Reconciliation is how you confirm that what your Accounting system shows matches what your bank statement shows. It's the monthly check that makes sure your books and the bank agree — that every dollar in and out is accounted for.
Think of reconciliation like balancing your checkbook. You get your bank statement at the end of the month, compare it to what you recorded in the system, and confirm everything lines up. If there's a difference, you find out why.
How reconciliation works
During reconciliation, you compare:
Your Accounting system — all the receipts, disbursements, and transfers you recorded.
Your bank statement — what the bank says happened in your account.
The goal is to confirm that the cash on your books matches the cash the bank reports. You check off each transaction that appears on the bank statement, and when everything matches, you complete the reconciliation.
Completing a reconciliation
To reconcile:
Go to Reconciliation.
Enter the statement ending ballance from your bank statement as of the Statement Period date.
The system shows what your balance should be at that point in time.
Check off each transaction that appears on your bank statement — deposits, payments, transfers.
When all items are checked and the difference is zero, click Complete Reconciliation.
After completion, the reconciled balance is recorded with the date. Any unreconciled transactions remain visible for the next reconciliation cycle.
Bank adjustments
Sometimes your bank statement includes items that aren't in your Accounting system yet — fees, interest, or returned checks. Adjustment types include:
Bank Interest – interest earned on your account (increases your book balance).
Bank Fee / Service Charge — a monthly service charge or other bank fees on your checking account (decreases your book balance).
Returned Check (NSF) — a check you received for Non-Sufficient Funds (decreases your book balance).
NSF Fee – any fee charged for a Non-Sufficient Funds check (decreases your book balance).
Wire Transfer Fee — a fee for receiving or sending a wire transfer (decreases your book balance).
Other adjustment — for anything else that doesn't fit the above categories. You choose whether the entry needs to increase or decrease your book balance.
To record a bank adjustment:
Go to Reconciliation —>Bank Adjustment.
Bank Account: Defaults to the main checking account but can be used to post to another account, such as for savings account interest.
Amount: Enter the amount of the adjustment.
Date: Defaults to current date but may need to be backdated to the actual date on the bank statement.
Adjustment Type: Select the appropriate type to match the transaction.
Direction: Will default to the appropriate Adjustment Type. Exception: Other Adjustment may need to be change to fit the need.
Description: Reason for the adjustment.
Fund Allocation: Select the appropriate fund. Click “Add Fund” to apply to multiple funds.
Click Post Adjustment. Print the document for your records.
Workflow: Record any bank adjustments before completing your reconciliation. The adjustment will then appear in your transactions, and you can check it off along with everything else. Without the adjustment, your balance won't match because the bank statement includes a fee or charge that isn't in your system yet.