Bank reconciliation makes sure your books match reality. This guide walks through the process step by step and shows how a bank feed makes it painless.
Published July 2026 · Updated July 2026
Your reports are only as good as the data behind them. Reconciling confirms every payment and receipt is recorded, so your profit, VAT and cash figures can be trusted. It is also a strong guard against errors and fraud.
Take your bank statement for the period and go through it line by line, ticking each transaction off against your records. Anything that does not match, a fee you forgot, a duplicate, a wrong date, is investigated and corrected until both balances agree.
Connect your bank so transactions flow in automatically. Software then suggests matches to your invoices and bills, turning a manual chore into a quick review.
If the two do not agree, work through the difference transaction by transaction. Common culprits are timing differences, bank charges, and entries recorded twice or not at all.
Weekly is ideal, or even daily with a bank feed, so issues are caught while they are easy to fix.
Correct it with an adjustment or journal, and note why. Then keep reconciling regularly so errors do not pile up again.
No, bookkeeping records transactions; reconciliation checks those records against the bank to confirm they are complete and correct.
This guide is general information for UK small business owners, not accounting, tax or legal advice. Rules, rates and thresholds reflect 2026/27 and change over time; always check the linked official source or a qualified adviser for your situation.