How Often Should Bank Reconciliation
Statements Be Done?
Bank reconciliation statements are generally completed once a month.
However, if your business is very busy with a large number of transactions you could do it twice a month or once a week.
That way you can easily stay on top of the reconciliations and avoid feeling rushed or stressed once a month.
There are no "rules" about how often to prepare bank reconciliation statements.
You can do it daily if you wish.
again, you could do it six monthly...
...but only if you have very few business transactions so that you don’t overload
yourself with too much work in one sitting!
Also important to note is that you should never reconcile a bank statement to today's date, because today is not yet over and your closing balance might change by the end of the day.
The most up-to-date you can make a reconciliation is to yesterday's date (meaning up to the day before you prepare a reconciliation).
How To Do Bank Reconciliations
Where to do them
Options on where to do them:
- Enter a reconciliation summary underneath the relevant month in the cashbook spreadsheet, or
- Prepare a bank reconciliation form on another sheet of paper, or
- Invest in bookkeeping software that has reconciliation capabilities.
If you are keeping a manual cashbook you need to check off each cashbook entry against each bank statement entry.
You can put a small tick on the bank statement next to the entry and put a tick or an 'R' for reconciled in the *cashbook next to the relevant entry.
If there are extra entries in the cashbook that do not show up on the bank statement, or vice versa, you need to highlight or circle them so that you can adjust the cashbook once you find out what they are.
*This article mentions 'cashbook', however, if you are using accounting software they might not call it 'cashbook'. Instead, they might title it 'Transactions' or 'Banking'.
things that require adjustment
Outstanding checks/withdrawals* - these are checks that your business has entered into the cashbook and sent to vendors but which did not show up at the bank by the closing date of your bank statement.
Outstanding deposits/receipts** - these are payments that you have received into the cashbook, but which were not deposited to your bank before the bank statement closing date.
Bank Fees and Interest - these are charges that you would normally only know about after receiving your bank statement. You will need to enter these into the cashbook.
Other Unidentified Entries - if there are any other entries missing from either document then you will need to investigate how they got there and make the necessary adjustments.
- *Outstanding checks/withdrawals will be added to the reconciliation
- ** Outstanding deposits/receipts will be deducted from the reconciliation
- If the bank account is in overdraft, then do it the other way around.
Two Steps to balancing cashbook to bank statement
Here is a screenshot from our Bank Reconciliation Exercises and Answers tutorial which explains how to know when to adjust the Cashbook versus when to complete a Bank Reconciliation Worksheet
Reconciliation in the cashbook | spreadsheet
Here is an example of a reconciliation work section underneath a cashbook spreadsheet for one month.
Bank Reconciliation Form
If you don’t want to enter the reconciliation into the cashbook, you can use a form instead, like the completed example below.
Example Cashbook and Reconciliation Worksheet
Simple Cashbook Example
Simple Bank Reconciliation Form Example
Bookkeeping Software bank Reconciliation
Bookkeeping software that has reconciliation capabilities
makes the whole process quick and easy.
All you need to do is
- click on
the reconciliation section of the software
- run your eyes down the bank
- check off | tick each entry in the software’s reconciliation
- add in the extra entries or remove doubled-up ones
- press a button
- and you should get an automated bank reconciliation statement that you can print out (or send to pdf) and place into your filing system.
Or, if the software automatically imports bank transactions to the system, you should be able to produce a report and the system will show on the report
- what the actual bank balance is (which it knows because of importing the information)
- versus the total of the transactions you have ticked or reconciled
- the difference in the two balances if they are not matching.
Any differences might be because you accidentally entered in an extra transaction manually that had already been imported - so it's double entered - you need to delete your manual entry to bring the reconciliation to balance.
Bookkeeping Software Account Transactions
Some software providers don't have an actual reconciliation feature or report.
If this is the case with the software you are using you can process your reconciliation by finding the ledger report for the bank account. I have included here an example of a ledger report window from the free software Wave Accounting.
Print (or export to pdf) the ledger showing just the dates you are checking, for example, 1 - 31 March.
Tick each transaction on the ledger that matches the transactions on your bank statement (tick the ones on the bank statement too) and highlight or make a note of any differences on both documents that need to be sorted.
Example (from Wave Accounting) of Transactions That Have Been Checked Against Bank Statement
If you have any questions or comments feel free to contact me.
You can go here to view some questions that have already been answered.