Your ledger says one balance; the bank says another. Usually both are right — they just recorded the same transactions on different days, and each knows about a few things the other does not. Reconciling is the routine of finding those differences, explaining every one, and correcting the ones that are real mistakes. Done monthly it takes minutes. Done once a year it takes a weekend.
The six steps
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Get the statement and pick the date
Download the bank statement for the period and note its closing balance. Reconcile to that exact date.
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Start from last month's reconciled balance
If last month did not reconcile, fix that first. Differences carry forward and multiply.
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Match each transaction
Tick every deposit and payment that appears in both the ledger and the statement, by amount and date.
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Record what only the bank knows
Bank fees, interest, direct debits and card charges you have not entered yet. These are real transactions — post them to the ledger.
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List what only the ledger knows
Cheques written but not yet cashed, and deposits recorded but not yet cleared. These are timing differences: list them, do not change them.
Anything still outstanding after two or three months is no longer timing — investigate it.
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Prove the difference is zero
Statement balance, minus outstanding payments, plus deposits in transit, should equal your ledger balance. If it does not, the remaining difference is an error to find.
A worked example
| Item | Amount |
|---|---|
| Balance per bank statement, 31 March | 12,400 |
| Less: cheque #104 not yet cashed | (1,800) |
| Add: deposit on 31 March not yet cleared | 2,500 |
| Adjusted bank balance | 13,100 |
| Balance per ledger before adjustments | 13,145 |
| Less: bank fee not yet recorded | (45) |
| Adjusted ledger balance | 13,100 |
When it will not balance
- Difference divisible by 9? Look for two transposed digits — 540 entered as 450.
- Difference equal to one transaction? It is missing or entered twice.
- Difference equal to twice a transaction? It was entered with the wrong sign — a deposit as a payment.
- Opening balance different from last month's closing? Something dated in a closed month was changed.
Questions people actually ask
How often should I reconcile my bank account?
At least once a month, when the statement closes. Businesses with many transactions often reconcile weekly or daily.
What are outstanding cheques and deposits in transit?
Payments and deposits you have recorded that the bank has not processed yet. They are timing differences and normally clear within days.
Should I reconcile credit cards and cash too?
Yes. Any account with a statement — cards, payment processors, loans — reconciles the same way. Petty cash reconciles against a physical count.
Where these facts come from
Checked against the following on 15 October 2026. Rules and dates change — if you are reading this long after that date, verify before you act on it.
WisoBooks is a bookkeeping and business-management tool, not an accounting, tax or legal advisor. Nothing on this page is tax advice, and tax rules change. Confirm your own obligations with the relevant authority or a qualified advisor.
