Bank reconciliation isn’t just a good habit—it’s a step-by-step process that helps you confirm your financial records are accurate. According to bookkeeping practice:

“Bank reconciliation involves comparing the transactions in your accounting records to those listed in your bank statement and identifying any differences.”

Let’s walk through the process in simple, beginner-friendly steps.

Start by gathering your bank statement for the period you want to reconcile—usually a month. Then, open your business’s cash book or accounting software. These are the two documents you’ll compare.

Go line by line and match every deposit, withdrawal, payment, or fee on the bank statement with the ones in your records. Check that the dates, amounts, and descriptions match. If something appears on one but not the other, flag it for review.

Sometimes, you’ve recorded a transaction in your books, but it hasn’t cleared the bank yet. These are called outstanding items—like uncashed checks or recent deposits. Make a note of these so they don’t throw off your reconciliation.

Banks often charge service fees or add interest that you might not have recorded yet. Add these missing items to your records so your balance reflects the true picture.

If you find typos, double entries, or forgotten transactions—correct them in your records. The goal is to adjust your books so they match the bank statement exactly (apart from any outstanding items, which will clear next month).

After matching and adjusting everything, compare your adjusted book balance to the bank statement’s ending balance. If they match—great! Your reconciliation is complete.

✅ Start with your bank statement and your accounting records side by side
✅ Match each transaction and flag differences
✅ Identify outstanding checks or deposits not yet processed
✅ Record missing charges like bank fees or interest
✅ Fix errors to make sure your books and bank statement agree
✅Once balanced, you can confidently close the books for that period