Bank reconciliation
Bank reconciliation is the check that the balance and transactions in your accounts match your bank statement. You compare your cash book (or bank ledger) with the bank’s record, spot timing differences, and correct any missing or wrong entries.
Typical reconciling items you may need to note:
- Unpresented cheques or payments that have not cleared
- Receipts lodged but not yet shown on the statement
- Bank charges and interest
- Direct debits and standing orders
- Card settlement payouts and their fees
- Reversals, chargebacks, or bank errors
Do it little and often
Reconciling regularly is easier than catching up. Reconcile each bank account separately and add a short note to explain any adjustments.
To reconcile, start from the statement balance, tick matching items, post any missing entries (such as bank fees or direct debits), and leave genuine timing differences as outstanding. Keep the reconciliation report and supporting records; it improves cash flow visibility and makes VAT returns and year-end smoother.
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