Bank Reconciliation

The process of matching a company's internal accounting records with the bank statement to identify and resolve discrepancies.

Bank Reconciliation is the process of comparing your company's cash book (internal records) with the bank statement to ensure they match. Differences arise due to timing, errors, or unauthorized transactions.

Common causes of differences:

  • Cheques issued but not yet cleared: You recorded the payment, bank hasn't debited yet
  • Deposits in transit: You recorded the receipt, bank hasn't credited yet
  • Bank charges and interest: Bank has debited/credited, you haven't recorded yet
  • Direct deposits/debits: NEFT/RTGS received or standing instructions executed
  • Errors: Wrong amounts, duplicate entries, or missing transactions

Steps in bank reconciliation:

  • Start with the bank statement balance
  • Add deposits in transit (in your books but not in bank)
  • Subtract outstanding cheques (in your books but not cleared)
  • Adjust for bank charges, interest, and direct transactions
  • The result should match your cash book balance

Frequency: Best practice is daily reconciliation for businesses with high transaction volumes. At minimum, monthly reconciliation is essential before GST filing and financial reporting.

Automated bank reconciliation through ReckOps matches transactions using amount, date, and reference number, reducing a full-day task to minutes.

Related Terms

Trial Balance

A bookkeeping statement listing all ledger account balances (debit and credit) at a specific date to verify that total debits equal total credits.

Cash Flow (Statement & Management)

The movement of money in and out of a business, tracked through the Cash Flow Statement showing operating, investing, and financing activities.

Automate your finance operations

ReckOps handles GST reconciliation, TDS compliance, vendor payables, and expense management — so you can focus on growing your business.

Free GST Health CheckBrowse all terms