Bank rules turn hours of manual coding into a couple of clicks a week.
Quick answer. Bank rules tell Xero how to code repeating transactions automatically — payouts, platform fees, postage, subscriptions and stock buys. Set a condition like “payee contains Royal Mail”, choose the account and VAT rate, and reconciliation becomes a quick review instead of manual entry.
A card business generates a lot of small, repetitive bank transactions — platform payouts in, supplier purchases and postage out, software subscriptions on a loop. Xero’s bank rules let you tell the system how to treat these automatically, so reconciliation becomes a review rather than a chore.
What a bank rule does
A bank rule watches for transactions that match conditions you set — a particular payee, a reference, an amount range — and pre-fills the account code, description and VAT treatment. When a matching transaction appears in your feed, Xero suggests the coding and you just confirm it.
The rules worth setting up for a TCG business
- Platform payouts \u2014 with care: your Whatnot or eBay deposit is a NET figure (gross sales less commission, processing fees and refunds). Never code it straight to sales \u2014 that understates your revenue and hides every fee. Route it to a clearing account instead, then post the gross position from your platform report against that clearing account so it clears to nil. See the section below.
- Payment processing fees: so card and platform fees land in a dedicated fees account rather than being lumped into sales.
- Postage and packaging: rules for Royal Mail, your courier and packaging suppliers — a constant, predictable cost.
- Software subscriptions: your POS platform, Xero itself, design and streaming tools.
- Stock purchases: for regular suppliers or distributors, to route buys to the correct cost account.
Why platform payouts need a clearing account
This is the one that catches people out. When Whatnot pays you, the money landing in your bank has already had commission, payment processing and refunds deducted — it is not your sales figure. If a bank rule codes that deposit straight to “Sales”, your turnover is understated by every fee you paid, and those fees never appear as costs at all. The accounts will look tidy and be wrong.
The correct pattern is a two-step one. Set your bank rule to code the platform deposit to a clearing account (call it “Whatnot clearing”). Then, from your platform’s report for the period, post the gross position against that same clearing account: gross sales as income, and commission, processing fees, shipping and refunds as costs. Done properly the clearing account nets to zero — which is itself a useful check that nothing has been missed.
Bank rules and VAT — a caution
Bank rules pre-fill a VAT rate as well as an account, and in a card business that is a real risk. Margin-scheme sales, standard-rated sales and zero-rated exports are all taxed differently, and no rule can reliably tell them apart from a bank line. So use rules confidently for predictable costs — postage, subscriptions, courier bills — and keep sales coding deliberate rather than automated. Getting VAT wrong on autopilot costs far more than the few minutes a rule saves.
How to set one up
In Xero, go to the bank account, open Bank Rules, and choose Create Rule. Set the conditions (for example, “payee contains Royal Mail”), choose whether it applies to money spent or received, set the account code and tax rate the rule should apply, give it a name, and save. From then on Xero applies it automatically. You can reorder rules so the most specific ones run first, and edit or delete them as your suppliers change.
