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Bank Rules

By Andrew McVinish Updated 11th Mar 2026

Xero Bank Rules

Bank rules are automated instructions telling Xero how to categorise and treat certain transactions in your bank feed.

The benefits of bank rules are:

  • Saving time by automating the bank reconciliation process.
  • Consistency of coding the same transactions by assigning the same account code, tax rate and other details.

When should you use bank rules?

When you have regular repayments which you don’t have an invoice for.

This includes:

  • loan repayments
  • hire purchase (HP) repayments
  • chattel mortgage repayments
  • lease repayments
  • monthly insurance payments
  • bank fees and charges
  • interest expenses
  • small expenses under $82.50

When you receive regular income which you don’t invoice a customer for. This includes:

  • Interest income
  • Dividend income
  • When you move money between your own bank accounts.

When should you not use bank rules?

When you need to record an invoice for the income or expense. In Australia, you need to keep a tax invoice if the amount of the supply is over $82.50 including GST and you want to claim a GST credit.

How to set up a bank rule in Xero

In this example, we are going to setup a bank rule for monthly loan repayments on a ute.

  1. In Xero, select Accounting > Bank Rules
  2. Select Spend Money Rules > Create Rules
  3. Click apply a bank rule
  4. Click any conditions match
  5. In the field column select amount
  6. In the condition column select equals
  7. In the value column enter the amount of the monthly loan repayment (for example 1065.22)
  8. Set the contact, Select To an existing or new contact
  9. Enter the name of the finance company (for example Westpac Finance)
  10. Allocate line items, skip the automatically allocate fixed value line items section
  11. In the With any remainder, allocate ratios using percent line items
  12. In the description column enter what the payment is for (for example Repayment of 2025 Toyota Hilux 4x4)
  13. In the account column, enter the loan account for the repayment
  14. In the tax rate column select the correct tax rate (for example BAS excluded)
  15. In the percent column enter 100% to allocate all the payment to the loan repayment
  16. Set the reference, select reference
  17. Add rule details, under run this rule, select all bank accounts
  18. Under name the rule, enter a distinctive name (for example 2026 Toyota Hilux)
  19. Click save

FAQ

Can I use the same bank rule across different bank and credit cards? Yes – click apply to all bank accounts.

My business receives a regular monthly invoice for rent. Should I use a bank rule? No, you should not use bank rules for this transaction. You should enter the monthly rent invoice directly into Xero or via Hubdoc. When the payment for the rent appears in your bank feed, Xero will match the invoice.

My bank rules are not working properly. There are 3 items to check:

  1. How the statement item imports into Xero. If the payee name has changed or some other key information has changed you will need to update your bank rule.
  2. The transaction amount may have changed due to price increases and you will need to update the bank rule.
  3. Check order of your bank rules. Xero check the conditions of your bank rules in the order they are listed in the bank rules screen. You may need to re-order the bank rules.