Bank reconciliation is the process of comparing your business’s financial records with your bank statement to identify and explain any differences.
Discrepancies can arise for several reasons, including uncashed cheques, deposits in transit, end-of-month transactions not yet recorded by the bank, and automatic deductions like loan payments. These timing differences mean your books and bank account may not always match.
Regular reconciliation ensures your records accurately reflect your available cash, helps catch errors or omissions, and can alert you to bank fees or fraudulent activity.
Keeping this process consistent is essential for maintaining financial accuracy and control in your business.