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What is a Bank Reconciliation?

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Definition of a Bank Reconciliation

A bank reconciliation is a process which compares a company’s bank statements with its financial reports using a bank reconciliation statement.

Importance of Bank Reconciliations

Ultimately, bank reconciliations ensure that all payments have been processed and deposited properly. A bank reconciliation statement also helps identify whether any bookkeeping changes are needed, such as double payments, calculation errors, or missed bank fees. Since bank reconciliations are completed on a regular basis, they also provide a great opportunity to review financial statements and reports for bigger issues, such as fraud.

Bank Reconciliation Tips

  • It is recommended to perform a bank reconciliation each month to ensure that your statement and reports remain up to date
  • Don’t forget the cash account. Pay close attention to potential errors such as bank service charges.
  • Make sure the balances equal out at the end. If your balances aren’t equal, start the reconciliation again.
Melissa Nuij
Chief Operations Officer

Ruby Business Solutions
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