The bank feed shows one BACS credit from the council. The remittance arrives by email a day later, from a no-reply address. It lists 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 public bodies send with the money is organised around their systems rather than your ledger, and that is where the reconciliation time goes.
This guide is for UK businesses paid by councils, NHS bodies, housing associations, universities and schools, and the bookkeepers who look after them. That includes 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 paperwork, so they belong here. The guide describes practice in England and the mechanics in Xero.
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. Everything approved since the last run goes out as one credit per supplier, so one bank line can settle invoices raised weeks apart for different departments. The remittance comes from 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: an invoice that does not quote a valid PO number is returned unpaid. It is also the key their system files the invoice under, so it appears on the remittance more prominently than your invoice number.
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 runs only on a valid, undisputed invoice, so an invoice without a PO number has not 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 arrives as a PDF, a spreadsheet or a table pasted into the body of the email.
The trap is the invoice number column. Their system stores whatever was typed at invoice registration, so prefixes get dropped, hyphens vanish and long numbers are truncated. Expect your number to appear in an altered form, match on the PO number when it does, and quote their voucher number when you query a line. Where the remittance carries no invoice number at all, the PO number is the only key into your ledger, which is why it belongs in the Reference field.
The social-care provider payment statement
Home care, supported living and residential care providers receive 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 appear 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 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 is 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; the self-bills and payment certificates guide covers reading those.
Setting Xero up so the match is possible
Public-sector remittances reward preparation at invoicing time more than skill at reconciliation time. Three habits do most of the work.
- 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 is searchable in Find & Match when the remittance quotes only their reference.
- Raise one invoice per unit they pay. For a PO, that is one invoice per order or per call-off. For social care, it is 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 is smaller than the invoices it covers is usually a deduction the payer considers entirely proper. The general taxonomy 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 appears 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. 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 silently against this week's lines.
Part-payments, duplicates and already-paid lines
A short-paid line that is not 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. Allocate the cash as a part-payment and leave the balance open, so 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, tick each line off against an open invoice, 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 opening 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 the routine no longer fits in a morning. Those figures are illustrative, but the shape is typical.
Where RemitClear fits
RemitClear reads the remittance in whatever form it arrives, PDF, spreadsheet, Word document, the body of an email or a forwarded email, and matches every line against your open invoices in Xero. Matching handles exact, partial and prefix-based invoice numbers, and where a line carries the payer's purchase order number or their own reference instead of your invoice number, it matches on whichever of those you recorded on the invoice, with the review screen showing which reference was used. For social-care statements a line matches on the client reference you recorded on the invoice; where that person has more than one invoice open, the amount decides, and the match is shown for review before anything posts.
- A line referencing an invoice that is already paid in Xero is flagged Already Paid, with a link through to it in Xero, and is left out of the allocation.
- Part-payments are allocated as part-payments, with the invoice left open for the balance, and flagged for review.
- If the allocation total does not equal the remittance total, the difference is shown and posting waits for a person to decide, which is where an early-payment rebate or a client contribution gets caught and booked the way you choose.
Deductions, disputes and refunds stay with you, because deciding what a council's short payment means is a business judgement. What RemitClear removes is the hundred routine lines around it. See Xero remittance 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. 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 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.