The bank feed shows one BACS credit from the council, and the remittance turns up by email a day later from a no-reply address, thirty lines keyed by purchase order and voucher number, with your own invoice numbers in a column headed something like your reference where they appear at all. What a public body sends with the money is organised around its own systems rather than your ledger, and that's where the reconciliation time goes.
This guide is for UK businesses paid by councils, NHS bodies, housing associations, universities and schools, and for the bookkeepers who look after them, so repairs contractors on housing stock, home care and care home providers, trades on council frameworks, and suppliers to universities and schools. Housing associations pay with the same systems and the same paperwork, so they belong here. It describes practice in England, and the mechanics are Xero's screens.
How public bodies pay
Payment runs. A council or trust finance system approves invoices continuously and pays them in batches, usually a weekly BACS run, so everything approved since the last run goes out as one credit per supplier and a single bank line can settle invoices raised weeks apart for different departments. The remittance comes out of the same system, emailed automatically. NHS trusts often pay through a shared-services provider, so the payer name on the remittance may not be the body you invoiced; keep the contact as the trust and match from the remittance, not the bank line.
Purchase orders. Most public bodies operate a no purchase order, no payment policy, so an invoice that doesn't quote a valid PO number comes back unpaid. The PO number is also the key their system files your invoice under, which is why it appears on the remittance more prominently than your invoice number does.
Statutory terms. Section 68 of the Procurement Act 2023, in force since 24 February 2025, implies into public contracts a term that sums due are paid within 30 days of the invoice being received, or of the invoice's due date if later. Concession contracts, private-utility contracts and contracts awarded by schools are excluded, and section 73 carries the same term into public sub-contracts. The clock only runs on a valid, undisputed invoice, so an invoice without a PO number hasn't started the 30 days.
The three shapes of public-sector remittance
The finance-system advice
The common case for councils, NHS bodies, universities and housing associations. One row per invoice: their purchase order number, their voucher or document number, your invoice number where their system captured it, and the amount. It runs to two lines or two hundred depending on how much you bill them, and it arrives as a PDF, a spreadsheet or a table pasted into the body of the email.
The invoice number column is the one that costs you time, because their system stores whatever was typed at invoice registration, so prefixes get dropped, hyphens vanish and long numbers are truncated. Expect your number to turn up in an altered form, match on the PO number when it does, and quote their voucher number whenever you query a line. Where the remittance carries no invoice number at all the PO number is your only key into the ledger, which is why it belongs in the Reference field.
The social-care provider payment statement
Home care, supported living and residential care providers get something different from a council's adult social care team, with no invoice numbers anywhere on it. Each line is a person the council funds, identified by the council's client reference, with a service date range and an amount, subtotalled per person and totalled for the run. Cycles are usually weekly or four-weekly, and corrections to earlier periods come through as negative lines against the same person. The council is paying for a named person's care over a named period rather than settling a document, so its system has no field for your invoice at all.
To reconcile one, subtotal the lines per person, find that person's invoice for the period by client reference in Find & Match, allocate the subtotal, and post each negative line as a credit note against the earlier period's invoice. Where the council pays net, invoice the person separately for their contribution.
The repairs and works-order schedule
Housing associations and council property teams paying for responsive repairs, voids and planned maintenance send a line per works order or job number, priced from a schedule of rates. It often arrives as a spreadsheet or Word attachment rather than a PDF, and it often runs to dozens or hundreds of lines. Raise one invoice per works order with the order number in the Reference field, and where a line comes in below your invoice because the surveyor revalued the job, allocate it as a part-payment and query the balance. Where the contract is self-billed the document is the invoice as well as the remittance, and the self-bills and payment certificates guide covers reading those.
Setting Xero up so the match is possible
Most of what makes a public-sector remittance easy to reconcile happens earlier, at the point you raise the invoice, and it comes down to three habits.
- Put their reference on your invoice. Record the PO number, works order number or client reference in the Reference field on the Xero invoice. It prints on the invoice, and it's searchable in Find & Match when the remittance quotes only their reference.
- Raise one invoice per unit they pay. For a PO, that's one invoice per order or per call-off. For social care, it's one invoice per person per payment period, with the council's client reference in the Reference field, so a statement line of reference, dates and amount has one invoice to land on.
- One contact per paying body, or per department where they pay from different systems. Adult social care and highways at the same council are, for reconciliation purposes, two payers.
Deductions and adjustments
A public-sector payment that comes in smaller than the invoices it covers is usually a deduction the payer considers entirely proper. The general run of them is in handling deductions on remittances in Xero; four are specific to public bodies.
Early-payment rebates. Some councils and trusts run early-payment programmes, usually through a third-party provider, paying well inside the 30 days in exchange for a rebate deducted from each invoice. The rate is tied to how many days early they pay, so it differs from run to run, and it shows up as a separate line or as a net amount. Book it as a discount allowed, by credit note against the invoice, rather than by editing the invoice.
Client contributions. On social-care contracts where the council pays net, it settles the care cost less the person's assessed contribution and expects you to collect that contribution yourself. Invoice the council for the net figure and the person for their share, rather than writing the difference off.
Retention and CIS on works. Councils, NHS trusts, government departments and housing associations spending more than £3 million on construction in any rolling twelve months are deemed contractors under the Construction Industry Scheme. They deduct CIS from the labour element of a subcontractor's invoices unless the subcontractor holds gross payment status, and larger works carry retention. Invoice gross, post the CIS to a CIS suffered account and part-allocate for the cash; the self-billing guide covers the detail.
Prior-period adjustments. A negative line against a person or an order settles a correction from an earlier period. Match it to the earlier invoice, by credit note or refund, rather than netting it against this week's lines and leaving no trace of it.
Part-payments, duplicates and already-paid lines
A short-paid line that isn't one of the deductions above is a query. A council that disputes a line pays what it accepts and leaves the rest to be argued, so allocate the cash as a part-payment and leave the balance open, where it stays on the debtor list and gets chased with their voucher number quoted. Lines that match nothing go back to the payer with their voucher number quoted.
Duplicate payments happen when a resubmitted invoice is registered alongside the original and the next run pays it again. Record it as an overpayment on the payer's account with the invoice number in the reference; the insurance-payer guide walks through the Xero steps, and the mechanics are identical.
Reconciling the run in Xero
The manual routine is the same one-payment-many-invoices reconciliation in Xero as for any bulk payer. Work from the remittance, not the bank line. On a finance-system advice, work down the lines against your open invoices, searching by your invoice number first and by the PO number in the Reference field second. On a provider statement, subtotal per person and find the period's invoice by client reference. Set the exceptions aside as you go, deductions, part-payments, lines against paid invoices, lines that match nothing, and resolve them before you open the bank reconciliation screen, then use Find & Match to allocate the full set against the bank credit.
A contractor on several housing frameworks, or a care provider funded by several councils on different cycles, can see a dozen runs a week at a hundred lines each, and by then the routine doesn't fit in a morning. Those figures are illustrative, but the shape is typical.
Where RemitClear fits
A public-sector run reaches RemitClear as whatever the payer's system sent out, a PDF, a spreadsheet, a Word document, the body of an email or a forwarded email, and every line on it goes against your open invoices in Xero. Where a line carries your invoice number, matching handles it exact, partial or prefix-based. Where the line carries the payer's purchase order number or their own reference instead, RemitClear matches on whichever of those you recorded on the invoice, and the review screen tells you which reference it used. A social-care statement line matches on the client reference you recorded on the invoice, and if that person has more than one invoice open the amount decides, with the match shown for review before anything posts.
- A line pointing at an invoice Xero has already settled comes back marked Already Paid, with a link through to it in Xero, and it sits outside the allocation.
- A line that covers only part of its invoice goes on as a part-payment, the balance is left outstanding on the invoice, and the line is flagged for review.
- Where the allocated lines don't add up to the remittance total, the difference goes on screen and nothing posts until a person decides, so an early-payment rebate or a client contribution gets caught there and booked the way you want it.
Deductions, disputes and refunds stay with you, because deciding what a council's short payment means is a business judgement, and the hundred routine lines around it are matched without you. See Xero remittance advice matching for the workflow and email remittance capture for the forwarding inbox that picks up automated remittance emails.
Summary
Public bodies pay in batches keyed to their references rather than yours, so put their reference on every invoice and raise one invoice per unit they pay. Expect early-payment rebates, client contributions, CIS and prior-period adjustments, and book each one as what it is. Work every run from the remittance, line by line, and reconcile the bank credit last. The step-by-step guide to reconciling a remittance advice in Xero covers the underlying mechanics.
