How to reconcile a bank statement
Updated 2026-08-19
Reconciliation answers one question: does what the bank says happened match what your records say happened. When it balances, the period is finished. When it does not, there is a specific order for finding the difference that beats staring at the sheet.
The procedure
Take the closing balance on the statement, add deposits recorded in your books that have not cleared the bank, subtract payments recorded but not yet cleared, and compare the result to your book balance. If they agree, the period reconciles.
Finding the difference
Work through the causes in order of likelihood rather than at random:
- Divide the difference by two. If the result is a transaction on the statement, an amount has the wrong sign.
- Divide the difference by nine. If it divides evenly, two digits are transposed.
- If the difference equals a single transaction exactly, it is missing or duplicated.
- Check bank fees and interest, which are the entries most often absent from books.
Where converted data helps
Reconciling from a PDF means reading two documents side by side. With the statement as a spreadsheet, you can sort both sides by amount and find unmatched rows in seconds instead of scanning line by line.
Do it monthly
An unreconciled month becomes an unreconciled year, and the cost of finding a difference grows with every period you add on top of it. Reconciling as each statement arrives keeps the search space to one month.