In this guide 6 sections
The gap usually comes from five causes. They are cheques and card settlements not yet cleared, returned direct debits, bank charges booked late, one receipt covering several invoices, and entries posted twice. Sort the difference by cause, because each cause has its own exception list, its own owner in accounts and its own fix before the next close.
Start by splitting the gap, not hunting for one number
Write the statement’s closing balance beside the ledger’s closing balance, subtract one from the other, and ask which entries sit on one side only. Most gaps are timing, a few are errors, and treating both groups alike means hours wasted chasing items that would have cleared on their own by Tuesday. Label every line timing or error. Once each line carries its label, the stubborn residue at the bottom shrinks to a handful of entries that you can trace back to a voucher.
Fix the cut-off date first. If the bank counts Friday’s deposits and the ledger stops on Thursday, the gap will shift every time somebody reruns the report, so freeze the date before anything else.
Items in the books that the bank has not seen
Cheques written but not presented are the oldest cause, because the ledger shows the payment while the statement stays silent, so list them by cheque number and date. Sort the list oldest first. The cheque issued in the first week of the month is likeliest to have been lost, mislaid or quietly cancelled by the payee.
Card and wallet settlements behave the same way: a sale is booked on Friday, yet the processor pays on Tuesday after deducting its fee. Meanwhile the reconciliation screen lists a sale with no matching credit until the settlement lands, and the fee shows up as a separate small debit.
Review the list weekly. A cheque older than its validity period is no longer timing, so cancel it, rebook the payment and tell the payee to discard it.
- Cheques issued, not yet presented
- Card settlements in transit
- Deposits made after the cut-off
- Stale cheques past validity
Items on the statement that the books have not seen
Bank charges, interest and processing fees appear on the statement first, and nobody tells accounts, so book each one from its statement line with a proper narration.
Returned direct debits are trickier. The bank reverses a collection, yet the invoice stays marked paid and the ledger is silent, so scan the statement for debit lines carrying a return reason code. The return advice quotes the original collection reference, and that reference is the quickest route to the customer invoice that now needs reopening.
Standing instructions and direct credits from customers often arrive without any remittance advice, so park each one in a suspense account until somebody matches it to an invoice.
- Bank charges and interest
- Returned debits with reason code
- Direct credits with no invoice
- Standing instruction payments
One receipt, many invoices, and double postings
A customer pays once against four invoices. The statement shows a single credit, the ledger shows four small entries, and a one to one match fails because no pair of figures is equal. Tick all four together. Most reconciliation screens offer a group match for this case, and using it keeps the ledger honest instead of forcing you to edit receipt amounts until they fit.
Duplicates come from two sources. Either a bank feed is imported twice, or a receipt is keyed by hand and then arrives again through auto matching from the same feed. Sort by amount and date. Twin lines on one day are suspects.
Check opening balances too. A reconciliation that starts from a wrong carried forward figure will never close, however carefully you match every line posted afterwards in the month.
- One receipt against several invoices
- Duplicate import lines
- Hand keyed and auto matched twins
- Opening balance differences
Make the next month’s reconciliation shorter
Reconcile weekly instead of monthly. Smaller piles are easier to read, and a mistake from Tuesday is still fresh in memory when you find it on Friday.
Keep a reconciliation statement every month. It lists the statement balance, uncleared items, books balance and a signed difference of zero, and the reviewer should be someone who never posts receipts. Ask the reviewer to open the oldest unmatched item first rather than the biggest, because stale items are where lost cheques and forgotten refunds hide for entire quarters.
This week, pull last month’s unmatched list, sort it by age, and put a name and a decision against anything older than ninety days.
Bank reconciliation worksheet
Worksheet of one page, in two halves. The top half starts from the statement balance, adds deposits in transit, deducts uncleared cheques and reaches the adjusted bank balance. The bottom half begins at the ledger balance, adds unbooked credits, deducts unbooked charges and returns, and reaches the adjusted book balance. Suspense items get their own line. A reviewer signs at the foot.
Open a blank worksheet to printQuestions owners ask
How often should we reconcile the bank?
Weekly beats monthly for any account with regular receipts, and daily suits shops taking card or wallet payments all day, because smaller piles clear faster. Month-end alone lets small mistakes stack up until nobody remembers what a stray amount was for, or which clerk keyed it on which day.
What goes in a suspense account?
A suspense account holds receipts that cannot yet be matched to a customer or an invoice, and it should be reviewed every week. Keep each entry short lived. Old balances hide real faults.
Why does the same amount appear twice?
The usual cause is a duplicate bank import, or a receipt keyed by hand and then matched again by the auto rule, so compare date, amount and reference. Remove the extra entry and note why. If the references differ, check whether a bank feed and a manual upload both ran, since that pair produces twins with unlike narrations.
Can software do bank reconciliation automatically?
Software can match most lines by amount, date and reference, then list the exceptions for a person to settle, though returns and split receipts still need written rules.