JustConsolidate

The Xero platform has some nuances associated with it that you are likely well aware of as a Xero user. These nuances require some special treatment that our QBO Online users don't have to deal with.

Your consolidation entity is a new, empty Xero organization that exists for one purpose: to hold your consolidated financials. It has no bank feeds, no invoices and no bills. Every figure in it arrives as a manual journal posted by JustConsolidate.

That changes how you build its chart of accounts, because Xero doesn't allow manual journals to post to every account type. Ten minutes of setup here saves you from errors later, and it's a one-time job.

1. Create the organization

Create a new Xero organization to serve as your consolidation entity. Set its base currency to the currency you want to report in — this cannot be changed once transactions exist. Set its financial year end to match your group's reporting calendar.

2. Use postable account types

Xero reserves three account types for its own transaction types and will not accept manual journals to any of them. Since everything in your consolidation entity arrives by manual journal, your chart of accounts needs to avoid them.

Every other account follows its natural type with no special handling — fixed assets, other current and non-current assets and liabilities, equity, revenue, direct costs, overheads and expenses all work normally.

If you do attempt to map a subsidiary account to one of the three blocked types, JustConsolidate will prevent it during COA mapping and tell you which type to use instead, rather than letting the consolidation fail at posting time. But it's far easier to build the chart of accounts correctly from the start.

3. Create a postable Retained Earnings account

Xero creates and manages its own Retained Earnings account, and keeps it closed to manual journals. JustConsolidate needs somewhere to post brought-forward retained earnings, so create your own.

Add an equity account called Retained Earnings, set up like any other account in your chart of accounts. This is a requirement, not an option — the opening balance sheet workflow will stop with an error if it can't find one. 

TIP - rename the Xero provided default Retained Earnings account to 'Retained Earnings - X' so you will know how to later identify that and not try to map anything to it.

4. If you have foreign currency subsidiaries

Create an equity account (or P&L depending on functional currency of subsidiaries) for currency translation adjustments — something like Currency Translation Adjustment or CTA Reserve. You'll select it later in the CTA & Historical workflow.

Don't plan to use Xero's own Realised Currency Gains or Bank Revaluations accounts. Despite the names, Xero manages both itself and populates them from its own foreign currency revaluation, so neither will accept consolidation entries.

5. Leave both tracking category slots free

Xero allows two active tracking categories per organization, and JustConsolidate uses both: one reserved to tag each consolidation line with the subsidiary it came from, and one for your own reporting dimension.

A brand new organization has both slots free, so there's usually nothing to do here. If you're repurposing an existing organization that already has tracking categories set up, archive them before connecting.

6. Set up the Balance Sheet presentation

Because your cash accounts are Current Assets rather than Bank accounts, Xero's default Balance Sheet lists them among your other current assets instead of in their own section. The numbers are right; the presentation isn't what you'd want to hand to a lender or a board.

Fix it once with a custom report layout:

1. Open the Balance Sheet report in your consolidation entity.
2. Switch to Edit Layout.
3. Create a group at the top of Current Assets called Cash and Cash Equivalents and move your cash accounts into it.
4. Do the same for receivables and payables if you want them shown under their own headings.
5. Save it as a custom report so you can run it again without redoing the work.

The result reads exactly like a conventional balance sheet. Nobody looking at the statement can tell which Xero account type sits behind each line.

What you're not giving up

Using Current Asset and Current Liability types in place of Bank, AR and AP costs you Xero's bank reconciliation, aged receivables and payables reports, and invoice-level drill-down — in your consolidation entity only.

None of that applies here. Your consolidation entity has no bank feed to reconcile, no invoices to age and no bills to pay. All of that lives in your subsidiaries, where those account types work normally and are untouched by JustConsolidate. What you keep is a real general ledger with a complete audit trail, running Xero's native reports.

A note on chart of accounts structure

Xero's chart of accounts is a flat list — it has no sub-accounts or parent-child nesting like QuickBooks Online. If you're used to building a consolidated chart of accounts with nested detail, you'll need a different approach: create the accounts flat, then use the report layout editor described above to group them under headings in your Profit and Loss and Balance Sheet.

The grouping is applied per report, so set it up once on each report you plan to use regularly and save it as a custom report.