Bank Reconciliation: What Good Actually Looks Like

Why it catches what nothing else does

Every other check in bookkeeping compares your records against your records. A trial balance proves your entries are internally consistent; it cannot tell you an entry is missing entirely.

The bank statement is independent evidence. Matching against it is the only routine step that finds something you never recorded at all.

The four things you find

Discrepancies fall into a small number of categories, and each means something different.

• In the bank, not in your records: usually a cost you forgot, which is money you are not claiming
• In your records, not in the bank: often a payment that failed, or an invoice marked paid that was not
• Different amounts: a typo, or a fee deducted that you did not account for
• Duplicates: the same transaction entered twice, which overstates whichever side it lands on

Imported does not mean reconciled

A bank feed removes the typing. It does not decide what a transaction was for, and until you review it the transaction is not in your figures.

This is a genuine trap with automated imports: the data looks present because you can see it on screen, while it is still sitting unapproved and outside your VAT return. Anything that reports a return as ready while imports are pending is not doing you a favour.

Treat pending imports as a blocking problem before filing, not a tidy-up task for afterwards. They are the difference between a return that is right and one that looks right.

How often

Monthly is enough for most sole traders, and it should take minutes once the feed is doing the import. Leaving it to the quarter end means reconstructing what a payment from ten weeks ago was for, which is where guesses enter the record.

The habit matters more than the frequency. A reconciliation you do every month beats a thorough one you do twice a year.