Quick answer
Record a manual journal in Xero from Accounting, then Manual journals, then New journal: narration, date, and balanced debit and credit lines, posted straight to the general ledger or saved as draft. Advisor-level access is required. Journals are the right tool for accruals, prepayment releases, depreciation, corrections between accounts, and opening balances, and the wrong tool for anything a document workflow already handles.
What journals are for
Xero is built so that most postings arrive through documents: invoices, bills, claims, and bank codings all write to the general ledger with a document attached. Manual journals exist for the residue: period-end adjustments like accruals and prepayment releases, depreciation where the fixed asset register is not doing it, reclassifications when something was coded to the wrong account, wage postings from an external payroll system, and opening balances at migration. The discipline that keeps a ledger reviewable is narration quality: a journal that says “reclass” invites an investigation; one that says which costs are moving, from where to where, and why, closes the question it would otherwise open.
Posting a journal
- Go to Accounting, then Manual journals, then New journal.
- Write the narration first, stating what the journal does and the evidence behind it.
- Set the date. The date decides which period the adjustment lands in, which is the whole game at month end.
- Add lines: each with an account, description, and a debit or credit. The journal must balance before Xero will post it.
- Leave tax rates at no tax unless you are deliberately adjusting the tax return.
- Post, or save as draft for review. Drafts are how junior-prepared journals wait for a senior’s eye.
Attach the supporting workpaper to the journal itself: the spreadsheet behind the accrual estimate, the payroll report behind the wages posting. Future reviewers get the evidence where the entry is, not in someone’s email.
Repeating and reversing journals
Two options carry most of the period-end weight. A repeating journal posts the same entry on schedule, which suits fixed monthly allocations like spreading an insurance prepayment or a flat management charge; set it up once with an end date matched to what it spreads. A reversing journal (Xero calls the option auto-reversing) posts the opposite entry on a chosen future date, and it is the natural shape for estimates: accrue this month, auto-reverse on the first of next, let the real document land whenever it lands. Estimates that reverse themselves cannot silently double up with the actuals they anticipated, which removes the most common accrual failure without anyone remembering anything.
What not to journal
The bypass power that makes journals useful is what makes them dangerous. Journals against the accounts receivable and payable control accounts move the balance while every underlying invoice and bill stays open, so aged reports and the ledger disagree from then on; fix documents with credit notes, payments, or edits instead. Journals into bank accounts create entries the bank feed can never match. Journals into the system accounts Xero maintains for currency revaluation break the automatic calculations. And journals carrying tax rates push amounts into the return with no document behind them. A short internal rule covers it: if a document workflow can express the change, use the workflow; journal only what has no document.
Common mistakes
- Vague narrations that turn next year’s file review into forensics.
- Corrections journaled at today’s date when the error sits in a prior period, fixing the balance and wrecking the comparative.
- Accruals posted without auto-reversal, then double-counted when the invoice arrives.
- Journals against AR, AP, bank, or system accounts.
- Opening-balance imports that balance in total but land lines on wrong accounts, discovered months later as unexplained differences.
Software that helps
- Xero’s draft, repeating, and reversing options cover the workflow natively; the review discipline is yours to add.
- Workpaper tools (Xero Workpapers and similar) tie period-end journals to their supporting schedules for review.
- ExpenseFlow reduces journal volume at the source: expense and bill documents arrive coded to the right accounts with the right tax treatment in Xero, so fewer miscodings ever need a correcting journal.
Related guides
The journal-shaped period-end tasks each have their own guide: accruals, prepayments, depreciation, and the end of month close. Concept: journal entry and double-entry bookkeeping.
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