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Maintaining accurate financial records is essential for any accounting team aiming to deliver strategic insights to the CFO and support sound decision-making. One of the most effective ways to ensure accuracy is through regular bank reconciliations that verify your general ledger (GL) matches your bank statements.
When done properly, bank reconciliation helps teams catch discrepancies early, reduce manual errors, and improve visibility into real-time cash positions. In this article, you’ll get a step-by-step walk-through of a sample bank reconciliation. We’ll also share practical examples that accounting departments use to streamline the process with both traditional methods and automation tools.
What is bank reconciliation?
Bank reconciliation is the process of comparing a company’s internal accounting records with its bank statements to ensure the two balances align. It’s a critical accounting control that helps verify your GL reflects your actual cash position after accounting for discrepancies between the accounts.
Regular reconciliation allows accounting teams to quickly catch errors, detect signs of fraud, and ensure the accuracy of financial reporting. All of this improves their ability to deliver timely, strategic insights to the CFO and other key decision-makers.
What is a bank reconciliation statement?
A bank reconciliation statement is a formal document that displays your company’s GL cash balance with the balance reported on your bank statement. It outlines all reconciling items, such as deposits in transit, outstanding checks, bank fees, or interest earned, that explain the differences between the two records.
This financial statement typically begins with the bank’s ending balance, then adjusts for transactions that haven’t yet cleared, adding deposits in transit and subtracting outstanding checks. On the book side, it includes adjustments for items recorded by the bank but not yet in your accounting system, like interest, service fees, or non-sufficient funds (NSF) checks.
When done correctly, the adjusted bank balance and adjusted book balance should match. This provides clear evidence that you have accounted for all discrepancies. In turn, it supports accurate reporting and makes your month-end close faster, more accurate, and audit-ready.
How to do a bank reconciliation
Bank reconciliation follows a systematic process that can be broken down into five key steps to ensure accuracy and completeness.
- Gather records: Collect the relevant bank statement and your company’s general ledger or cash account records for the same period.
- Compare transactions: Match deposits, withdrawals, and payments in your books to the bank statement. Mark cleared transactions and flag discrepancies.
- Identify timing differences: Note outstanding checks, deposits in transit, or unprocessed electronic payments that may explain mismatches.
- Adjust the book balance: Add or subtract items like bank fees, interest earned, or returned checks that appear on the bank statement but not in your books.
- Confirm adjusted balances match: Ensure the adjusted bank balance equals your adjusted GL balance. Investigate and resolve any remaining discrepancies.
Many organizations are now turning to automated bank reconciliation software to streamline this process and reduce the risk of human error. If you’re tired of manual reconciliations, NetCash can automate your process, saving you time and reducing errors.
Schedule a demo to explore Netgain's accounting solutions.
Quick Tip: Reconciliation Frequency
While monthly reconciliations are standard practice, companies with high transaction volumes may benefit from weekly or even daily reconciliations to catch discrepancies early and maintain accurate cash flow projections.
Bank reconciliation statement examples
The following sample bank reconciliation statements illustrate common reconciliation scenarios and demonstrate how to resolve various types of discrepancies.
Sample 1: The cash book balance is higher than the bank balance
Problem: XYZ Company's cash book shows a balance of $25,000 as of the end of the month, but the bank statement shows only $22,500. After reviewing the records, the accounting team finds:
- A $3,000 deposit made on the last day of the month that hasn’t reached the bank account yet (deposit in transit)
- A $500 check issued near the end of the month (Check #1089) that hasn’t cleared the bank (outstanding check)
Solution: To reconcile these balances, XYZ Company needs to adjust the bank statement balance by adding the deposit in transit and subtracting the outstanding check.
Sample bank reconciliation statement format:
Bank Reconciliation Statement - XYZ Company
Sample 2: Cash book balance requires multiple adjustments
Problem: ABC Corporation's cash book shows a balance of $38,000 as of the end of the month, but the bank statement shows $42,000. The accounting team identifies the following items:
- $150 monthly bank service fee not recorded in the cash book
- $2,000 check recorded as $1,000 in error
- $3,150 in outstanding checks not yet cleared
- $2,000 electronic customer payment on the bank statement but missing from the books
Solution: To reconcile, the team adjusts the bank statement for the outstanding checks and updates the cash book to reflect the unrecorded fee, payment, and correction.
The company must make journal entries to record the $150 bank fee as an expense, correct the $1,000 error in the check payment, and record the $2,000 electronic payment received.
Sample bank reconciliation statement format:
Bank Reconciliation Statement - ABC Corporation
Common Reconciliation Errors
Recording errors account for a significant portion of the reconciliation discrepancies that slow down month-end close. These include transposed numbers, decimal point errors, and transactions recorded in the wrong period. Implementing double-check procedures can significantly reduce these common mistakes. Reconciliation software helps clean up your data for a much faster month-end close.
Sample 3: The bank balance is higher than the cash book balance
Problem: DeltaEchoFoxtrot’s bank statement shows a balance of $35,000 as of the last day of the month, while the company's cash book shows only $32,000. Reconciliation reveals:
- $500 in bank interest not yet recorded in the cash book
- $2,500 customer payment received via direct deposit, unrecorded in the cash book
- $1,000 deposit recorded in the cash book but not yet reflected on the bank statement (deposit in transit)
Solution: To reconcile these balances, DeltaEchoFoxtrot needs to adjust the bank statement for the deposit in transit and adjust the cash book for the interest earned and direct deposit.
The company should record journal entries to recognize the $500 interest income and the $2,500 payment received from the customer. After these adjustments, both the adjusted bank balance and adjusted cash book balance should equal $34,000.
Sample bank reconciliation statement format:
Bank Reconciliation Statement - DeltaEchoFoxtrot
Sample 4: Bank balance includes error and unrecorded deposits
Problem: EggsAmple Enterprises’ bank statement shows $53,000; the cash book shows $47,000 on the same date. Reconciliation reveals:
- $1,000 bank error — funds wrongly credited by the bank
- $3,000 electronic customer deposits on the bank statement but not yet booked
- $2,000 outstanding check issued but not yet cleared
Solution: To reconcile, EggsAmple adjusts the bank statement for the error and the outstanding check and updates the cash book to reflect the received electronic payments. The accounting team should also notify the bank about the misapplied credit.
Sample bank reconciliation statement format:
Bank Reconciliation Statement - EggsAmple Enterprises
Common bank reconciliation discrepancies and how to solve them
Reconciliation discrepancies are often predictable—and preventable. Accounting teams that understand the root causes of these mismatches can work proactively to reduce errors, accelerate closes, and improve financial reporting accuracy. Many teams are adopting automated reconciliation tools to catch these issues early and free up time for higher-value analysis.
Oversights
Oversights are one of the most common sources of reconciliation discrepancies. Left unchecked, they can lead to incorrect balances, financial misstatements, or time-consuming cleanup efforts.
Common types of oversights include:
- Transposed digits or decimal errors
- Missing transactions like unrecorded deposits or payments
- Incorrect timing such as transactions posted in the wrong period
How to fix oversights:
Establish a review workflow that includes second checks on data entry, consistent naming conventions, and scheduled reconciliations. Templates and workflow automation can help reduce human error and maintain consistency.
Missed or infrequent reconciliations
Skipping reconciliations allows small discrepancies to snowball, making them harder to trace and correct. Delays can also increase the risk of undetected fraud or material misstatements in financial reports.
How to fix missed or infrequent reconciliations:
Set a recurring reconciliation schedule (daily, weekly, or monthly based on transaction volume), and treat it as a core accounting control. Automated reconciliation tools make it easier to stay consistent while reducing manual effort.
Duplicate payments
Duplicate payments can occur when you accidentally pay an invoice more than once, often due to disconnected approval workflows or poor invoice tracking. These errors not only waste money but also complicate reconciliation when payments don’t match invoices.
How to fix duplicate payments:
- Use a centralized accounts payable system
- Apply unique invoice numbering conventions
- Enforce structured approval workflows
- Conduct regular vendor statement reviews
- Leverage automation to flag potential duplicates by vendor, amount, and date
Transaction delays
Timing differences are common, especially with checks, automated clearing house (ACH) transfers, or deposits in transit. These transactions may appear in your books before they hit the bank, or vice versa.
How to manage transaction delays:
Track all in-process transactions with expected clearing dates and current status. Create recurring reconciling items for common timing issues so they’re easy to flag and clear in future periods.
Benefits of automated bank reconciliation
Automating the reconciliation process eliminates manual busywork, reduces risk, and enhances financial visibility. For accounting teams focused on accuracy, efficiency, and audit readiness, automated solutions like NetCash free up time for more strategic, insight-driven tasks.
Faster error and fraud detection
Automated reconciliation systems flag mismatches in real time, catching transposed numbers, duplicate entries, or unexpected transaction patterns. This enables teams to spot errors and potential fraud early, reducing financial risk.
Key advantages include:
- Consistent matching logic highlights anomalies instantly
- Exception reports help teams resolve issues before month end
- Built-in audit trails provide documentation for compliance and review
More accurate balances
Removing manual calculations and rule-checking with automation keeps your balances accurate and up to date. This improves confidence in your general ledger and supports better decision-making.
Automation helps ensure:
- Elimination of human errors from data entry or timing issues
- Real-time cash visibility for forecasting and reporting
- Stronger internal controls and simpler audits
Scalable process efficiency
As businesses grow, so does the volume and complexity of financial transactions. Manual reconciliation processes that once worked for smaller teams quickly become unsustainable, slowing down close cycles, increasing error risk, and straining internal resources. Automated systems like NetCash are built to grow alongside your business so your accounting team can keep pace without compromising accuracy or control.
Enhanced check records and management
Automated systems track check status (issued, outstanding, cleared, or voided) more effectively than manual processes. They can automatically identify checks that remain outstanding for extended periods and flag them for follow-up, helping prevent check fraud and unclaimed property issues.
The benefits of automated check management include:
- Comprehensive tracking of all check activities
- Automatic flagging of checks outstanding for extended periods
- Simplified research for check-related questions or disputes
- Improved cash flow management through better visibility into payment status
This visibility is particularly valuable for organizations that issue a large volume of checks or have complex payment processes.
Automated close processes
Automated reconciliation contributes to faster, more efficient month-end and year-end closing processes by eliminating manual matching and data entry tasks. This automation allows accounting teams to complete reconciliations more quickly and with fewer resources, accelerating the entire close cycle. With faster month-end close processes, key decision-makers can access financial information sooner.
By reducing the time required for routine reconciliation tasks, automation gives accounting professionals more time to focus on analysis and strategic activities that add greater value to the organization. This shift from transaction processing to financial analysis helps elevate the role of accounting within the organization.
Full visibility and control
Automated reconciliation gives accounting teams real-time visibility into their cash flow position and reconciliation status through intuitive dashboards and detailed reporting tools. This level of transparency helps teams manage exceptions proactively and respond quickly to internal or audit requests.
With enhanced visibility, teams can:
- Identify trends and recurring issues in reconciliation data
- Monitor key metrics such as unreconciled items or aging transactions
- Resolve discrepancies before they impact reporting
- Access clear documentation for audits or leadership reviews
Automation also enables detailed audit trails, including explanations for variances, making audits faster and less disruptive.
NetSuite integration
NetCash is fully native to NetSuite, not a bolt-on or third-party integration. This native architecture ensures seamless data alignment, real-time synchronization, and a unified user experience without additional connectors or manual data transfers.
Key benefits of NetSuite-native functionality include:
- Performing reconciliation tasks directly inside the NetSuite interface
- Eliminating the need for manual imports, exports, or sync errors
- Accelerating implementation and improving user adoption
- Ensuring consistent, accurate data across your accounting workflow
Direct cash flow reporting
NetCash is the only NetSuite-native reconciliation tool that delivers direct cash flow reporting. This gives accounting and finance teams an immediate, accurate view of cash inflows and outflows without relying on manual spreadsheets.
By automatically aggregating and categorizing cash movement data, NetCash improves the precision and timeliness of cash flow insights, helping teams forecast with more confidence and support smarter decisions across the business.
Streamline your bank reconciliation process with NetCash
Bank reconciliation is a critical accounting process, but it doesn’t have to be stressful or time-consuming. By applying a structured approach, your accounting teams can improve accuracy, reduce risk, and close the books faster. And with the right tools in place, reconciliation can evolve from a reactive task to a proactive source of financial insight.
NetCash helps teams limit all of the common reconciliation challenges outlined in this guide. It automates manual tasks, reduces errors, and surfaces real-time insights that empower smarter financial decisions.
Purpose-built for accounting teams using NetSuite, NetCash fits directly into your existing workflows. The system automatically pulls in bank transactions, matches them against NetSuite records using intelligent rules, and flags exceptions for quick review, freeing your team from line-by-line matching.
With NetCash, you can cut back on hours of manual reconciliation.Instead, your team can focus on resolving meaningful discrepancies, closing faster, and delivering strategic insights to leadership.
Beyond transaction matching, NetCash offers robust analytics and reporting to help you:
- Monitor reconciliation performance
- Spot trends and recurring issues
- Gain visibility into your cash position—daily, weekly, or at month-end
Reconciliation with NetCash is a streamlined, reliable process that improves accuracy, saves time, and elevates your accounting team's impact.
Ready to modernize your reconciliation process?
Learn more about sample bank reconciliation examples
What is an example of a bank reconciliation situation?
A common bank reconciliation situation is when a company issues checks at month-end that don’t clear the bank until the following month. This creates a timing difference between the GL and the bank statement. Bank reconciliation adjusts for these outstanding checks, ensuring accurate financial reporting despite the delay.
How do you calculate a bank reconciliation with an example?
Bank reconciliation follows this formula:
Bank Statement Balance + Deposits in Transit – Outstanding Checks = Adjusted Bank Balance
For example, if your bank statement shows $10,000, with a $2,000 deposit in transit and $500 in outstanding checks, the adjusted bank balance would be:
$10,000 + $2,000 – $500 = $11,500
How do you solve bank reconciliation questions?
To solve bank reconciliation questions, use a systematic approach:
- Gather your bank statement and internal accounting records
- Match and categorize all differences (e.g., timing issues, missing entries)
- Adjust both the bank and book balances accordingly
- Confirm that the adjusted balances match
This method ensures you can identify and resolve all discrepancies accurately.
What is a sample bank reconciliation formula?
There are two main components to a bank reconciliation, each with its own formula:
- Bank side:
Bank Statement Balance + Deposits in Transit – Outstanding Checks ± Bank Errors = Adjusted Bank Balance - Book side:
Cash Book Balance ± Unrecorded Transactions ± Book Errors = Adjusted Book Balance
These formulas help accounting teams confirm that records are accurate and complete. And with automation to support reconciliations, you can enhance the accuracy and speed of your month-end close process.
