# How to do a bank reconciliation

Match every line on the bank statement to your ledger. Add deposits not yet cleared, take off payments not yet cleared and enter fees or interest not yet booked. The adjusted bank balance must equal the ledger balance.

Free tool: [Bank reconciliation generator](https://www.pulsify.tech/free-tools/bank-reconciliation-generator/). Enter the statement balance, outstanding items and ledger balance to see if they agree.

## Why it matters

A reconciliation catches errors, missed payments and fraud early. It is also the base for every other report. If the bank is wrong, the balance sheet is wrong.

Do it often. A weekly rec takes minutes. A rec left for three months takes days.

## The steps

1. **Get the statement.** Use the bank statement for the same dates as the ledger period.
2. **Match each line.** Tick each statement line against a ledger entry. Match by date, amount and reference.
3. **List deposits in transit.** Deposits in your ledger that are not yet on the statement.
4. **List outstanding payments.** Payments in your ledger that have not yet cleared the bank.
5. **Enter missing items.** Enter bank fees, interest and direct debits that are on the statement but not in your ledger.
6. **Work out the adjusted balance.** Statement balance, plus deposits in transit, less outstanding payments.
7. **Compare with the ledger.** The adjusted bank balance must equal the ledger balance after you enter missing items.
8. **Investigate differences.** Check for a transposed amount, a duplicate entry or a payment in the wrong period.
9. **Sign and date it.** Have a second person review. Keep the rec with your month-end file.

## Worked example

Example Distribution Pty Ltd reconciles its main account at 31 October.

| Item | Amount |
| --- | --- |
| Bank statement closing balance | A$48,300 |
| Add deposits in transit | A$6,200 |
| Less outstanding payments | -A$3,100 |
| Adjusted bank balance | A$51,400 |
| Ledger balance before adjustments | A$51,425 |
| Less bank fee not yet entered | -A$25 |
| Adjusted ledger balance | A$51,400 |

Both sides equal A$51,400, so the account is reconciled.

## Common mistakes

- Plugging a difference to force a match.
- Leaving old outstanding items for months.
- One person doing entry and reconciliation.
- Reconciling to the wrong period.

## Common questions

### How often should I reconcile?

Weekly is good. Monthly at the least.

### What if I cannot find the difference?

Check for a transposed digit first. Divide the difference by 9. If it divides evenly, you may have swapped two digits.

### Do I reconcile credit cards?

Yes. Treat the card like a bank account.

## Next step

Use the [Bank reconciliation generator](https://www.pulsify.tech/free-tools/bank-reconciliation-generator/) first. Then see [how to close the month in AP](https://www.pulsify.tech/how-to/close-the-month-in-ap-bills-accruals-unapproved-items/).

Source: https://www.pulsify.tech/how-to/do-a-bank-reconciliation/ (last checked 2026-10-20)