Bank reconciliation

What is bank reconciliation?

A bank reconciliation is the process of matching your accounting records against your bank statement to confirm every transaction agrees. You account for timing gaps, outstanding checks, deposits in transit, and catch errors, bank fees, or fraud. When both balances tie out after adjustments, your cash records are verified as accurate.

Why it matters for fast-growing companies

Reconciling every bank and credit card account monthly is the single best control against errors and fraud, and it's non-negotiable for a credible close. Unreconciled accounts mean you can't trust your cash balance, and auditors, lenders, and acquirers will flag it immediately.

Related terms

• Accounting & closeMonthly closeThe monthly close is the process of reconciling accounts, booking accruals, and finalizing financial statements for the prior month.
• Accounting & closeGeneral ledgerThe general ledger is the master record of every financial transaction a company makes, organized by account, cash, revenue, payroll, and so on.
• Accounting & closeCash flow statementA cash flow statement tracks the actual cash moving into and out of a business over a period, grouped into operating, investing, and financing activities.
• Accounting & closeTrial balanceA trial balance is a report that lists every account in the general ledger with its ending debit or credit balance, then totals each column.

Frequently asked questions