconciled. Reconcile every month, ideally in the first week, rather than once a year. And avoid undoing old reconciliations to edit past entries: to undo an older period, Zoho Books requires you to undo every later period too. Correct mistakes in the current period instead.

Getting help

FBS Advisory is a Certified Zoho Finance Partner. We set up bank feeds and bank rules in Zoho Books, clean up old uncategorised transactions, and can take over monthly reconciliation as part of our bookkeeping service.