AUTOMATIC BANK RECONCILIATION

Bank reconciliation is an accounting process used to ensure that a company’s financial records (typically its cash book) match the corresponding information on a bank statement. It involves systematically comparing the transactions recorded in the company’s ledger with those listed by the bank to identify and correct any differences

PURPOSE

The main objective of bank reconciliation is to verify the accuracy and completeness of cash records, and to ensure that any discrepancies are identified and addressed. These discrepancies may arise due to:

    • Outstanding checks – checks issued but not yet cleared by the bank.

    • Deposits in transit – cash or checks received and recorded but not yet reflected on the bank statement.

    • Bank charges or interest – fees or interest recorded by the bank but not yet entered in the company’s books.

    • Errors – mistakes made by the bank or the business in recording transactions.