Why Monthly Bank Reconciliation Protects Your Business

Monthly bank reconciliation is the simplest habit in bookkeeping — and the one that prevents the most pain. When you reconcile, you confirm that what your software shows matches what the bank shows. That single discipline catches duplicates, missing entries, and timing errors before they metastasize into fear at tax time.

Begin with a clean starting point. Ensure the opening balance in the reconciliation screen matches your bank statement. If it doesn’t, don’t proceed; find the discrepancy by comparing the previous ending balance to the system’s beginning balance and identify entries added or deleted since the last reconciliation.

Work from statements, not memory. Reconcile each account — checking, savings, credit cards, and loans — to the exact statement end date. Check off each transaction in the software as it appears on the statement. Resist the urge to “force” a reconciliation to zero. Differences are clues, not rounding errors.

Watch for duplicate entries, especially when using bank feeds. A common pattern is manually entering a transaction and then also accepting it from the feed. Duplicates inflate expenses or income and will not always be obvious until reconciliation flags them.

Address outstanding checks and deposits in transit. Items that remain uncleared for months indicate either an error or a process issue. Stale entries clutter your books and hide real cash availability. Investigate, void, or reissue as appropriate.

Once reconciled, save the reports. Create a monthly “Reconciliations” folder and store PDFs of the reconciliation summaries and supporting statements. This documentation closes the loop and reduces the time you’ll spend answering questions later — from yourself, your tax preparer, or a lender.

If reconciliation keeps slipping because you’re busy, systemize it. Or let SimplifiBooks verify each month that reconciliations are complete and clean, and flag exceptions so you fix minutes, not hours later.