Bank reconciliation
What is Bank reconciliation? Checking every line on your bank statement against a receipt or payment in your books, so that your books and the bank show the same figures.
In plain words
Your bank statement and your books should tell the same story. Reconciliation is the check that they do. Most differences are timing: a cheque you issued that the supplier has not yet banked, or a charge the bank took that you have not yet recorded.
A worked example
On 30 September the bank statement shows ₹8,42,000 and your books show ₹8,57,500. Both should reach the same figure.
| Bank side | Amount |
|---|---|
| Balance on the bank statement | ₹8,42,000 |
| Add: customer cheque deposited on 29 September, not yet credited | ₹30,000 |
| Less: cheque issued to a supplier, not yet presented | ₹20,000 |
| Adjusted bank balance | ₹8,52,000 |
Books side: ₹8,57,500, less bank charges not yet recorded (₹500) and an EMI the bank debited that you have not yet recorded (₹5,000), gives ₹8,52,000. The two sides agree, and the two items to record are now clear.
Why it matters
- Cost. You catch charges, EMIs and receipts that were never booked.
- Deadline. Month-end close needs it done; an old unreconciled balance gets harder to untangle every month.
- Risk. A missing or doubled entry shows up as a difference rather than hiding in the balance.
See your own bank statement matched against your books.
In Kinnow
How Kinnow handles it
In Account, each bank line moves through four states: unmatched, suggested, matched or written off. The Bank Reconciler agent pre-matches lines to receipts and shows the rule behind each match. Low-confidence lines come up only as suggestions. You confirm matched lines in bulk and decide the few that need a person.
A wrong match can be unmatched, and the line goes back to the queue. Only matches a person has confirmed count as reconciled. Related: bank lines that book themselves.
Bank statement import has a ready format for HDFC and a generic format. Ask us how your bank's statement would be brought in.
Questions
What is bank reconciliation?
Checking every line on your bank statement against a receipt or payment in your books, so that your books and the bank show the same figures.
What happens when the agent matches a line wrongly?
You unmatch it and the bank line returns to the queue. Every match shows the rule behind it, so a wrong one is easy to spot. Nothing is posted until a person has looked at it.
How often should I reconcile?
Many businesses do it monthly for close, but doing it weekly keeps the differences small. Your accountant or auditor can tell you what your lender expects.
Send us one month of your statement and ask how many lines would match on their own.