Bank rules
Saved conditions in Xero that automatically categorise or suggest a match for bank statement lines whose description text meets the criteria you define — for example, coding every line containing "STRIPE PAYOUT" to a clearing account with no VAT.
A bank rule in Xero is a saved instruction that watches every incoming bank statement line and acts when the description text matches a condition you specify. You choose whether the rule should auto-apply immediately or merely suggest the coding for your approval. Each rule can set the transaction type, contact, account code, and VAT rate, removing the repetitive categorisation work from routine reconciliation.
Why rules break on real businesses
Rules are deterministic: they match on description text, then apply your preset coding. That makes them fast and auditable when suppliers are consistent — £1,200 every month from the same reference codes cleanly. The failure mode arrives the moment that reference changes. A supplier switching banks, a payroll bureau updating its batch reference, or a card terminal prepending a new terminal ID can all cause a rule to silently stop firing, leaving transactions unreconciled with no alert.
Rules work best on high-volume, low-variance lines: software subscriptions, standing orders, and single-merchant card terminals. For anything with variable descriptions — marketplace payouts, agency payments, or expense reimbursements — a rule either needs broad conditions that introduce miscoding risk, or you leave those lines for manual review. JAX, Xero’s machine-learning reconciliation layer, handles description variation better because it learns from your history rather than matching fixed text.