Reconciling out-of-pocket expenses (and reimbursements) in Xero

A few definitions before we get started:

Prerequisite steps:

  • Export any out-of-pocket expenses and direct reimbursements to Pleo. Manual reimbursements cannot be exported from Pleo, so don’t worry about those.

  • In Xero, go to your dedicated account for out-of-pocket expenses, click on the question mark in the top right corner, and toggle on the “mark as reconciled” option:

Why extra steps are needed for manual reimbursements as opposed to direct reimbursements

For direct reimbursements, you can export the reimbursement from Pleo and find the transfer created in Xero. This reconciles against the bank feed line in the Pleo account.

Manual reimbursements, however, are made outside of Pleo. As such, the transfers need to be done manually, as Pleo does not know which account in Xero the transfer was created from.

What an out-of-pocket expense looks like in Xero

After exporting an out-of-pocket expense to Xero, it will pop up in your dedicated Pleo Pocket account (under "account transactions"). It will automatically show as "Spent". The balance of the Pocket account will increase by the expense amount, as shown in the below example. Any reimbursements will automatically show as “Received”, and they will be deducted from the balance.

How to reconcile direct reimbursements

  1. In Xero, both the Pocket expense and direct reimbursement will automatically appear in the dedicated Pleo Pocket account.

  2. Tick the boxes next to both the Pocket expense and the direct reimbursement.

  3. Click “More”.

  4. Click “Mark as reconciled”:

  5. You might see this pop-up message. Proceed by clicking “Mark as reconciled”:

  6. Done! Both the expense and reimbursement will show as reconciled:

How to reconcile manual reimbursements

  1. In Xero, you’ll need to reimburse the employee through a manual bank transfer from your business bank account.

  2. Once the manual reimbursement is done, move it from the business bank account to the dedicated Pleo account for out-of-pocket expenses. To do so, go to the "Reconcile" tab, click the “Transfer” tab, select "Pleo account for out-of-pocket expenses", and click “OK”:

  3. Once the reimbursement is moved, the Pleo account for out-of-pocket expenses will now show the original out-of-pocket expense (Spent) and the transferred reimbursement (received):

  4. Tick the boxes next to both the out-of-pocket expense and the manual reimbursement.

  5. Click “More”.

  6. Click “Mark as reconciled”:

  7. Done! Both the expense and reimbursement will show as reconciled:

How to double-check that your employee balance is correct

  1. In Pleo, go to the Reimbursements page.

  2. Click "download" and then "employee balance statement":

  3. Check that the balance downloaded from Pleo matches the "Balance in Xero (found under your "Pleo account for out-of-pocket expenses"):

Good to know: You will usually have a balance that is not 0. This can be due to 1) out-of-pocket expenses that haven't been reimbursed yet and/or 2) one or more employees having a negative Pocket balance (e.g., when using a Pleo card and then marking the expense as personal). You can see this under the receivables from employees on the Pleo Pocket statement.

What happens if your account for out-of-pocket expenses account does not balance?

  1. Check if there are any Pocket expenses that haven't been exported from Pleo yet.

  2. Check that all the reimbursements and expenses up to the day you want to reconcile are in your Xero account for out-of-pocket expenses. Once all reimbursements and expenses are here, the account should balance.

  3. Still no luck? Contact our support team.

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