Why it matters
Your books say one thing; your bank says another. Until the two agree, you cannot fully trust your reports. Reconciliation catches missing entries, duplicate payments, bank fees nobody recorded, and occasionally fraud. It also makes month-end and year-end far easier for whoever prepares your accounts.
How it works
- Get the statement for the period, for example the month.
- Start from the opening balance, which should match the closing balance of the last reconciliation.
- Match transactions one by one: each deposit and payment in the books against the same item on the statement.
- Investigate differences. Some are timing, some are missing entries, some are mistakes.
- Record what is missing, such as bank fees or interest.
- Confirm the closing balance in the books matches the statement.
Common causes of differences
| Difference | Example | What to do |
|---|---|---|
| Timing | A payment recorded on the 31st clears on the 2nd | Leave it; it will clear next period |
| Missing entry | A bank fee nobody recorded | Add a journal entry |
| Duplicate | The same payment entered twice | Remove the duplicate |
| Wrong amount | A typo in a recorded payment | Correct the entry |
| Unapplied deposit | Money received but not matched to an invoice | Apply it to the right invoice |
How often to do it
Monthly is the minimum for most small businesses. Businesses with many transactions often reconcile weekly, because smaller batches are easier to match and problems are found sooner.
Common mistakes
- Letting it slide for months, which turns a short task into a long investigation.
- Forcing it to balance with an unexplained adjustment.
- Changing closed periods after reconciling them.
A simple monthly routine
- Get the statement as soon as the month closes.
- Record any bank fees, interest and charges you have not entered yet.
- Match deposits to the payments you recorded against invoices.
- Match withdrawals to bills, payroll and other payments.
- List anything left over and resolve it before moving on.
- Close the period so it cannot change after your reports are shared.
An hour a month on this saves days at year end, and gives you numbers you can rely on when making decisions.
How GuardenerAI handles it
- GuardenerAI Invoices and accounting keeps bank accounts in the ledger and reconciles them against statements you enter.
- Payments recorded against invoices, including card payments through Stripe payment links on the Max plan, post their journal entries automatically, so most receipts are already in the books.
- Manual journal entries cover fees, interest and corrections.
- Fiscal periods can be closed once reconciled, so finished months stay finished.
- There are no automatic bank feeds: statement lines are entered by you rather than imported from the bank.
- Accounting is a module switched on for your workspace.