Guide
Bank reconciliation every day, not at month end
Monthly bank reconciliation turns into a hunt for small differences. Reconciling every day keeps the books current, catches problems while they're still easy to fix and makes month end a review.
Key takeaways
- Bank reconciliation checks that every line on the bank statement matches a record in your books, and the other way round.
- Done monthly, it's a hunt. Done daily, it's a few minutes of matching while everything is still fresh.
- Daily reconciliation catches duplicate payments, missing bills and unexpected charges within a day.
- With the bank reconciled daily, month end is a review of exceptions, not a catch-up.
What bank reconciliation is
Bank reconciliation is the check that your books and your bank agree. Every payment in and out of the account should match a record in your accounting software: a customer's invoice, a supplier's bill, a salary, a fee. And every record that says money moved should show up in the bank.
When they agree, you can trust the numbers. When they don't, something is missing, duplicated or wrong, and the longer it stays that way the harder it is to find.
Why month end hurts
Most companies reconcile once a month, usually in a rush before the books close. By then there are hundreds of lines to match. Most match easily. The hard ones are the dozen that don't: a payment with a vague reference, a customer who paid two invoices in one transfer, a card charge nobody recognises, a bank fee that was never recorded.
Each of those needs someone to remember what happened three or four weeks ago. That's where the hours go.
What daily reconciliation looks like
Reconciling daily means the same work in small pieces. Each day, take the new lines from the bank feed and match them. On most days that's a handful of lines, and almost all of them match on the first try.
- Pull the new bank lines for the day
- Match each payment received to the invoice it pays, including part and combined payments
- Match each payment made to the bill or expense it settles
- Record what's expected but missing a document, such as bank fees and interest
- Update which invoices are now paid, so everyone sees the same list
- Flag anything that doesn't match, with the line and the reason
What it catches early
The real value of daily reconciliation isn't neat books, though you get those too. It's finding problems within a day instead of within a month.
- A supplier paid twice for the same bill
- A bill that was paid but never recorded
- A customer payment that doesn't match any invoice
- A subscription that renewed at a higher price
- A card charge nobody recognises, while it can still be disputed
Month end, as a review
When the bank is reconciled every day, the month-end close changes character. The matching is already done. What's left is a review: look at the short list of exceptions, check accruals and adjustments, and sign off. The numbers your managers see at the start of the month are also the numbers they'd have seen on any day of it.
It also helps beyond finance. Knowing exactly which invoices are paid, every day, means nobody chases a customer who has already paid, and cash planning works from today's numbers rather than last month's.
How the Accountant does it
At OFFHOURS we're client zero: the Accountant keeps our own books. Every day it records new supplier bills, reconciles the bank statement to the cent and updates the status of open invoices. On a typical day that's dozens of bills and a fully reconciled bank, finished by mid-morning.
It works inside your accounting software and bank feed, so nothing moves to a new system. Lines it can't match come back to a person with the evidence attached, rather than being guessed. Every action is logged and can be undone, and it never sends money: payments are prepared for your own people to approve.
Getting started
If you reconcile monthly today, start by clearing the backlog once. Then switch to daily matching for one account, usually the main operating account, and add the others when it's routine. Write down the few rules that settle most of the hard cases: how to treat bank fees, what to do with part payments, who decides on a line nobody recognises.
