Reconciling a business bank account

Bank reconciliation checks that the accounting record agrees with independent bank evidence after known timing differences. Start with the correct account, currency and opening balance. Compare transactions as well as totals, because duplicate or missing entries can conceal one another.

Separate outstanding payments, bank charges, transfers and duplicate feed imports. Investigate old reconciling items and confirm whether they remain valid. Keep the statement and reconciliation at the same date, with the preparer's explanation and any review evidence.

Start from independent evidence and the right date

Obtain the bank statement for the account and reconciliation date. Confirm currency, account number and opening balance against the previous completed reconciliation. A live banking screen may show a different date or pending items, so save the evidence used. Do not start by changing the ledger to match the current screen without identifying the transactions explaining the difference.

List all relevant accounts, including cards, savings accounts and payment platforms. A transfer between two company accounts needs matching treatment on both sides and is not income merely because it appears as a receipt. GOV.UK's record guidance provides the wider requirement for reliable company financial records. ^[1] Reconciliation is a practical control supporting that record, not a substitute for invoices and transaction explanations.

Match movements without hiding differences

Compare amounts, dates and references, looking for duplicates, missing entries and incorrect allocations. Bank feeds can import transactions twice after reconnection or omit a date range. A total difference of zero does not prove accuracy if an omitted receipt offsets an omitted payment. Review individual movements and investigate unusual patterns rather than relying only on the software's matched percentage.

Separate timing differences from errors. An outstanding payment may legitimately appear later on the statement, while a duplicate entry requires correction. Record why each reconciling item exists and when it should clear. Old items need investigation; carrying them forward indefinitely can conceal cancelled payments, duplicated postings or a misunderstanding of the original transaction.

Resolve fees, transfers and foreign currency carefully

Record bank charges and interest using supporting evidence and the appropriate accounts. For internal transfers, check both source and destination so a timing difference is not posted as an unexplained expense. Payment platforms may settle net of fees and refunds, requiring a separate reconciliation of gross activity. Use Reconciling online payment platforms for those platform balances rather than treating every payout as a standalone sale.

For foreign currency accounts, distinguish the currency balance from its reporting-currency value. Agree exchange treatment with the accountant and preserve the rates or calculations used where relevant. A difference caused by translation should not be confused with missing cash. Keep the original transaction evidence so the financial effect can be assessed without losing the amount actually paid or received.

Review and retain the completed reconciliation

Prepare a schedule showing the statement balance, ledger balance and explained differences at the same date. Identify the preparer and appropriate reviewer. A small company may use a director review of unusual items where full separation of duties is impractical. The review should consider the evidence and old exceptions, not simply add initials to a report without checking its content.

Make corrections through a traceable process and preserve the reason. Avoid balancing entries with no factual basis. If a discrepancy suggests unauthorised activity, escalate it promptly through the appropriate finance or incident process. Do not postpone investigation until year end merely because the amount is below the company's usual reporting threshold; the pattern or cause may matter more than one transaction's value.

For Limited company bookkeeping, provide the statement, ledger and outstanding-item list. Ask for help resolving identified differences and improving the recurring process. Use Bookkeeping records for a limited company to connect reconciliation with the wider bookkeeping routine. After completion, save the report and supporting evidence, then verify that outstanding items clear as expected in the next period. A reconciliation is strongest when it leads to resolved exceptions rather than a growing list of unexplained carry-forwards.

Investigate a transfer that crosses the month end

A transfer between two company accounts may leave one account before appearing in the other. Match the amount, dates and bank references, then record the timing difference appropriately in the reconciliation. Do not create income in the receiving account merely because the matching withdrawal falls in the previous reporting period.

Check whether a foreign currency conversion or bank charge explains any difference in the amounts. Keep both statements and the calculation together so the reviewer can reproduce the result. If the transfer remains unmatched beyond the expected processing period, investigate it rather than carrying the same reconciling item forward indefinitely. The reconciliation should show a supported timing difference, not an unexplained number that has become familiar through repetition.

Illustrative scenario

A bank feed imports a supplier payment twice, while a bank charge is missing. A superficial total check nearly hides the errors. Matching the individual statement lines exposes both, and the bookkeeper corrects the ledger with an audit trail rather than posting one unexplained balancing amount.

Preparation checklist

• Confirm the statement period and opening balance.
• Match receipts, payments and transfers individually.
• Explain and age every remaining difference.
• Keep the completed reconciliation and approved adjustments.