Start with the bank statement and book balance
Use the statement ending balance and the company’s cash ledger for the same date. Do not mix periods. If the accounting system imports bank feeds, remember that an automated feed does not eliminate the need to investigate unmatched or misclassified transactions.
Identify deposits in transit
Customer receipts recorded in the books near month-end may not appear on the statement until the next banking day. List those deposits and confirm that they subsequently clear.
Identify outstanding checks and payments
Checks issued but not yet presented reduce the company’s true committed cash even though the bank balance has not changed. The same timing issue can occur with ACH and other scheduled payments.
Investigate bank-only activity
Service charges, interest, returned items, wire fees, merchant adjustments and other bank-posted entries may not yet be in the books. Record legitimate items and investigate anything unfamiliar.
Escalate unexplained differences immediately
An unexplained difference can be a simple posting error, but it can also indicate duplicate payment, unauthorized activity or fraud. The reconciliation process should assign responsibility for investigation and documentation.
Close the month with evidence
Retain the reconciliation report, statement, supporting schedules and evidence of review. Businesses with stronger internal controls separate payment initiation, bookkeeping and reconciliation duties where staffing allows.
Primary sources and reference material
Build banking decisions around operating risk and total cost.
Use the account structure, permissions and liquidity rules that fit how the business actually receives, holds and moves money. Verify changing bank terms before implementation.