A Step-by-Step Guide to Performing Bank Reconciliations

Banks reconciliations can be a great way to keep your finances in order and maximize your cash flow. In this guide, we’ll show you step-by-step how to perform bank reconciliations and why it’s important to do so.

Collect Necessary Documentation.

The first step to completing a bank reconciliation is to learn what documents you need. This will depend on the type of account and banking institution that you are reconciling, but usually includes copies of bank statements, outstanding checks, deposited items, and bank fees. Once you have these documents in hand, you can start the process of reconciling your account.

Check the Bank Statement Matching Outstanding Transactions.

On the bank statement, look for checks that have been paid, deposits that have cleared, or automatic debits/credits. Compare these with your own records to make sure they match correctly. Any discrepancies need to be noted and resolved before continuing with the reconciliation process. Once all of the outstanding transactions are accounted for, your next step is to account for the balance on the statement.

Locate Missing and Unrecorded Transactions in Your General Ledger.

After matching the transactions between your general ledger and the bank statement, you should locate any missing or unrecorded transactions such as check payments, deposits or automatic debits/credits. Make sure these are all filled in and reconciled. If further investigation is required, be sure to contact your bank for further information on these items. Once you have accounted for all items in both sets of records, you can proceed with the reconciliation process.

Confirm Accuracy of Transactions with Supporting Documentation.

To ensure all your transactions are accurate and legitimate, it’s important to review the supporting documents for each one. Depending on the transaction type, this could include deposit slips, canceled checks, online banking records, or other forms of proof. Comparing these documents to those reported in the bank statement will help you locate any discrepancies and make sure both sets of data agree with each other. Once everything has been confirmed as accurate, then you have completed the entire reconciliation process.

Resolve any Discrepancies with Bank or General Ledger Accounts/Statements.

The last step in the bank reconciliation process is to resolve any discrepancies between the bank records and those of the general ledger. If the balance on both documents are not identical after all adjustments have been made, then you’ll need to dig a bit deeper. Check payment confirmations, setup errors, theft or fraud could all be possible explanations for different reports. Once you have correctly documented and corrected any issues, then your reconciliation is finally complete!

Perfect Balance Accounting is here to help you with all your bank reconciliation needs. Our experienced team of accountants have the expertise to help you stay on top of your finances and ensure your books are up to date. We offer a comprehensive suite of services that can help you stay organized and on track. Our services include bank reconciliations, account analysis, and more. We are dedicated to helping you achieve the perfect balance of accuracy and efficiency in your accounting. Contact us today to learn more about how Perfect Balance Accounting can help you with your bank reconciliations.