How to reconcile your bank statement.

Reconciling your bank statements is an important financial task to keep your personal or business finances in order. It helps to identify and resolve any discrepancies between your books and the bank you are with. Please follow this step-by-step guide.

1. Gathering your materials
   • You’ll need your bank statement for the period you want to reconcile (can find this under estatements on your online bank account or it may be mailed to your address depending on how you have this set-up at your bank).
   • You’ll need your accounting software or your checkbook containing all your transactions.
2. Review your bank statement
   • Skim through your bank statement, you should notice your deposits, withdrawals, any fees and interest earned related to your account.
   • Check the ending bank balance as well located on your bank statement.
3. Updating your records
   • In your accounting software or checkbook, mark off transactions that match those on the bank statement.
   • This should include any bank fees and interest earned that might not be in your records.
4. Compare your balances
   • Calculate your adjusted ending balance by adding any deposits and subtracting any withdrawals not yet recorded in your checkbook (this includes deposits in transit (DIT) which you may not see on your bank statement, also any outstanding checks that haven’t been cashed by your vendors).
   • Compare your adjusted ending balance with the balance on the bank statement.
5. Identify any discrepancies
   • If balances match, congratulations you have completed reconciling your account!!
   • If your balances do not match, that is okay. Compare the transactions on your bank statement with your records. Some examples of common discrepancies include missing or duplicate entries, data entry errors, or any forgotten transactions.
6. Investigate discrepancies and make adjustments
   • If you find a discrepancy, investigate it further. Maybe you forgot to record the transaction, or an error in your calculations, or it could be an error by the bank. After investigation, make the adjustment in your accounting software or checkbook.
   • You should further contact your bank to clarify if there are any discrepancies on their side and work with them to correct it.
7. Reconcile until your ending balance matches
   • Continue reviewing and adjusting your records until your ending balance matches the bank statement’s ending balance.
8. Keep your Records
   • Maintain a copy of your reconciled bank statement and any other documentation for your records.
9. Regular Basis
   • Reconciling your bank statement regularly, ensuring there are no errors between your book and your bank statement. This also helps you determine and quickly act if there is any fraudulent activity occurring in your account. Most people and businesses do this monthly.

Reconciling your bank statement is an essential financial practice helping you prevent errors and any fraudulent transactions: it also ensures that you have an accurate picture of your financial health/situation. If you are having trouble reconciling your bank statements, consider seeking assistance from a professional accountant to help you identify and resolve any issues.

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