Bank Reconciliation Statements (2024)

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Bank Reconciliation Statements

Learn everything you need to know about bank reconciliation statements for a business - how to do them and how often.

Here you will see a sample and have access to a free, printable template. This information can also be used to balance your personal bank accounts.

What are Bank Reconciliation Statements?

Any business that is receiving and spending money will use banking and bank reconciliation procedures.

The bank will regularly send the business a bank statement, or the information can be accessed through online banking, whichlists in date order the money that has gone in and out of the bankaccount.

In the meantime, the business’ bookkeeper will have entered these withdrawals and deposits into the business cashbook.

Why Do Bank Reconciliation Statements
Need to Be Done

Bank reconciliations verify that the funds going in and out of the cashbook agree with the funds going in and out of the bank account.

If the closing balance of the cashbook does not match the closing balance of the bankstatement, the cashbook will need to be adjusted or amended.

Thereconciliation helps the bookkeeper to find what is causing thedifference and make the necessary adjustments.

Of course, there may bean error on the bank statement rather than the cashbook, however, in myexperience banks very rarely make these errors. I’m not saying theydon’t happen, but it is rare!

How Often Should Bank Reconciliation
Statements Be Done?

Bank reconciliation statements are generally completed once a month.

However, if your business is very busy with a large number of transactions you could do it twice a month or once a week.

That way you can easily stay on top of the reconciliations and avoid feeling rushed or stressed once a month.

There are no "rules" about how often to prepare bank reconciliation statements.

You can do it daily if you wish. Trovata give 5 reasons supporting the case for doing a bank reconciliation daily.

Thenagain, you could do itsix monthly...

...but only if you haveveryfew business transactions so that you don’t overloadyourself with too much work in one sitting!

Also important to note is that you should never reconcile a bank statement to today's date, because today is not yet over and your closing balance might change by the end of the day.

The most up-to-date you can make a reconciliation is to yesterday's date (meaning up to the day before you prepare a reconciliation).

How To Do Bank Reconciliations

Where to do them

Options on where to do them:

Enter a reconciliation summary underneath the relevant month in the cashbook spreadsheet, or
Prepare a bank reconciliation form on another sheet of paper, or
Invest in bookkeeping software that has reconciliation capabilities.

If you are keeping a manual cashbook you need tocheck off each cashbook entry against each bank statement entry.

things that require adjustment

Outstanding checks/withdrawals*- these are checks that your business has entered into the cashbook and sent to vendors but which did not show up at the bank by the closing date of your bank statement.

Outstanding deposits/receipts**- these are payments that you have received into the cashbook, but which were not deposited to your bank before the bank statement closing date.

Bank Fees and Interest- these are charges that you would normally only know about after receiving your bank statement. You will need to enter these into the cashbook.

Other Unidentified Entries- if there are any other entries missing from either document then you will need to investigate how they got there and make the necessary adjustments.

*Outstanding checks/withdrawals will beaddedto the reconciliation
**Outstanding deposits/receipts will bedeductedfrom the reconciliation
If the bank account is in overdraft, then do it the other way around.

Two Steps to balancing cashbook to bank statement

Here is a screenshot from our Bank Reconciliation Exercises and Answers tutorial which explains how to know when to adjust the Cashbook versus when to complete a Bank Reconciliation Worksheet

Reconciliation in the cashbook | spreadsheet

Here is an example of a reconciliation work section underneath a cashbook spreadsheet for one month.

Bank Reconciliation Form

If you don’t want to enter the reconciliationintothe cashbook, you can use a form instead, like the completed example below.

Click Here to Download a Free Bank Reconciliation Form

Example Cashbook and Reconciliation Worksheet

Simple Cashbook Example

Simple Bank Reconciliation Form Example

Bookkeeping Software bank Reconciliation

Bookkeeping software that has reconciliation capabilitiesmakes the whole process quick and easy.

All you need to do is

click onthe reconciliation section of the software
run your eyes down the bankstatement
check off | tick each entry in the software’s reconciliationsection
add in the extra entries or remove doubled-up ones
press a button
and you should get an automated bank reconciliation statement that you can print out (or send to pdf) and place into your filing system.

Or, if the software automatically imports bank transactions to the system, you should be able to produce a report and the system will show on the report

what the actual bank balance is (which it knows because of importing the information)
versus the total of the transactions you have ticked or reconciled
the difference in the two balances if they are not matching.

Any differences might be because you accidentally entered in an extra transaction manually that had already been imported - so it's double entered - you need to delete your manual entry to bring the reconciliation to balance.

Bookkeeping Software Account Transactions

Some software providers don't have an actual reconciliation feature or report.

If this is the case with the software you are using you can process your reconciliation by finding the ledger report for the bank account. I have included here an example of a ledger report window from the free software Wave Accounting.

Print (or export to pdf) the ledger showing just the dates you are checking, for example, 1 - 31 March.

Tick each transaction on the ledger that matches the transactions on your bank statement (tick the ones on the bank statement too) and highlight or make a note of any differences on both documents that need to be sorted.

Example (from Wave Accounting) of Transactions That Have Been Checked Against Bank Statement