Bank reconciliation compares the balance in your bookkeeping system with the balance on the bank statement. The goal is not merely to make the totals match; it is to explain every difference.
What reconciliation catches
It can reveal duplicate entries, missing fees, unrecorded deposits, incorrect dates, cleared checks recorded for the wrong amount, and transactions posted to the wrong account. It also helps detect unauthorized activity.
A reliable process
- Use the statement ending date and ending balance.
- Match cleared deposits and withdrawals one by one.
- Identify legitimate outstanding checks and deposits in transit.
- Investigate old outstanding items rather than carrying them forever.
- Confirm the reconciled difference is exactly zero.
Do not force a reconciliation
A plug entry makes the screen look complete while preserving the underlying error. If the difference cannot be explained, review beginning balances, deleted transactions, duplicates, transfers, and entries posted after the statement date.
Reconcile more than the checking account
Credit cards, savings accounts, loans, lines of credit, PayPal, Stripe, and other payment processors also need reconciliation. Complete this work monthly while details are still recent.