Bank reconciliation compares your own transaction records with the bank’s statement. The goal is to explain every difference and confirm that the adjusted balances agree.
Gather Both Sets of Records
You need the statement, your ledger or spreadsheet, receipts, deposit records, and the previous reconciliation. Confirm that all records cover the same account and date range.
If the statement is a PDF, use the bank statement converter to create a sortable CSV copy while retaining the original document.
Confirm the Opening Balance
Compare the statement’s opening balance with the prior period’s closing balance. An unexplained difference at the beginning will prevent the current period from reconciling correctly.
Match Transactions
Work through deposits, withdrawals, card payments, transfers, and fees. Mark each item that appears in both records. Compare the date, description, and amount, remembering that processing dates may differ.
Do not mark transactions based only on similar amounts. Two identical payments can belong to different merchants or dates.
Identify Legitimate Timing Differences
Some entries may be outstanding: a payment recorded in your ledger may not yet have cleared the bank, or a deposit may still be processing. List these items separately instead of deleting them.
Add bank fees, interest, or direct debits that appear on the statement but were missing from your records. Investigate duplicates and unfamiliar transactions promptly.
Compare Adjusted Balances
Adjust the bank balance for legitimate outstanding items and update your ledger for confirmed missing entries. The adjusted totals should agree.
If they do not, check transposed digits, duplicate entries, missing rows, incorrect signs, and transactions recorded in the wrong period.
Document and Save the Result
Record the reconciliation date, unresolved items, corrections, and reviewer. Keep it with the source records according to the retention requirements that apply to you.
Complete reconciliation monthly or more frequently for active business accounts. The financial document organization guide offers a practical folder and naming system for the resulting records.