Reconciliation & Closing
How to Reconcile a Bank Account (Step by Step)
Short answer
Reconciliation matches every transaction in your books to your bank statement, ending with identical balances on both sides. Do it monthly. Differences come from missing transactions, duplicates, timing of pending charges, or bank fees you forgot to record.
Reconciling isn't optional. If your books don't tie to the bank, every report is fiction — and the IRS will catch it in an audit.
The 5-step reconciliation
- Pull the statement for the month. Note the ending balance and statement date.
- In your books, open the reconciliation tool. Enter the same ending balance and date.
- Check off each transaction in your books that appears on the statement. Skip anything not on the statement (pending).
- If the difference is zero, you're done. If not, look for: duplicates, missing fees, wrong amounts, or transactions in the wrong account.
- Save the reconciliation report as a PDF in your monthly backup folder. Lock the period.
Where the difference usually hides
- Bank or merchant processing fees you forgot to record
- A check entered twice (once when written, once when cleared)
- Transactions categorized into the wrong account
- A deposit recorded as gross but bank shows net of fees
- Last month's reconciliation was never completed
Frequently asked questions
Should I reconcile credit cards too?
Yes — same process. Every card with business charges gets reconciled monthly against the statement.
Bookkeeping, done for you.
Glo Invoice keeps your P&L, AR, and expenses in sync automatically — no spreadsheets, no surprises.
Sources & further reading
Primary sources we consulted when writing and reviewing this guide.