How to Reconcile a Bank Statement in 5 Simple Steps

Bank reconciliations are one of those behind-the-scenes tasks that, when done regularly, can prevent financial disasters. This often-overlooked habit is essential for keeping your books accurate, detecting discrepancies, and building financial confidence as a business owner.

If you've ever asked yourself, “Why doesn’t my bank balance match what’s in my accounting software?” — reconciling your bank statement will give you the answer.

In this article, we’ll walk you through how to reconcile a bank statement in five clear steps, why it matters, and how a strong accounting partner can streamline this process for you.

What Is Bank Reconciliation and Why Does It Matter?

Bank reconciliation is the process of matching the transactions in your accounting records to those listed on your bank statement. The goal is to ensure that the balances align — or if they don’t, to uncover why.

Doing this regularly helps you:

• Catch errors before they snowball

• Detect fraudulent activity or unauthorized charges

• Identify missed entries or duplicates

• Keep cash flow projections accurate

• Maintain audit readiness and cleaner financial reports

Think of reconciliation as a monthly financial “health check” for your business.

How to Reconcile a Bank Statement in 5 Steps

Step 1: Gather Your Records

Start by pulling:

• Your most recent bank statement

• The corresponding general ledger or accounting software record for the same period

• Any manual records of payments or deposits if you're not fully digital

Make sure the time periods match exactly — usually a calendar month.

Step 2: Compare Opening Balances

Confirm that the opening balance on your bank statement matches the ending balance from your previous month’s reconciliation.If it doesn’t match, you may have skipped a reconciliation or missed adjustments. Resolve that first before moving forward.

Step 3: Match Deposits and Withdrawals

Go line-by-line through your bank statement and:

• Tick off each deposit and withdrawal that appears in your books

• Highlight unmatched transactions for investigation

Common mismatches include:

• Outstanding checks that haven’t cleared yet

• Deposits recorded late

• Bank fees or interest not yet entered into your system

• Double entries or missed entries

Step 4: Adjust Your Books

Once you identify the unmatched transactions:

• Add bank-only items like interest earned, bank fees, or automatic payments into your books

• Remove or correct duplicate entries or errors

• Record any missing entries

Your goal is to bring your book balance in line with your bank balance, once adjustments are made.

Step 5: Reconcile and Save the Report

Once the adjusted book balance equals the bank statement’s ending balance, your reconciliation is complete.

Document the reconciliation by:

• Saving a copy of the statement

• Creating a reconciliation report

• Noting any unusual findings for follow-up

Repeat this process monthly (or more often, depending on your transaction volume).

Common Bank Reconciliation Issues to Watch For

• Uncleared transactions: 

  Checks or transfers recorded in your books but not yet processed by the bank

• Bank errors: 

  It’s rare, but banks do make mistakes — reconciliation helps you catch them

• Fraud or unauthorized activity: 

  Reconciliation can reveal suspicious activity early

• Software sync issues: 

  Automated imports can occasionally miss entries — a manual review is essential

How Amazing Accountants Can Help You Reconcile with Ease

At Amazing Accountants, we understand how tedious reconciliation can be — and how critical it is to your business’s financial integrity.

Our team supports businesses by:

• Reconciling bank statements monthly with precision

• Investigating discrepancies and resolving them quickly

• Setting up systems to reduce reconciliation errors

• Training teams on using digital tools for faster, cleaner reconciliations

• Keeping all financial records aligned, up to date, and audit-ready

We turn bank reconciliation from a stressful chore into a streamlined, reliable routine that you never have to worry about again.

Take Control of Your Business Finances

Reconciliation isn’t just about checking off boxes. It’s about ensuring that every dollar is accounted for — and that your books are trustworthy.

If you’re behind on reconciliations or unsure whether your balances are accurate, it’s time to fix that.

👉 Visit our website at www.amazingaccountants.com to learn more, or book a free consultation with our team and get expert help building a process you can trust.