Monthly bank reconciliation checklist for small businesses
A monthly bank reconciliation is easier when it is the same routine every time. Use this checklist for each checking account, savings account and company card, in the first week after the month ends.
March 31
Adjusted balances
- Balance per bank statement
- 24,860.00
- Add deposit in transit
- 3,150.00
- Less outstanding checks
- -2,355.50
- Adjusted bank balance
- 25,654.50
- Balance per books
- 25,532.10
- Interest and fees
- -47.60
- NSF and duplicate
- 170.00
- Adjusted book balance
- 25,654.50
The ten step checklist
1. Collect every statement
Download the statement for each bank and card account. Card statements close on their own dates, so reconcile cards to the statement closing date, not month end.
2. Finish the bookkeeping for the month
Record all sales, deposits, bills paid, payroll and transfers up to the statement date. Clear the bank feed queue if you use one.
3. Check the beginning balance
The beginning balance on the statement must equal the ending balance of last month's reconciliation. If it does not, fix last month first.
4. Match deposits
Tick each deposit on the statement against your books. Watch for one bank deposit that combines several customer payments.
5. Match payments and checks
Tick checks by number and electronic payments by amount and payee.
6. List what is only in the books
These are outstanding checks and deposits in transit. They need no entry.
7. List what is only on the statement
Bank fees, interest, automatic payments you forgot and returned customer checks. These need entries in your books.
8. Look for duplicates and errors
A payment entered twice, a transposed amount or an entry posted to the wrong account.
9. Confirm the adjusted balances agree
Adjusted bank balance and adjusted book balance must be equal. Do not finish with a difference.
10. Record entries and file the report
Post the adjusting entries and keep the statement and the reconciliation report together for the month.
When to reconcile
Within the first five to ten days after the statement date is a good rule. Accounts with many transactions, such as a merchant deposit account, are easier to reconcile weekly. Do not let several months pile up: one month with a problem is easy to fix, six months with the same problem are not.
Warning signs to act on
- The same unexplained difference appearing month after month
- Outstanding checks older than 90 days
- Deposits in transit that do not clear in the first days of the next month
- Fees or subscriptions you do not recognize
- Payments to a vendor you do not know
Tools that make it faster
Steps 4 to 8 are where the time goes. A bank reconciliation template in Excel keeps the format consistent, and BankReconciler does the matching itself, from any statement and any ledger export, and produces the monthly reconciliation report for step 10.