As a business owner, you know the importance of keeping records up-to-date and accurate. You’ll also know that it is not easy to handle business books and business accounts while managing all other tasks to grow your business. For a busy business owner, it is easy for financial transactions to get lost and numbers to get entered wrong. This is where a bank reconciliation helps to identify if there are any discrepancies in numbers. Performing bank account reconciliations is a crucial process that keeps your accounts current, ensures accurate records, and gives you a chance to check your accounts for fraud and other irregularities.

Understanding the Process to Reconcile Bank Accounts

Bank account reconciliation or bank statement reconciliation is the process of making sure that the records of your business books match the records of your bank accounts. If they provide the same balances on a specific date, it means they are reconciled accurately. Manual bank account reconciliation is a quite time-consuming task. With modern accounting software, bank reconciliation statements can be easily done. Bank account reconciliation is the most common type of reconciliation performed by various business owners.

What is the Purpose of Bank Reconciliations?

Bank account reconciliation is important for various reasons. It allows you to :

  • keep precise records of the cash you have on hand for your company at all times.
  • find problems, such as multiple payments, data entry errors, and wrong calculations. Even the most successful firms are susceptible to these problems.
  • Watch out for theft or fraud.
  • create precise reporting for tax purposes
  • Avoid paying bank fees for overdrafts and inadequate money.

Many business owners assume that numbers from their accounting software and bank are correct without preparing bank reconciliation statements.

How Often Should You Perform Bank Account Reconciliation?

Generally, you should reconcile your bank accounts each time your bank sends you a statement, which is usually once a month. You might also wish to undertake a weekly or daily reconciliation of your bank accounts depending on the volume of transactions your company processes.

By doing this, you can cut down on the number of transactions you need to review each month and make sure you’re always one step ahead of any problems that might arise.

How to do a Bank Reconciliation?

When you compare your records of sales and costs to the records kept by your bank, you are performing a bank account reconciliation. It’s how you validate the accounting figures for your company.

  • Get Bank Records

Get a list of all transactions from the bank. If you have a current account and a credit card account, then you are required to get both statements.

  • Get Business Records

Open your ledger to check incoming and outgoing. It might be in a logbook, in an accounting software package, or on a spreadsheet. Some accounting software will get bills and receipts using various data capture tools and fetch the data automatically.

  • Find Your Starting Point

Find the last time when the balance in your company account and the balance in your books matched. From there, begin the reconciliation and prepare a statement of bank reconciliation.

  • Run through Bank Deposits

Ensure each deposit in your account appears as income. If something is missing, then enter it. You will need to check out if it was a refund, interest, sale, or something else.

  • Check the Income on Your Books

Each entry must match a deposit on your bank statement. You need to find out the reason if something is missing. A client payment might have bounced.

  • Check Bank Withdrawals

You need to record all bank withdrawals in your business books. It includes things like bank fees that might not have been accounted for yet.

  • Run through Expenses on Your Books

Each entry needs to be matched with a withdrawal on your bank statement. If not, check out the reason behind it. It might be possible that your payments haven’t cleared yet, or maybe paid using a different account or paid using cash.

  • End Balance

After going through your all deposits and withdrawals, your business bank balance must match the totals in your business accounts. It will be the starting point for your next bank account reconciliation.


Now, you know the importance of reconciling bank accounts. Therefore, make sure you reconcile your bank accounts for more accuracy. You can also get in touch with a Reliable Bookkeeping Services provider to get your bank accounts reconciled.

Also read:-

How to Correct Differences in Bank Reconciliation?