Reconciling means checking that two sets of records agree — usually the cash book (our records) against the bank statement (the bank’s records). It catches errors early and keeps our accounts accurate.
Before you start
Have these open (all on the Finance pages):
- the cash receipts and payments journals
- the bank statement extract
- the general ledger extract and the accounts-receivable ageing
Step by step
- Tick off the matches. Go line by line and match each cash-book entry to the statement — same date, reference and amount.
- List the timing differences. Some items are correct but haven’t cleared yet — an unpresented payment or a deposit not yet shown. These are reconciling items, not errors.
- Add bank-only items. Things the bank has applied but you haven’t recorded — like a bank fee. Add them to the cash book.
- Adjust and compare. Start from the cash-book balance, apply the reconciling items, and check it now equals the statement balance.
- Investigate anything left over. A leftover difference is usually an error — for example a transposition (keying $848.40 instead of $884.40). Find it, correct the entry, and note the adjustment.
Recording discrepancies
For each difference, record it in the discrepancy log: what it is, the expected vs recorded amount, the difference, the risk, and the action. Use the journal correction request to log a correction.
When to escalate
Escalate to the Finance Manager when a discrepancy:
- can’t be resolved from the records (e.g. a supplier over-billed),
- involves an overdue account over its credit terms,
- needs an approval to correct, or
- affects a period that’s already been closed.
Don’t change figures you’re unsure about — check first. See the Finance & Transactions procedure for approval limits and the escalation path.