Learn about Bank Reconciliation

Learn about Bank Reconciliation

What is bank reconciliation?

Bank reconciliation the way to double-check your business’s financial data. You do this by comparing your business accounts against your bank statements. 

Both sets of records should agree with each other. Doing bank reconciliation will highlight any transactions that don’t match. It’s important to then figure out why this has happened. 


Why do Bank Reconciliation regularly?

Doing your Bank Reconciliation daily, weekly or monthly helps to: 

  • Find and fix errors in your bookkeeping before they get out of hand
  • Catch fraudulent or scam payments early
  • Confirm how your business is performing financially
  • Be prepared for filing taxes (bank reconciliation records are mandatory for businesses, so don’t leave it until the end of the financial year!)
 

'Locking' the Transactions

Once you have completed your Bank Reconciliation for the month, your records will be locked. This is to protect you from accidental changes that will not only affect that month's reconciliation, but also any reconciliation you have completed for future months.

The reconciled bank balance carries forward from month to month. Also, deposits and cheques that were outstanding at the end of a month may have subsequently appeared on your Bank Statement and are no longer recognised as outstanding. Consequently, if you make a change to an earlier month you may need to complete all your subsequent reconciliations again.
 

'Unlocking' the month's Transactions

Provided you have reconciled correctly, the only time you should need to make a change is when you have entered an amount into an incorrect column and you want to move it to another column.

However, extreme care is required to ensure that you do not alter anything affecting your Bank Reconciliation. (If you have already transferred information to your Accountant you should only make changes advised by your Accountant.)

After a month has been 'Locked', you will see a button allowing you to 'Unlock Month' in your Cash Flow and Bank Reconiliation screens.


Doing this will unlock your Income, Expenses and Bank Reconiliation. You can now make the changes you wish. To lock it again, return to the Bank Reconciliation. You will need to go through the Bank Reconciliation process again to Lock the month. 
 

How to do Bank Reconciliation? 

  1. Firstly, you’ll need your bank statement/s handy.
  2. From the sidebar, select Banking > Reconciliation


 
  1. Choose the relevant account, month and year that you want to reconcile and Start Reconciliation.

 
  1. Set an opening balance as per your bank statement (this should equal the closing balance of the previous month)


 
  1. Set a closing balance as per your bank statement


 
  1. Review your bank statement and tick the ‘Matched’ on the transactions that match up with your bank statement
  2. Once you’ve matched your transactions, if there is a discrepancy you will need to figure out why (is it a mistake? is there a delay in payment?). If you’re unsure, contact your accountant to discuss the discrepancy. 


 
  1. Once you’re done, select Reconcile Account. 




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