Reconcile your bank account
This explains how to reconcile your bank account with Accounting.
We recommend regularly reconciling your bank accounts. This makes sure your bank account balance matches you actual bank account and your reports are accurate.
Before you start
Make sure you have your bank statement handy as you'll need this.
Before you reconcile, make sure you record all bank transactions using one of the methods below.
Connect Accounting to your bank to import transactions automatically
Import from your bank statement
Reconciliation terms explained
Here is an explanation of the terms used on the reconciliation page and how we use them.
The end date of the bank statement you are reconciling.
The closing balance as shown on the bank statement.
This shows the total value of reconciled payments (money out) and receipts (money in).
We update these amounts as you mark off each transaction as reconciled.
The Starting Balance is always the total value of all reconciled transactions, up to the date of the statement you are reconciling now.
This may not always match the closing balance of your previous reconciliation. It will include reconciled errors or late entries from prior periods.
Check that the Starting Balance matches the opening balance on your bank statement.
As long as your reconciled balance matches the closing balance on your bank statement, the reconciliation is successful.
This is the same as your statement end balance. At the end of your reconciliation, this should match the reconciled balance.
This is a vital part of reconciliation. This is the total of reconciled transactions, plus the starting balance.
The aim of any bank reconciliation is to make sure that the closing balance on your bank statement matches the Reconciled Balance in Accounting.
When you start, this will always match the starting balance. As you tick transactions the reconciled balance updates. The reconciliation is finished when the reconciled balance matches the target balance. and your bank statement.
When you start, this is the difference between the Starting balance and the Statement end balance.
As you reconcile, the difference updates. The reconciliation is successful when the difference is zero.
The starting balance is £1000.
You have two payments to reconcile for £500 and £300, making a total of £800. This reduces your bank balance to £200.
When you start the balances are
Starting Balance =1000
Target Balance =200 (1000 -800).
Reconciled Balance =1000
Difference = -800
When reconcile the first transaction, the reconciled balance is 500 and the difference is 300.
When you reconcile the second, the reconciled balance is 800, and the difference is zero.
How to reconcile
The purpose of bank reconciliation is make sure the transactions entered in Accounting, match the transactions on your bank statement. This makes sure that your bank balance is correct.
To do this, enter the closing balance from your bank statement. Then check all the transactions match the bank statement. If everything matches, the total of all reconciled transactions added to the starting balance will match the closing balance. To confirm this the difference will be zero.
Enter your statement details
It is important that you enter this information correctly. The information you enter here affects which transactions you see, and the target balance for the bank reconciliation.
Statement Date, enter the end date from your bank statement.
We only show transactions up to the statement date you enter. If transactions are missing, or you have too many transactions, check your statement date.
Statement End Balance - Enter the closing balance from your bank statement.
Reference - Add a reference such as the reference from your bank statement. This is optional.
Select Apply. This updates the reconciliation details below.
Add interest and charges
It’s easy to add interest and charges right at the start of your reconciliation. Any interest or charges you add here are automatically marked as reconciled too.
If you use a bank feed or import from bank statement, it's likely that your will have already imported any fees or charges already, so ignore this step.
Select Interest and Charges to enter the details
Use the available options to record interest paid and received, as well as normal bank charges.
Enter an amount in the relevant box to record a Bank Charge, Interest Charge or Interest Earned as needed.
Enter the date the transaction took place in the Date box.
Reconcile your transactions
You can reconcile all entries at once which may save time but can take longer to identify errors.
If you use a bank feed or import from your bank statement, your imported transactions are already selected as they have come from your bank account. Simply check the balances match in the Summary section at bottom.
To reconcile your transactions:
Check each transaction against your bank statement.
If the transaction matches, select the check in the Reconcile column
To reconcile all transactions at once, select the drop-down arrow next to Interest and Charges and choose Reconcile All Entries
As you reconcile each transaction, the reconciled balances update at the bottom of the screen.
Save as a draft
You can save the reconciliation at any point. This is useful if you need to stop and come back to complete it later.
To save a reconciliation as a draft, select the drop-down arrow next to Finish and choose Save for later.
You must finish the draft reconciliation before you can start a new one.
To come back to the saved reconciliation, just select the Reconcile link. The saved reconciliation opens automatically.
You cannot unreconcile transactions once you choose Finish.
You can unreconcile transactions when you save the reconciliation as a draft.
To unreconcile all transactions at once, select the drop-down arrow next to Interest and Charges and choose Unreconcile All Entries.
To unreconcile each transaction separately, select the check box in the Reconcile column. This removes the tick and reconciles the transaction.
Finish the reconciliation
The reconciliation is complete, once you have
Reconciled all transactions,
The reconciled balance matches the target balance.
The difference is zero.
Once the reconciliation is complete, choose Finish.
When you choose Finish
We mark all transactions as reconciled so they are not included in another reconciliation.
You cannot reverse or delete the reconciliation.
You cannot unreconcile individual transactions.
Find details of completed reconciliations from the Reconciliations tab.
Change reconciled transactions
If you have made a mistake and need to edit a reconciled transactions, you can edit certain information, otherwise delete the transaction and re-enter it.
You can edit the Reference, Description, and Ledger Account Read more from Edit reconciled transactions
To change to a date outside the reconciliation period, delete the transaction and re-enter it. Read more from Edit reconciled transactions.
If the bank account or amount is incorrect, delete the transaction and re-enter it. Read more from Delete bank transactions
You cannot delete a reconciled bank transfer, you need to reverse it instead. Read more from Reverse a bank transfer or cash deposit.
You cannot edit or delete any transactions that have been included on a VAT return. Read more from Correct transactions included on a VAT return
When the difference is not zero
When the difference is not zero, this can be because
The statement end date is not correct.
The statement end balance is not correct.
Some transactions have a different date to your bank account.
The starting balance does not match the opening balance on your bank statement.
A previous reconciliation was saved with a difference.
A previous reconciliation was saved with the wrong date.
For more details on how to resolve this read Why a bank account doesn't reconcile