Bank Reconciliation Statement: Process, Examples & Tips

This includes all deposits made into the bank account, checks written, withdrawals made, and any bank charges or other fees. Again, difference between cost center and profit center the only way to find out about the error or omission is to complete a bank reconciliation. The only way you may even know about the fraud is by completing a bank reconciliation. The final step is to reconcile the bank balance and book balance.

What is a bank reconciliation statement used for?

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They also help detect fraud and any cash manipulations.
The key is ensuring the person responsible understands both the bank statement and your company’s financial records.
Even with a well-established bank reconciliation process, businesses often encounter challenges that can complicate the task of matching their bank statement to their accounting records.
Effective reconciliation processes help detect fraud and uncover cash manipulations, which could indicate accounting errors or intentional wrongdoing.

If you complete the bank reconciliation at month-end, then print the bank reconciliation report and file it in the monthly journal entries binder. This situation should only arise if someone at the company requested the bank to alter the closing date for the company's bank account. Another possibility that may be causing problems is that the dates covered by the bank statement have changed, so that some items are included or excluded. There are several problems that continually arise as part of the bank reconciliation, and which you should be aware of. Otherwise, you may find that cash balances are much lower than expected, resulting in bounced checks or overdraft fees. Go line-by-line through both records and tick off matching transactions.

The goal of this process is to ascertain the differences between the two, and to book changes to the accounting records as appropriate. Bank reconciliation isn’t just a routine task—it’s a core accounting process that ensures accuracy, protects against fraud, and strengthens financial control. Microsoft Dynamics 365 Business Central offers some of the most powerful tools for automating bank reconciliation and improving financial accuracy for UK businesses. Bank reconciliation detects duplicate entries, missing transactions, bank errors, or incorrect bookkeeping entries. Any reconciliation sheet you use for your bank reconciliation should have two columns; one for the bank account and one for the general ledger account. Before starting the reconciliation, you should have a copy of your bank records for the period that you’re reconciling along with any relevant accounting records.

This ensures that the summary account balance in the GL is accurately supported by the underlying detail. Reconciling these accounts ensures that the proper amounts are offset and removed, preventing the overstatement of assets and liabilities. For example, adjusting for bank service charges requires a debit to Bank Expense and a corresponding credit to the Cash account. The entire procedure is performed monthly to ensure compliance with generally accepted accounting principles. This identical figure is the True Cash Balance, which is used as the correct cash asset value on the balance sheet.

AP & FINANCE

This creates an additional layer of control and helps catch errors before they become bigger problems. Additionally, all reconciliations should be reviewed and approved by a supervisor or manager. The longer you wait between reconciliations, the more difficult it becomes to identify and resolve discrepancies.

Error Reduction

Nowadays, many companies use specialized accounting software in bank reconciliation to reduce the amount of work and adjustments required and to enable real-time updates. Reconciling the bank statement and internal records can identify and correct errors and uncleared transactions. From there, compare the new, adjusted cash balances of your bank account to your accounting records. Compare the ending cash balance of your bank accounts to your internal financial records. Your bank statement and financial records contain your opening and closing balances for the month. Individuals and businesses with simple accounting needs should consider reconciling their accounts monthly after receiving a bank statement.

Eleven – from days to minutes by automating e-wallet reconciliations

Bank reconciliation is typically handled by your company’s accountant or bookkeeper, though small-business owners often do it themselves. It mainly involves matching your records with your bank statement to find and correct discrepancies. Manual bank reconciliation is time-consuming and error-prone, leaving finance teams vulnerable to missed transactions, duplicate entries, and potential fraud. If your books still don’t match after a few attempts or reconciliations take longer than expected, it may be time to bring in an accountant or bookkeeper. Maintain clear documentation for each reconciliation, including bank statements, receipts, and adjusting journal entries.

Reconciliation Data Sheet

Another item affecting the book balance is Interest Earned on the account balance, which the bank credits automatically. Deposits in Transit are funds the company has recorded in its books but the bank has not yet credited to the account. Proper reconciliation procedures ensure the integrity of the data used to prepare financial statements and tax filings like IRS Form 1120 for corporations. Similarly, identify any transactions in your bank account that are not reflected in your internal records, such as bank fees, interest income, and overdraft fees.

Regulatory Reporting Data Sheet

Microsoft Dynamics Partners providing comparisons and opinions for the Dynamics ERP software selection process. Completing these journal entries will ensure that your beginning balance for January will reflect the actual reconciled total. There is no need to make any adjustments on the bank side since those will likely happen during the next month. Let’s say that you wrote a check for $50 to a vendor, but the check was later altered and cleared by the bank for $500. It may also not reflect deposits made into your account electronically that have not yet been accounted for. Every active checking account or other business account your business currently has should be reconciled at the end of the month.

Discover how automated payment reconciliation tools simplify finances, reduce errors, and save time with practical tips in this guide. Discover the best account reconciliation solution to streamline check reconciliations, reduce errors, and boost efficiency. These systems learn from your historical data to improve over time, detecting potential fraud or errors how to calculate net operating income that manual processes might miss.

At the end of this process, the adjusted bank balance should equal the company's ending adjusted cash balance.
Regular bank statement reconciliation also means you'll catch errors and fraud much faster, potentially saving thousands of dollars.
Completing these journal entries will ensure that your beginning balance for January will reflect the actual reconciled total.
“Switching from Brex to Ramp wasn’t just a platform swap—it was a strategic upgrade that aligned with our mission to be agile, efficient, and financially savvy.”

Dividing responsibilities adds oversight and reduces the risk of fraud or accidental errors. Organized records make it easier to trace discrepancies, prepare for audits, and identify recurring problems. After reviewing the details, you find an unrecorded bank deposit of $3,000, a bank service charge of $500, and an automatic loan mind your business well mind your finances flawlessly finaloop payment of $2,000 that hadn’t been entered. If not, recheck for missing or misclassified items before finalizing your reconciliation report. Some differences may simply reflect timing delays between when transactions are recorded and when they clear. For example, transposing numbers or forgetting to record a deposit can throw off your ending balance.

These items represent cash reductions the company had not recorded before receiving the bank statement. A bank error might involve crediting another company’s deposit, while a book error could be recording a transaction incorrectly in the company ledger. Since the bank reports this first, the company must add the amount to its book balance to align the records. These charges are deducted directly by the bank, requiring a reduction to the company’s book balance. Outstanding checks must be subtracted from the bank balance because the bank is unaware of the cash reduction until the instrument is processed. Bank reconciliations are completed at regular intervals to ensure that the company’s cash records are correct.

A bank reconciliation statement is a formal record comparing your company’s internal cash balance with the balance shown on the bank statement. A bank reconciliation statement is a financial document that compares your company's cash records with your bank statement to ensure accuracy and identify discrepancies. After recording the journal entries for the company’s book adjustments, a bank reconciliation statement should be produced to reflect all the changes to cash balances for each month.

A Bank Reconciliation Statement (BRS) is an essential financial document. “The ability to create flexible parameters, such as allowing bookings up to 25% above market rate, has been really good for us. “Switching from Brex to Ramp wasn’t just a platform swap—it was a strategic upgrade that aligned with our mission to be agile, efficient, and financially savvy.” The more time we can save doing all those tedious tasks, the more time we can dedicate to supporting our student-athletes.” Try a demo to see how Ramp helps finance teams reconcile faster with fewer errors and stronger fraud prevention.

Discover the best check reconciliation software tools of 2026 and how Solvexia streamlines and automates your account reconciliation. Download our data sheet to learn how you can run your processes up to 100x faster and with 98% fewer errors. While human oversight is still needed for unusual items and final approval, automation can reduce reconciliation time by 80% while improving accuracy.

Intercompany Account Reconciliation is necessary for corporations with multiple subsidiary entities. Non-Sufficient Funds (NSF) checks, or bounced checks, occur when a customer’s payment is rejected due to a lack of funds. For example, a company may issue a check, recording an expense, but the recipient may not deposit it for several days. A timing difference occurs when one party has recorded a transaction while the other party has not yet processed it.