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Blog » How to Reconcile Your Bank Account Statement ? 5 Simple Steps

How to Reconcile Your Bank Account Statement ? 5 Simple Steps

Last updated: 26 Sep, 2023 By | 6 Minutes Read

bank account reconciliation

Accurate bank reconciliation of business accounts ensures the balancing of book records with respective bank statements. Having said that, performing it is a tedious job, but by following some necessary & right steps, you can make it effortless. Go through this blog to gain insights into those steps:

Bank account reconciliation is a process that helps in comprehending the reasons behind the difference between the bank balance displayed in the statement supplied by the bank and the amount shown in the organization’s own records.

These differences occur either due to errors or due to not recording some of the transactions either by the bank or by the organization. These reconciliations are carried out at regular intervals of time to ensure the accuracy of statements. The latest accounting software is mostly used for this purpose. Most business organizations perform this task once a month.

Steps that can help your bank account reconciliation

1. Enter dates and balances in the bank reconciliation template correctly 

All the dates and bank balances must be entered correctly. This is a major step in the bank reconciliation process.

2. Carefully enter all outstanding checks

The outstanding checks must be entered properly. The check sequence summary of the bank account statement must be looked at carefully. Some checks are issued at the end of the month; this thing should be kept in mind.

3. Outstanding deposits should be entered at the right time

The time variance should be kept in mind while accounting the outstanding deposits.

4. Make the other adjustments

Other adjustments like entries recorded in your accounting records as cash but not shown on the bank statement should be taken care off.

5. Check the balance

Once all the outstanding entries have been made, the end balance should be checked. The balance of the assets and liabilities should match. If it doesn’t match, then certainly some error has been made.

In case an error has been made, go through the bank account statement and the accounting records again. Check each entry carefully. This will help in finding out the error and making the mistake.

Where the bank account reconciliation helps you in detecting errors, it also improves the ability of managing accounts receivable. The time period between cash outflow (Vendors and employees) and inflow (Clients and customers) varied a lot, so reconciliation helps to take decision regarding late payments, especially when a firm is operating on very low cash reserves.

The process becomes simpler once you master it by performing it every month. By performing the bank account reconciliation properly, you will be able to maintain a proper record of the financial health of the business which can act as a guide map for the future.

Also Read: Get your Business on Track with Bank Account Reconciliation Services

Cogneesol is a leading provider of outsourcing accounting services to global business ventures. With many commercial ventures looking for cost-cutting solutions, the services offered by Cogneesol can prove to be extremely useful. They possess an expert staff capable of delivering quality results within the allocated deadlines. For more information, you can visit us at [email protected] or call us at +1 646 688 2821.