How to reconcile a bank statement
Updated August 2026 · 5 minute read
Start from the statement's closing balance, add deposits you have recorded that the bank has not yet cleared, subtract payments that have not yet cleared, and the result must equal your own closing balance . A difference left over is timing, an error, something missing, or a duplicate.
The procedure
Reconciliation is one calculation performed in a fixed order. Doing it out of order is what turns a ten-minute job into an afternoon.
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Check the opening balances agree
The statement's opening balance must equal your books' closing balance from last period. If they do not, last period did not reconcile and this one cannot. Stop and fix that first.
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Tick off everything that appears on both sides
Work down the statement and mark each transaction that is also in your records, matching on amount first and date second. Two payments for the same amount in the same week are the classic mis-tick, so check the payee before marking either.
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List what is on the statement and not in your books
Bank charges, interest, direct debits set up outside your process, returned payments, and card fees. These are real transactions you have not recorded. Enter them in your books now.
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List what is in your books and not on the statement
Deposits you have banked that have not cleared, and payments you have issued that have not been presented. These are timing, not errors, and they belong in the calculation rather than in your books.
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Do the arithmetic
Statement closing balance, plus deposits in transit, minus outstanding payments, equals your closing balance. If both sides match, the period is reconciled and the ticked items can be marked cleared.
What a difference actually turns out to be
Worth checking in this order, because the first is the commonest and the cheapest to rule out.
- Timing
- A payment issued and not yet presented, or a deposit banked after the statement date. Not an error, and not something to correct in your books. Check the item's date against the statement period before treating it as anything else.
- A transposition or a slip
- A figure entered as 1,745 instead of 1,475. If the difference divides exactly by 9, a transposition is the likely cause, because swapping two digits always changes a number by a multiple of 9. Divide the difference by 9 and look for a figure near that size.
- Something missing on your side
- A bank charge, interest, a standing order, or a card fee that never reached your records. The difference equals the missing amount exactly. Search your books for the figure before assuming it is not there.
- A duplicate, or a sign the wrong way round
- A payment entered twice makes the difference exactly twice the amount. A receipt entered as a payment makes it exactly twice the amount as well, in the other direction. Halve the difference and look for that figure.
Reading the difference itself
The number is evidence. These checks take about a minute between them and settle most differences without a line-by-line hunt.
| The difference | Likely cause | What to do |
|---|---|---|
| Divides exactly by 9 | Two digits swapped in one entry | Divide by 9 and look for an entry near that magnitude |
| Exactly twice a figure in your books | That entry is duplicated, or its sign is reversed | Search the period for the halved figure |
| Matches a round number | A bank charge or a standing order not recorded | Check the statement's fees and charges lines |
| Matches nothing, and is small | A rounding or foreign-currency conversion difference | Check whether any line is in another currency |
A difference matching none of these is usually two errors at once. Reconcile a shorter period, a week rather than a month, until the difference appears.
How often to do it
Monthly, on the statement, is the standard and is what an accountant expects to find. Accounts with heavy daily volume are reconciled weekly, because the cost of finding one error rises with the number of transactions you have to look through to find it.
The case for not letting it slip is arithmetic rather than discipline. One unreconciled month is one month of transactions to search; six unreconciled months is not six times the work, because the errors interact and each one changes what the others look like.
Getting the statement into a form you can tick against
The procedure above assumes both sides are lists you can compare. When the statement is a PDF or a scan, the first hour goes on retyping it, and a retyped figure is a new chance to introduce the transposition the reconciliation is meant to catch.
LedgerBox extracts the transactions from the statement instead. Every row comes out with its date, description, and amount, and the arithmetic is checked before the document is marked clean: debits, credits, and the running balance have to add up to the printed closing balance, and a row LedgerBox cannot verify is flagged for review rather than guessed. The rows export to Excel, CSV, QuickBooks formats, or JSON, which is the tickable list the procedure needs.
Questions people ask
What is a bank reconciliation?
A check that your own record of an account agrees with the bank's, once timing differences are accounted for. It is the control that catches a missed entry, a duplicate, and a mistyped figure.
What if the difference is tiny?
Find it anyway. A small difference is usually two larger errors that nearly cancel, and writing it off leaves both in the books. A genuine rounding difference is worth a note explaining which line produced it.
Do I record outstanding checks in my books?
They are already there. A check you issued was recorded when you issued it, and it appears in the reconciliation as an outstanding item until the bank presents it. Recording it again is a duplicate.
Does the bank ever make the error?
Rarely, and it happens. A payment posted twice or an amount keyed wrongly by the bank is corrected by the bank, not by an adjusting entry in your books. Report it and reconcile against the corrected statement.
What is the difference between clearing and reconciling?
Clearing marks an individual transaction as having gone through the bank. Reconciling is the check that the whole period agrees once every cleared item is ticked and the outstanding ones are counted.
Where to go next
- How to read a bank statement The sections and totals the procedure ticks against.
- Bank statement abbreviations What the codes on an unrecognised line mean.
- Cleaning up a set of books When several periods are unreconciled at once.
- Convert bank statements to Excel and CSV Turn the statement PDF into the list you tick against.