Reconciliation to Check Your Bookkeeping is Correct


The process of reconciling your bank accounts involves matching the transactions you’ve recorded in your bookkeeping system against the transactions on your bank statement. At the end of the process, the bank balance (amount in your bank) should match the amount shown in your recorded accounts.

This process was traditionally carried out monthly, once the paper bank statements arrived in the post. If you have lots of transactions each month, this could be a very lengthy process, especially as some of the transactions will be almost two months old, so difficult to follow up if they’ve not been entered into the bookkeeping. Also, if the two amounts do not balance at the end of the reconciliation, there are lots of transactions to look through to spot the error.

Being able to print off bank transactions from your internet banking means that reconciliation can be carried out at any point in the month and as often as is most useful for your business.

Choose a date to reconcile your bank accounts.

Enter all the transactions up to this date into your bookkeeping system.

Print off the bank transactions from the date you last reconciled to the date you have chosen.

Check the balances from the previous reconciliations still match.

For each line on the bank statement, check the bookkeeping entry. If they both match, mark/tick the line on the bank statement and the bookkeeping entry. If not, find out why and process in your system.

Move onto the next line, and so on.

It is likely there will be bank transactions that are not recorded in your bookkeeping. If the bank payment is a direct debit or monthly payment where you received a statement from the supplier at the beginning of the agreement, enter the transaction into your bookkeeping (you already have the paperwork filed).

If an expense shows on the bank statement but not in your bookkeeping, some investigation is needed and an invoice or receipt will need to be found for filing.

If there is money coming into the bank that isn’t recorded in your bookkeeping, it is likely to be from a customer who hasn’t informed you they’ve paid your invoice. Find the invoice and mark as paid in the usual way.

When everything is marked/ticked on both the bookkeeping and the bank statement, the amount in the bank should match the amount you’ve calculated in your bookkeeping. The reconciliation is complete, always a relief!

If the amounts do not match, it could be due to the following:

You’ve received cheques from customers that were only paid into your bank a day or two prior to the reconciliation date, or recently written cheques to suppliers, as they may not be shown on the bank statement yet. You will have recorded these in your bookkeeping so the end balances will not match. Calculate the following, the balances A and D will match if your bookkeeping is correct;

Balance on bank statement A

ADD total of cheques paid in but not showing on statement B

MINUS total of cheques written but not showing on statement C

Balance in bookkeeping records D

It is very easy to write or type numbers incorrectly. If the difference between the two balances can be divided by 9, it is likely that a number has been written back to front (e.g., 98 written as 89). Careful re-matching of each line is the only way to find this.

If the balances don’t match by a few pence, this could be that the pennies of a transaction have been recorded incorrectly or a customer paid a rounded up or down amount and the invoice was marked as paid correctly. Again, careful re-matching of the lines is required to find this.

Sometimes leaving a reconciliation for a short space of time and returning with a fresh bank statement print-out and a different coloured pen will help you spot the error very quickly!

As frustrating as it is, the errors need to be found, otherwise the next reconciliation will be wrong and any new errors will be even more difficult to spot.


Carry out bank reconciliations at least once a month. The less transactions that are to be reconciled, the easier it is to find errors and it will save time in the long run.

Always work from the bank statement and find the transactions in your records to keep it simple.

If the balances don’t match and the errors are not found quickly, go away and come back refreshed.


  • Your recorded accounts should tally with your bank account
  • Thanks to online banking, reconciling these figures can now be carried out at any time
  • Check each line of your bank statement against your bookkeeping entry
  • The figures may not always tally
  • For instance, cheques received from customers may take a few days to display on your account
  • It may be laborious but errors need to be investigated
  • If you find balances don’t match at first take a break and review with fresh eyes
  • Carry out bank reconciliations at least once a month. The less transactions that are to be reconciled the easier it is to find errors

Apr 16, 2015