Bank Reconciliation

The process of matching and comparing a business's internal financial records with its bank statement to ensure they agree, identifying and resolving any discrepancies.

Regular reconciliation prevents financial errors, undetected fraud, and costly surprises. A founder who reconciles monthly catches issues quickly; one who reconciles annually may discover significant problems too late to easily correct.

A founder compares her accounting software records with her bank statement at month end and finds a £200 discrepancy. She traces it to a subscription charge she had not recorded, corrects her books, and cancels the unneeded subscription.