What Is Bank Reconciliation?
Bank reconciliation is the process of matching your internal accounting records to your bank statement. The goal is to confirm they agree โ and if they don't, find out why.
Done monthly, it catches errors, missing transactions, duplicate entries, unauthorised charges, and fraud before they become serious problems.
Why Bank Reconciliation Matters
- Catches errors: Your own mistakes and your bank's mistakes.
- Detects fraud: Unauthorised transactions show up fast when you reconcile regularly.
- Ensures accurate books: Your profit/loss numbers are only meaningful if they're based on accurate data.
- Required for tax accuracy: Tax authorities expect your records to match reality.
Step-by-Step: How to Reconcile Your Bank Account
Step 1: Gather Your Records
You need your bank statement for the period and your internal transaction list (in Accountable, this is your transaction log).
Step 2: Match Each Transaction
Go through every line on your bank statement and find the matching entry in your records. Mark each one as matched.
Step 3: Investigate Differences
Any item on the bank statement that isn't in your records needs investigating. Common reasons: bank charges you forgot to record, a payment that cleared late, an error in your records, or an unauthorised transaction.
Step 4: Adjust and Confirm
Add missing transactions, correct errors, and confirm both balances match. Your ending balance in your books should equal your bank statement ending balance.
How Accountable Makes This Easy
Accountable's Reconciliation module walks you through the entire process with a guided interface โ no accounting expertise required. Start free today.