Year‑end can be stressful, but Xero’s features help you streamline the process. This article outlines a checklist for closing your books, including reviewing your organisation settings, reconciling payables and bank accounts, managing fixed assets and running final reports. Following these steps ensures your accounts are ready for your accountant.

Stuart Kerr | Published 04/11/25 | Updated 04/11/25

For many businesses, the end of the financial year means gathering receipts, checking ledgers and ensuring everything balances. Xero provides tools and reports that make year‑end tasks easier, but it’s up to you to use them effectively. Below is a step‑by‑step checklist to help you close your books and prepare for a smooth year‑end process.

1 Review organisation details and settings

Start by verifying that your Xero organisation details are up to date. Check the legal name, ABN, postal address and conversion balances for accuracysimplesolutionsaccounting.com.au. Review your chart of accounts and lock previous periods to prevent accidental changes. If you migrated from another accounting system during the year, ensure your conversion balances match the closing balances in the old system.

2 Enter all bills and reconcile accounts payable and receivable

To avoid missing expenses or income, enter all supplier bills and customer invoices before closing the period. Review any credit notes and apply them against open invoices. Use the Aged Payables and Aged Receivables reports to confirm that outstanding balances are accuratesimplesolutionsaccounting.com.au. Write off unrecoverable debts with a journal entry or credit note, and follow up on overdue invoices.

3 Reconcile bank transactions and credit cards

Reconciliation should be done weekly or monthly, but if you’re behind, year‑end is the time to catch up. Import or refresh your bank feed, match transactions, and create any missing spend money or receive money transactions. Xero’s Bank Reconciliation Summary report helps identify duplicates and outstanding itemssimplesolutionsaccounting.com.au. For credit cards and petty cash, create separate bank accounts in Xero and reconcile them in the same way.

4 Review fixed assets and depreciation

If you use Xero’s fixed asset register, add any assets purchased during the year and calculate depreciation. Confirm that disposals and write‑offs have been recorded. Use the Fixed Assets Reconciliation report to ensure that the balances in your fixed asset register match the corresponding accounts in your general ledgersimplesolutionsaccounting.com.au. Make any necessary adjustments before closing the period.

5 Process adjustments and journals

Once everything is reconciled, process your final adjustments. This may include accruals, prepayments, deferred income, and corrections to mis‑coded transactions. Xero allows you to create manual journals, which your accountant can help you prepare. If you have repeating journals (for example, monthly rent or depreciation entries), ensure they are up to date and reverse them as neededsimplesolutionsaccounting.com.au.

6 Generate reports and lock the period

After entering and reconciling all data, generate your year‑end reports. The Profit & Loss statement and Balance Sheet provide a snapshot of your financial position. Use Xero’s report templates to customise headings and group accounts. Once you’re satisfied, set a lock date for the financial year so that no one accidentally enters transactions into a closed periodsimplesolutionsaccounting.com.au. Send your reports and supporting schedules to your accountant for tax preparation.

Following this structured year‑end process in Xero reduces stress and ensures that your books are accurate. A well‑prepared year‑end helps you identify trends, plan for the future and meet statutory obligations with confidence.

About the Author

Stuart Kerr, Partner in Bookkeeping Packages. You can contact him on stuart@bookkeepingpackages.co.uk.