• What Is Bank Reconciliation
• The 5-Step Process
• Common Mistakes to Avoid
• How Pricefic Automates Reconciliation

Your bank statement says you have 15,000. Your records say 14,847. Where did that 153 go?

Bank reconciliation answers that question. It's the monthly process where you match your business records against your bank's official records to ensure they agree. It's not glamorous, but it's essential.

What Is Bank Reconciliation

Bank reconciliation compares your accounting records to your bank's official records. The goal is simple: ensure both show the same balance.

Why it matters:

• You catch fraud early. 85% of small business fraud goes undetected for over a year, primarily because owners don't reconcile monthly
• You find your own mistakes before they become bigger problems
• You know your actual cash balance for confident business decisions
• Your accountant doesn't spend hours fixing your records

The 5-Step Process

Step 1: Gather Your Documents Get your bank statement, accounting records, outstanding checks list, and your previous month's reconciliation. Reconcile within 3-5 days after month-end.

Step 2: Compare Deposits Match each deposit on your bank statement to your accounting records. Mark each one as verified. Create a list of deposits you've recorded that haven't appeared on the bank statement yet (pending deposits).

Step 3: Compare Payments Compare each check, ACH payment, and withdrawal on the bank statement to your accounting records. Note any bank fees you haven't recorded. Create a list of payments you've recorded that don't yet appear on the statement (outstanding checks).

Step 4: Build Your Adjusted Balances This is the core reconciliation:

Bank Statement Reconciliation:

• Ending balance per bank statement: $18,547
• Add: Pending deposits: $5,200
• Less: Outstanding checks: ($3,100)
• Adjusted bank balance: $20,647

Accounting System Reconciliation:

• Ending balance per accounting system: $20,400
• Add: Bank interest: $47
• Less: Bank fees: ($25)
• Add: Pending deposit you recorded: $450
• Adjusted accounting system balance: $20,872

If these don't match, find the discrepancy.

Step 5: Document and Review Record your reconciliation date and findings. Update your accounting system with any missing items (bank fees, interest). File your reconciliation sheet for your records.

Common Mistakes to Avoid

Matching by amount alone: You see a 500 debit and a 500 payment and assume they match. But amounts repeat. Match by amount AND date AND description.

Forgetting bank fees and interest: Your bank statement shows a 25 fee and 3.12 in interest. If you don't record these, your book balance won't match the bank balance.

Confusing outstanding vs. cleared items: Outstanding items are transactions you've recorded but the bank hasn't processed yet. Don't ignore them—subtract them from the bank balance.

Not investigating timing differences over 10 days: A payment should clear in 5-7 days. If it's been 15 days, investigate.

Transposing numbers: Import your bank statement PDF into Pricefic instead of manually typing amounts. This eliminates transcription errors entirely.

How Pricefic Simplifies Reconciliation

Manual reconciliation is accurate but tedious. Pricefic transforms this monthly task into a streamlined process.

What Pricefic does:

• Import your bank statement PDF directly into Pricefic with simple accuracy
• Intelligently matches your invoices to deposits and bill payments to withdrawals
• Flags transactions in the bank statement but not in your records
• Automatically detects and records bank fees
• Provides a visual reconciliation dashboard showing which transactions are matched and which aren't
• Maintains a history of all reconciliations for compliance

Result: What used to take 2-3 hours of spreadsheet work happens in 30 minutes. No data entry errors. No missed transactions. Just accuracy.

For guidance on organizing your chart of accounts to make reconciliation easier, see our guide on understanding chart of accounts for smart business financial management.

For related cash management strategies, explore our article on cash flow forecasting for small businesses.

Final Word

Bank reconciliation isn't just a compliance task. It's your monthly opportunity to verify your financial records are accurate and detect fraud early. With Pricefic, monthly reconciliation goes from tedious manual work to an automated process that takes minutes.

Start reconciling this month. Make accuracy your competitive advantage.